Provincial satellite TV channels in China are starting to attract serious attention from advertisers, investors and foreign content providers. However, the market is dominated by a small circle of players, with smaller, more local channels finding it difficult to grow and attract international investment.
1 There are currently five main players in the regional satellite channel sector in China in terms of viewer ratings. There’s Hunan Satellite TV, which typically targets a younger audience, followed by Anhui Satellite TV, which is very drama show-heavy. Then family channel Jiangsu Satellite TV, Zhenjiang Satellite TV, which broadcasts an entertainment shows, and finally Shandong Satellite TV, which has strong news content. Big-name entertainment shows are helping to drive viewers to these channels. Hunan Satellite has boosted its viewer ratings with the popular talent show Super Girl, sponsored by Mengniu, and Ugly Wudi, the Chinese version of Western show Ugly Betty, sponsored by Unilever. Zhenjiang TV is also broadcasting Pepsi’s ‘battle of the bands’ competition, which has boosted its popularity.
2 In terms of ad revenue, the gap is widening between larger and smaller players. Hunan Satellite TV topped the list for ad revenue last year, raking in US$220 million. The Shaanxi network posted less than $29 million in revenue, and Tianjin Satellite TV ad revenues totalled $14 million. Smaller and local satellite TV networks have a hard time finding room for development. Foreign investment is still focused on the big players.
3 Provincial channels are increasingly competing with China Central Television’s powerful CCTV-1 terrestrial channel for ad revenue. The cost of CCTV advertising, sold at an annual auction, has grown rapidly in recent years. Warren Hui, MD of China Media Exchange, says: “Bidding prices are becoming higher, hence agencies are turning to regional satellite TV channels which have high ratings, especially Hunan Satellite TV.” Ivan Xiao, head of TV investment at Zenith Media China, adds: “the cost of advertising on regional satellite TV channels is generally half the price of CCTV, depending on the channel.” Ad costs can vary wildly. According to China Media Exchange, a 30-second TV spot on Hunan TV costs Rmb 108,129, on Anhui TV it is Rmb 75,200. On the top CCTV channel it is Rmb 234,000.
4 One advantage of the big regional satellite channels over CCTV is their flexibility in terms of formats and advertiser involvement. Larry Namer, president and partner at Metan Development Group, which develops programming for the Chinese market, points to “progressive programming policies to work with advertisers” as a key advantage.
This is likely to become more important if media rates continue to rise. The China Broadcasting Authority limits TV spots in peak hours to 12 minutes per hour. So as demand increases on satellite stations, brands will find themselves fighting for airtime. “This will lead to more inflation,” says Teresa Wu, TV planning director at MEC China. “Regional TV stations hope advertisers and agencies will do more than just title sponsorship and go for product placements as well. Regional satellite TV is more flexible than CCTV in this area.”
5 Hui adds that provincial satel- lite channels are investing and buying an increasing number of movie releases, especially local productions. “Programme quality, recognition by clients and market share of regional satellite TV are growing and in coming years will offer further opportunities,” Wu says.
For overseas content providers too, provincial satellite stations offer a new outlet and a way into the Chinese market. Of course, cultural differences mean that Western content doesn’t always fit, though in some cases Western-style formats can work - Hello! Hollywood, says Wu, gave the 18 to 35 demographic Hollywood news, stories and culture.
“The challenge is to create the right blend of programming,” says Namer. “With each satellite group, there are needs and policies we need to be aware of and sensitive to in order to distribute through their satellite. Localisation and developing programming with our audience in mind will always be a part of any of our programmes.”
What it means for…
Advertisers
- As bidding prices become higher, provincial channels offer a more cost effective advertising platform and are currently about half the cost of advertising on leading television network CCTV.
- Regional satellite TV in China is generally more flexible in terms of formats and advertiser involvement. As well as usual advertising and title sponsorship, the medium carries shows such Hunan Satellite’s Super Girl and Ugly Wudi, which are open to product placement.
- Coverage and audience may not be as far reaching as CCTV but it is more targeted demographically.
Media Owners
- As the leading channels continue to dominate the market, smaller players will find it increasingly difficult to grow and attract foreign investment.
- With relatively few top players in the sector, brands will be fighting for airtime, which in turn will see media prices rise.
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This article was originally published in 10 September 2009 issue of Media.
