China aims to build global media giants

06 October 2009

BEIJING: The Chinese government is planning to dramatically increase its investment in the domestic media sector, as it seeks to create independent companies that could ultimately have a sizeable global presence.

The country's authorities estimate there are 2,000 newspapers in the world's most populous nation at present, along with 9,000 magazines and 287 TV channels, as well as 700 million mobile phone owners, 338 million web users and 180 million bloggers.

In a recent set of guidelines, the national State Council announced that it wanted to establish a number of major players in the news, entertainment and cultural sectors.

The state will provide significant financial resources to support this initiative, as it seeks to improve the BRIC market's image around the world.

However, it also said some private funding, including from abroad, will be permitted, so these organisations can "live on their own rather than being attached to government departments as parasites."

As part of this process, media companies will have greater licence to make their own material, both for broadcast inside China and for sale abroad.

Foreign firms will be allowed to invest in producing this sort of material, although it is thought this will have to be through agreements with state-owned organisations, while news content will also remain under official control.

The Shanghai Media Group is likely to be one of the initial beneficiaries of the Communist regime's new policies, having issued stock to the public in August, and will now be divided into two parts.

The first will remain in the government's hands, and focus on news and satellite transmissions, while the second will be commercial, looking to advertising, programme development and distribution.

Li Ruigang, the Shanghai Media Group's chairman/ceo, said "the domestic media market is being changed dramatically."

"This will be a new SMG. In the future we'll be a holding company, and there will be more than ten subsidiaries.”

The China Development Bank, run by the government, will provide SMG with $1.5 billion (€1.02bn; £941m) over the next five years, and will also partner the company in a separate $735 million media investment fund.

Michael Tung, the chief investment officer of China Media Capital, said that the country's media market is currently "very fragmented."

"China should have four or five huge media groups. There's nothing now like News Corp or Time Warner. But we'll also be looking for overseas opportunities," he added.

Data sourced from New York Times; additional content by WARC staff