ANALYSIS: Television - China's TV consolidation creates divisions

The Chinese Government's decision to force the country's myriad competing television channels to combine is moving rapidly ahead. Last month, Beijing brought all its television stations together and unified its rate card as part of the Government's plan to whip local broadcasters into shape before post-WTO rivals arrive.

But bigger may not mean better when it comes to programming quality and advertiser opportunity. That's certainly the message coming out of Hunan, the region which two years ago became the first to combine its television businesses into one organisation - but this month splintered into three separate entities.

The crumbling of China's first unified television market suggests there are inherent problems in bringing previous competitors together in this way. In Hunan, the consolidation of all sales and revenues led to discontent over the way resources were distributed.

All channels were uniformly rewarded irrespective of their strength or weakness. Making a ratings winner didn't mean you'd see the benefit in ad revenues. Mounting frustration has led station executives to break away. In place of a centralised command there are now three competing television networks of varying ambitions and quality. The return to a fragmented landscape should inject a healthy dose of competition for viewers in a province of 65 million people and whose capital, Changsha, ranked 13th in terms of monitored spend in the first six months of this year.

Hunan's consolidation and break-up also has repercussions for how the rest of China proceeds with the Government-ordered TV consolidation drive.

Hunan has also led the way in raising cash from the stock market soon after it centralised sales and programming operations. But media observers say the station subsequently frittered away a golden opportunity to raise its programming bar as central command ran the broadcaster like a state corporation. "When it was centralised, they focused on budgets instead of what viewers wanted, says Zoe Tan, Zenith Shanghai's vice-president of strategic resources.

Now the focus will be back on programming. MindShare's national buying and implementation director Simon Woodward, is optimistic that the return to a more competitive structure will be good for viewers and advertisers.

"If they can segment their programming and use it to improve sales, then we've got an upward virtuous cycle of higher revenues being earned, then ploughed back to improve programming."

One of the stations - Hunan Satellite - has grandly set its sights on taking on national broadcaster China Central Television.

The second entity, the Hunan Economy Channel Group, has three channels, two of which are planning to rework programming and their positioning.

The former City channel is to be rebranded as City Life and will be creating programmes to target male viewers. The Life channel will be turned into a financial news and information channel. Hunan Economy is the station with the hits, owning 10 of the province's top 20 shows, albeit two are connected to lotteries. The third broadcaster, Hunan United Media is attempting to position itself as an entertainment, drama and sports channel.

But these three "partners are now competing once again - and for audiences and advertisers that is a welcom e development.

TV SPENDING (JAN-JUN 2002)
                      All Media
                      Monitored
                       Spending
Rank Market           (Rmb 000)
1    Shanghai         3,590,144
2    Guangzhou        2,853,537
3    Beijing          2,056,959
4    Hangzhou         2,047,551
5    Nanjing          1,820,149
6    Wuhan            1,764,245
7    Chongqing        1,572,678
8    Jinan            1,277,348
9    Fuzhou           1,211,028
10   Hefei            1,178,621
11   Chengdu          1,145,935
12   Xi'an            1,110,505
13   Changsa          1,107,796
14   Shenyang         1,051,018
15   Harbin           1,008,861
16   Shijiazhuang       898,119
17   Taiyuan            806,845
18   Shenzhen           799,022
19   Zhengzhou          780,196
20   Changchun          720,959
Source: Nielsen Media Research