Viacom makes steady gains in long China march http://today.reuters.com/business/NewsArticle.aspx?type=businessCompany&storyID=2006-06-27T104040Z_01_SHA119977_RTRIDST_0_BUSINESSPROCO-MEDIA-CHINA-VIACOM-DC.XML
Tue Jun 27, 2006
By Doug Young
SHANGHAI (Reuters) - Media giant Viacom Inc. (VIA.N: Quote, Profile, Research) is on track to post revenue growth of more than 20 percent this year in China, making slow but steady gains in the tough market, the company's top Asia executive said on Tuesday.
Viacom, owner of the MTV and Nickelodeon TV channels, now earns tens of millions of dollars in revenue each year in China, Nigel Robbins, president of MTV Networks Asia-Pacific, told Reuters in an interview.
While respectable for a developing market, the amount is still a tiny fraction of the company's $2.4 billion in total revenue in the first quarter of this year alone.
"We have a healthy business here," said Robbins, in Shanghai for a youth marketing forum. "By no means are we faltering."
Viacom and its peers, including News Corp. (NWS.N: Quote, Profile, Research), Time Warner Inc. (TWX.N: Quote, Profile, Research) and Walt Disney Co. (DIS.N: Quote, Profile, Research), are all moving cautiously in China, a market where media was traditionally viewed more a propaganda tool than entertainment, and Beijing has been reluctant to let in too much foreign influence.
In one of the latest twists typical in the give-and-take environment, a Shanghai TV station broadcasting shows produced by a China-based Viacom joint venture will have to look outside to purely Chinese production houses for all its prime-time shows starting later this year, Robbins said.
That twist follows a similar retrenchment last year, when China opened up the TV program-making sector to foreign joint ventures, only to clamp down later in the year when it limited each company to one such venture. "It was a marathon, and now it's a decathlon," Robbins said. "The challenges are many."
Despite those challenges, Viacom and its peers remain committed to a market with potential to become the world's biggest in terms of viewers, and one where ad spending is also growing rapidly. In the first quarter alone, ad spending grew 25 percent to $10.3 billion, according to Nielsen Media Research.
Viacom's own business is growing at a similar rate.
"The growth is good -- over 20 percent year on year," Robbins said. "That's healthy growth for any business."
Within the China market, Viacom derives the biggest part of revenue from advertising, followed by its consumer products division and digital media. Apart from a children's programming joint venture with Shanghai Media Group, China's second-biggest media company, Viacom also operates a Mandarin MTV station that caters to the mass audience in affluent Guangdong province.
That part of the business, while still a minor player in the market since its launch about three years ago, has posted some of the company's strongest revenue growth in China this year, with ad revenue up more than 50 percent, Robbins said.
"Ratings have grown," he said. "It's a niche channel, but it's a 24-hour market for a targeted demographic."
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