With the issue of foreign access to China's TV industry getting
wide attention in the international press, the State Administration of
Radio, Film and Television (SARFT) has denied rumours that foreign
broadcasters have been given permission to retransmit via cable TV
networks on the mainland.
Reports based on wishful thinking and unidentified sources appear on a
regular basis and the same seems to be true about the latest reports
that certain foreign TV broadcasters have gained landing rights through
China's sought after cable TV networks, seen as crucial to increasing
advertising revenue.
While China, with a population of 1.3 billion people and a television
penetration rate of 89 per cent, is of prime interest to media moguls
gathered in Hong Kong and Singapore; not much has been achieved so far,
despite massive lobbying initiatives.
The grey area exceptions in some southern provinces is the result of
spill-over of terrestrial signals from Hong Kong and unapproved
rebroadcast of signals on cable TV networks.
Foreign broadcasters trying to get a foot in the door have to make do
with permission to broadcast in hotels (with three or more stars),
designated foreign compounds and other relevant institutions for an
annual licence fee.
When 2,000 licences were issued in late 1999, 18 foreign broadcasters
were on the list.
But hotels do not deliver the mass penetration broadcasters are after,
so they have taken to working together with local TV stations on
programming blocks, with the aim of building brand recognition ahead of
future entry.
One of the exceptions is the Star TV-backed Phoenix Satellite
Television.
According to its own reports, Phoenix Chinese Channel is widely seen
throughout China and has seen double-digit increase in advertising
turnover during the first six months of this year.
As Phoenix Chinese Channel comes into more direct competition with the
mainland TV industry, it will need to find methods of securing
advertising dollars while dealing with increasingly frustrated PRC
competitors.
More than 980 terrestrial TV stations, 1,300 cable TV stations and over
30 satellite TV channels have emerged on the mainland over the last
decade.
Originally funded through state subsidies, the vast majority of TV
stations have been relying solely on advertising revenues and third
party investments to fund their expansion for many years.
Since 1998, the Chinese cable industry has developed rapidly as China's
cable TV operators, known as "secondary infrastructure information
networks" have succeeded in attracting investment from new sources.
The potential they offer: delivery of telecom, Internet and TV services
through one network.
Currently, there are 90 million cable TV subscribers in China.
According to official estimates, the number will increase to 120 million
cable TV subscribers by 2001.
The average growth per year since 1995 has been 10 million, while cable
TV is mainly available in China's urban centers.
While major cities such as Shanghai reach close to 100 per cent cable
penetration, the divergence in the level of investment and equipment
used in different cities is great.
In an attempt to consolidate the sprawling cable industry, and in
anticipation of cashing in on the sector, SARFT has established an
Information Network Center to handle cable consolidation.
The process involves 3,000 cable operators being regrouped into 32
province-based operators. The aim is to create a national China cable TV
network.
Mr Chen Xiaoning, director of the Information Network Center, again
restated the plan to connect local cable operations into one national
cable television network at the recent Symposium on Cable TV
Technologies in Hangzhou.
But, there are many obstacles along the road as cable TV stations have
to a large extent been locally financed and managed and are not keen on
relinquishing control.
According to reports, by June of this year, the majority of trunk
networks in the 14 eastern provinces and municipalities were
connected.
With the cable TV sector's potential to offer broadband solutions to
China's problems, the satellite industry has been out of the limelight
over the last year.
Nevertheless, satellite's role in delivering free-to-air TV channels
back and forth across the nation remains strong. CCTV, China Education
TV and 35 of China's provincial terrestrial broadcasters utilise
satellite to reach consumers in outlying areas either directly or via
local cable TV networks.
With increasing fragmentation and consumer sophistication, competition
is heating up and winners are starting to look for ways to distance
themselves from the pack.
Ms Zoe Tan, strategic resources director with Zenith Media, said that TV
stations are now eager to install ratings software.
However, the knowledge and understanding still lags behind the passion
to adopt research tools.
"If we only follow ratings, programming will become too similar," she
said, "a trend which is obvious in many cable and satellite TV
channels."
One of the success stories of recent years is Hunan Satellite TV, which
has revamped its schedules and programming to attract advertising.
While CCTVsuffered a 34 per cent drop in income from its prime time
auction last year, Hunan Satellite TV has developed a successful
business model.
The channel staged its own auction that will generate over USdollars 48
million in 2000.
While some mainland TV stations are struggling to cope with growing
competition and some are attempting to stay ahead of the pack by
increasing channel capacity through upgrades of the cable networks and
better quality programming.
Some predict that China's control of media content will increase rather
than decrease and recent statements by senior industry officials
underline this sentiment.
However, the country's entry into WTO and an increased need for content
will result in the opposite occurring.
Partial access to cable networks for foreign broadcasters is nothing new
and is a matter of definition.
Foreign broadcasters have been for years working with Chinese television
stations by way of programme sales and programming blocks - and there
has long been a list of foreign broadcasters allowed into hotels and
foreign compounds.
Source: CMM Intelligence.
