While China scrambles to deal with the multiple challenges which
will come with the accession to WTO, major broadcasters are moving ahead
with a series of crucial internal reforms.
The reforms are being driven by State Administration of Radio, Film and
TV (SARFT) policy initiatives released over the last few months, which
called for the separation of TV production and broadcast functions.
Under the plan, production resources will be released into the market,
while the state will retain control over broadcast signal delivery.
The reforms will have imminent impact on advertising sales and TV
production infrastructure.
National network China Central TV (CCTV) started its separation process
in April with satellite-delivered cable channels CCTV-5 (Sports) and
CCTV-8 (Drama) acting as trial cases.
If successful, the reforms will be extended to other channels with the
exception of news.
The separation of production from broadcast is the first in a
three-stage reform process being instigated by CCTV under the leadership
of president Zhao Huayong.
The second stage will see the elimination of slots with the lowest
ratings.
The third stage will be to develop multiple revenue streams for its
satellite and cable channels rather than to rely on advertising.
The move towards establishing production companies is not new in
China.
The SARFT policy places a definite time period of two years on real
practical action and most leading broadcasters have started to roll out
details of their new production relationships.
Beijing TV (BTV) re-launched its third terrestrial channel as BTV
Science & Education late last year.
Recent reports have suggested that the network's second channel may be
relaunched as BTV Culture & Sports.
The relaunch of these leading local channels with a semi-niche remit is
designed to facilitate a commissioning-based system, which BTV leaders
said will be in place within a year.
In southern China, former provincial powerhouse Guangdong TV (GDTV) has
now completed an internal restructuring.
This has resulted in a series of production units or "offices", with
responsibility for production and with the ability to earn directly from
advertising revenues.
Whatever the specific interpretation of "separation" in different
places, the release of state production resources into the market is
designed to contribute to the growth of batches of professional TV
programme production companies.
In turn, these companies should open the national production market to
civil capital investment.
This, at least, is the theory.
"State TV must overcome a large number of fundamental problems before
they can declare any of their assets independent, according to even
Chinese legal understanding of that concept," said Mr Rowan Simons,
chairman of TV investment consultant RSA Media Relations.
Among the biggest problems, he said, was the "basic paradox" that faces
all China's state TV resources.
"On one hand, everyone agrees that production forces must be able to
develop their businesses according to market conditions," he said.
"On the other, everyone knows they must maintain 'exceptional
relationships' with regulators and broadcasters, or risk losing their
licences and scheduled positions."
With Beijing, Shanghai, Guangdong and CCTV moving ahead with their own
versions of separation, firmly within the cocoon of the total ban on
direct foreign investment, all the domestic action has yet to translate
into the emergence of properties with real potential to the outside
world.
If the SARFT is to be believed, that particular programme has yet to be
scheduled.
CABLE MARKET IN CHINA
Year No. of Cable TV TV Advertising
Household Sub ('000) Penetration Rev Market
('000s) (Rmb bn)
1996 330,800 45,000 85.9% 36.7
1997 335,000 50,000 86.5% 46.2
1998 341,957 70,000 87.7% 53.8
1999 400,000 80,000
Source: Merrill Lynch.
