Tuesday, November 16, 2004
China to relax media investment norms
Mure Dickie & Alexandra Harney / Beijing/Hong Kong
Foreign firms can form joint ventures with minority stake for TV production.
International media groups will be allowed to invest in Chinese television production joint ventures from the end of the month,under long-awaited rules to be announced this week by the Beijing authorities.
US media giant Viacom and Rupert Murdoch's News Corp are among the overseas companies seen as likely to take quick advantage of the new rules, which mark an important step in the opening up of China's heavily protected media sector.
Other companies, including Seven Network of Australia, are also expected to be part of a flurry of activity as foreign investors seek to play a greater role in China's fast-growing TV industry.
China's State Administration of Radio, Film and Television announced this year it would lift the ban on foreign investment in the domestic television industry. But it has held off from issuing the terms on which international companies can enter the market until this week.
Under the new rules, which will take effect on November 28, Chinese companies must hold a majority stake in joint ventures. The joint ventures must also have a unique logo a provision intended to ensure they are not used to promote the brand of foreign parents.
However, such limitations are unlikely to deter the big media companies already in active discussions with a range of television companies both from China's dominant state sector and smaller privately-owned production firms.
Following Sarft's original announcement this year, Viacom announced plans for a venture with China's Shanghai Media Group. Sarft officials said such ventures could be formally launched after the new rules come into force.
"There are quite a few applications [being made]," said Zhu Hong, an official in charge of industry regulation at Sarft. "There is a high level of activity on the foreign side and Chinese companies are also very positive."
An official at SMG said preparations for its joint venture with Viacom were essentially complete and that the issuing of the new rules meant it would be established soon.
News Corp has held talks with a number of potential Chinese partners and is expected to announce a venture within a few months.
Australia's Seven Network is in negotiations on a possible venture with Beijing Mobile TV Station, a unit of one of the capital's biggest media groups that provides programming for taxis and buses in the capital, according to Chinese officials and industry executives.
China's television market is growing rapidly, with advertising sales estimated at about $2.7 billion in 2003, compared with just $1.5 billion in 1998. Advertising spending per capita is still low by international standards, however.
Demand for new and more compelling content is also expanding quickly, amid fierce competition between state-controlled broadcasters for viewers and the planned launch of hundreds of new digital channels.
Beijing is liberalising the production sector in the hope that foreign capital and skills will revitalise an industry plagued by low production values and limited creativity.