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."
