China lifts lid off airwaves, plans 1,000 new TV channels

MUMBAI: The Bamboo Curtain is finally parting. Having realised the vast potential its media industry holds, China has loosened some of the tightest fetters that shackled the sector for decades.

While the wide ranging reforms touch a vast range from newspapers to films, the biggest advantage in the liberalisation process belongs to the television industry. 2004 marks the beginning of a big restructuring of the state owned China Central Television, and Beijing has decided to scrap its ban on overseas investment in local production companies, as part of a broad set of reforms aimed at attracting private and international capital and talent needed to fill the proposed 1,000 odd new television channels with quality content.

Tightly controlled television in China thus far has spelt poor production values and curtailed creativity in programming. The State Administration of Radio, Film and Television (SARFT) has already approved of a batch of local production companies who will make programmes without an authority overseeing their work at every stage. Under a new policy drawn up by the Sarft, qualified foreign companies will be able to apply to take minority stakes in the companies spun off from CCTV.

In the longer term, officials and executives hope the new companies will be able to issue shares abroad.

Health and weather bureaus will also be allowed to set up their own fee paying channels, but demand for programming will outpace supply by a large margin. This is where overseas production companies can make a killing. Officials are pushing for a big expansion of pay TV, essential to China's ambitious plan to switch completely to digital TV by 2015. But the hundreds of new channels planned will need huge amounts of content that viewers think is worth paying for. "We are very short of programmes," acknowledges Zhu Hong of Sarft, according to media reports. Under the new policy, "strong and influential" foreign companies will be able to hold minority stakes in Chinese production companies.

However, new media channels and the more open production industry do not spell an end of the era of government control. Zhu has been quoted as saying that liberalisation does not free broadcasters from the requirement to reflect faithfully the views of the Communist party. "We must uphold party control of the media and persist in correctly guiding public opinion," he says.

The opportunities for foreign opportunities in actual broadcasting are likely to be limited, though.

CCTV's sports channel could be an early target of the restructuring at CCTV, because of the popularity of its content and the fact that it is a straightforward business. According to media reports, Cheng Hong, director of the chief editor's office at CCTV, said the broadcaster hoped to spin off the sports production operations as a new company that would sell programmes to its parent on a contract basis.

The new strategy extends beyond television. The state is also scrapping state funding and compulsory subscription schemes for party and state newspapers, in an attempt to create more commercial print media. In the film industry, censors no longer have to approve each stage of a movie's development, restricting themselves to looking at an initial proposal and the final product. And Sarft has also recently moved to raise the foreign investment allowed in cinema ventures in big cities to 75 per cent from 49 per cent.

While most overseas companies will now begin to scramble for a piece of the pie, the first move advantage will clearly rest with Rupert Murdoch, who has worked painstakingly on getting in a toehold China for the last decade, although a major portion of Star TV's revenues currently come out of India. With the realisation of the tremendous promise that the Chinese media market holds, Murdoch got in permission to beam Xingkong Weishi, its Mandarin language entertainment channel, to all hotels above three stars and into residential compounds where foreigners and overseas Chinese live, in January 2003.

Star TV thus became the first foreign television company to win the rights to broadcast into China, along with AOL Time Warner, which had also gained permission to launch a channel in a limited area in Guangdong. Moving with dogged patience in a regime that has so far gone excruciatingly slow in opening up its airwaes, Murdoch was also willing to drop a BBC news channel's satellite delivery into China. He also vetoed News Corp's plans to publish a book by Chris Patten, the last colonial governor of Hong Kong, who irked China's top officials in the run-up of the handover of Hong Kong to China with his strong espousal of democratic principles.

Will the new SARFT reforms now spell a shift into top gear for Star's plans for the country? Murdoch has not gone wrong on any of his long-term gambles thus far and the China payback may already be well within his sights.

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