SATELLITE & CABLE: CCTV must change or lose out

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