SATELLITE & CABLE: CCTV must change or lose out

CCTV's famous annual national bidding came to a close, and it is clear that China's once all-powerful national television channel is faced with a stark reality - the need to change rapidly and become more market-driven, or risk a diminishing audience share and revenue stream from advertisers Two insights can be drawn from the recent bidding process. First, CCTV is changing the way it 'auctions' its airtime. It no longer requires advertisers to bid for a full year period - rather, they have moved to bidding for spots on a two-month basis. Historically, advertisers often bid astronomical sums to secure annual positions in CCTV's highest-rated time slots. However, many of those successful bidders failed to follow through on their commitments - in some cases because they went out of business. Clearly, CCTV is hoping that increased flexibility in the bidding process will attract advertisers who, in the past, were unable to make the full-year budget commitments required to secure top time slots. Second, demand has slowed, at least in the first quarter. In previous years, CCTV would have already sold most, if not all, of its top prime time slots at this point. But this year, there is still a significant number of slots available. This is a direct result of advertisers looking to alternative media solutions and that CCTV may no longer be seen as the only national advertising vehicle. Provincial TV owners, who once meekly followed the lead of CCTV, are starting to act more aggressively and commercially driven. This was made obvious by recent improvements in programming quality. Provincial TV operators have historically broadcast a large portion of CCTV programmes. But increasingly, they are acquiring more appealing programmes from independent producers, as well as investing in unique original productions. Improved programming leads to improved ratings, and advertising budgets will follow - often at CCTV's expense. China's entry into the WTO is expected to open the entertainment and programming market, and hence, competition. Further increasing the pressure, strong overseas Chinese channels will continue to fight for share in the China market. Although the door is not yet fully open for channels like Phoenix TV, Sun TV and Macau TV, they will nevertheless continue to make inroads. But the news is not all bad for CCTV. It is still the overwhelming leading national station in China. It has a strong reputation with TV viewers throughout the country, and it has strong financial resources. But it must reposition its brand and better leverage its strengths to succeed in the changing media environment. Some examples: - News reporting - CCTV arguably has the best team of reporters across China. The country still tunes in to CCTV nightly for the latest news. This is a core strength, but should be marketed better and perhaps extended more aggressively into other programme formats, such as reality-based drama productions. - Business programming - CCTV's business and economics channel has developed well in 2000 and it has quickly become a recognised authority on business news. Further development of this channel will be key to future growth, especially as China's increased integration into the world economy will be of keen interest in the years to come. - Sports programming - CCTV's scale and financial resources enable it to purchase or produce sports programming, including the Olympics, the European Cup and NBA live broadcasts. - Public service - although this type of programming is not necessarily revenue-generating, CCTV can use public service programmes to build viewer loyalty. Enlisting advertiser support for the development of public service programming is one way to capture the resources required to improve production quality. The winds have changed direction for CCTV in China. The question is whether the station will move with or against these forces. Some developments will be positive for CCTV; others will no doubt be negative. CCTV can have a strong future, but it will require new thinking and new approaches that better reflect the needs of both audiences and advertisers in China. That would be in everyone's interest.

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