China's TV stations face merger order

BEIJING: China will merge the sales operations of city television stations at the end of this month at a time when TV adspend is said to be declining for the first time. However, media sources believe the State Administration of Radio, Film and Television directive is politically-motivated to cut the number of TV stations from an estimated 2,000 nationwide to a more manageable total of under 300. This covers the 240 cities and 31 provinces, in addition to national broadcaster, China Central TV. The latest directive follows a decision early this year to revoke the licences of county TV stations. Theoretically, county stations are no longer allowed to sell ad space or produce programming. They only have transmission rights. But media directors said county stations are still accepting advertising, and they believe the Government will find its merger directive just as difficult to implement. "I believe 70 per cent of the mergers will be superficial ones," said Zenith Media Beijing general manager Derek Kwok. He said Zhejiang's cable and terrestrial operation are still operating separately despite their merger. "The Government knows it but it has to keep one eye closed because of revenue considerations, and it also does not want to create a monopoly situation," he said. The merger comes at a time when media agencies have forecast either static growth or a decline in 2001 spend. Domestic policy and external pressures have been cited as key factors limiting growth. Media sources believe the merger will reduce competition in the short-term, but doubted its long-term impact. "The negotiation tactic in the medium to long-term will be to play off one market against another," said MindShare China chief executive Chris Walton. "Increasingly, advertisers are looking at the potential of market A versus market B rather than TV station one versus station two."

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