Turning profit while singing party praises

PUBLISHED : Monday, 28 November, 2011, 12:00am
UPDATED : Monday, 28 November, 2011, 12:00am


After more than 30 years of market reform on the mainland, it may finally be the media's turn to embrace capitalism, whether they want to or not.

Unlike other industries that have moved from state to semi-private ownership, most media on the mainland - television, radio, newspapers - are wholly owned by the state. But by the end of the year, that might begin to change.

In May, the General Administration of Press and Publication (GAPP), the central government's regulator and censor for print media, said that by the end of the year more than 6,000 non-political newspapers and periodicals would be turned into for-profit enterprises.

However, little has been done so far as the leadership debates whether bringing private enterprise to the media will result in a loss of control over content.

'[The delay] shows that those in the upper level still have different understandings of the role of media,' said Dr Yin Hong, deputy dean of the School of Journalism and Communication at Tsinghua University.

But one thing is clear. However Beijing reshapes the media industry, the press will not be unfettered. Beijing's aim was for the media to continue to act as the party's mouthpiece but also generate profits, said Qiao Mu, a professor at Beijing Foreign Studies University. Free speech is not part of the bargain.

'The government wants to turn the media into a rooster that is capable of both crowing and egg-laying,' Qiao said. Beijing will still appoint top editors, and reporters will still be required to have a press card that is checked annually.

Newspapers and magazines however will be run as for-profit enterprises and be able to accept non-government investing. Editorial, on the other hand, will stay firmly in the hands of the country's propaganda department.

Several obstacles stand in the way of making the media more market-oriented businesses. Government agencies are already engaged in battles to protect their own spheres of power; local authorities are wary of losing editorial control; and some publications fear that without comfortable government subsidies they will no longer be financially viable.

One motive for the change in government policy is money. It is unclear how much taxpayer money is poured into mainland media every year, but Beijing appears to believe it is time for the media to be self-supporting.

Virtually every central government department, agency and ministry has its own government-funded publication and television station, as do governments and departments at the provincial, city and county level.

A research report by Tsinghua University estimated the turnover of the mainland's media industry will reach 688 billion yuan (HK$836.55 billion) this year.

The reform of the press sector has been on Beijing's agenda for a decade. It is seen as part of a more comprehensive campaign to transform cultural entities, including publishing houses, museums and performance troupes, from state-owned companies to private enterprises.

But progress has been halting.

'For a long time, the central government has been stepping on the gas with one foot, while hitting the brakes with another,' said one observer.

Beijing first advocated reform in the press sector in 2001, issuing a notice encouraging news organisations to become cross-regional and span different platforms, such as TV and print.

In 2003 media mogul Rupert Murdoch was invited to speak to the Party School, the prestigious think tank in Beijing, where he encouraged the future leaders to open the media market.

'By developing a regulatory system that is both firm enough to ensure China's control over her emerging businesses and smart enough not to stifle those businesses' growth, China will create an exemplary media industry,' he said then.

But Beijing has had difficulty finding that balance. Because of the special status of the media, which is charged with the mission of 'guiding public opinion', it is an industry that more than any other is fraught with political and ideological concerns.

'After so many years, I can only say the reform has just started,' said Zhang Jiangang, an academic at the China Academy of Social Sciences.

Still, if non-political newspapers will be forced to compete, as GAPP proposes, it will be a major step.

An editor at China Youth Daily who asked not to be named, said: 'We were told that the publications at the central government level will all become enterprises, except for two papers and one periodical - the People's Daily, Guangming Daily and Qiushi Journal.'

The People's Daily and Qiushi (seeking truth), a bi-weekly magazine, are mouthpieces of the government. Guangming Daily is under the direct control of the Central Propaganda Department, which is the country's paramount censor.

The editor said many publications would prefer to stay within the government system because they received considerable annual subsidies. 'To be an enterprise means you have to make every penny yourself, and lose the stability that a government job provides,' the editor said.

He said China Youth Daily was trying to persuade government officials to remain state-owned.

In addition to a few media outlets at the national level, every province and city will have its own official mouthpiece that will remain state-owned.

For other newspapers and publications, Beijing wanted to foster competition and force only the fittest to survive, Yin said.

'[Beijing] would like the market to play a bigger role,' he said. 'In terms of the numbers of newspapers, China must lead the world. But every paper has limited circulation.'

But the existing structure, where the state dominated, did not provide a solution, he said, as 'good newspaper can't grow bigger and the bad ones won't close'.

Forced to fend for themselves in an open market, small papers and magazines would face severe challenges and might have to close.

But Qiao said that even without subsidies most newspapers and magazines should be able to survive on advertising.

'The number of publications will undoubtedly shrink, but because GAPP is not issuing new licences to newspapers and magazines, competition is constrained, unlike in the overseas media market,' he said.

The government has said it will allow more private and foreign investment to build a stronger media industry, a move Yin favours.

'The goal of the central government is to foster a media industry that is both large and influential and can compete with international news groups,' said Sun Wei, president of Hong Kong-listed Beijing Media.

After shedding their state-owned status, media enterprises would be open to acquisition and mergers, public listings and investment, rather than be forced to endlessly rely on government sponsorship, he said.

'Influential media groups should span television, radio and print,' Sun said. 'This is what we have been trying to do, but can't because of the current environment.'

Regulations prohibit newspapers from operating television stations and vice-versa. Complicating matters is that the two media are governed by rival agencies - print by GAPP and television by the powerful State Administration of Radio, Film and Television (Sarft).

Moreover, all media companies are controlled by a 'government work unit' - such as the Ministry of Railways or even provincial and local entities - which can severely limit their development and scope of their reporting.

The only exceptions are state broadcaster China Central Television, which runs a television guide newspaper, and Xinhua, which established a television service in 2010, though its programmes are only accessible through the web on the mainland.

In the debate over the future of the media, commentators often talk about creating a 'media aircraft carrier' to describe a large integrated media group. Creating one would not be difficult but could it be competitive and influential, Zhang said.

'It would take Beijing a single order to meld TV and radio stations and a newspaper into one media group. However, it won't have the battle effectiveness of a News Corp or Time Warner. It could be a raft of remarkably huge size, but with no combat capability.'

Sun said Beijing essentially had imposed a ban on the creation of new media outlets. That and local protectionism are the biggest difficulties his company faces in becoming a 'cross-media and cross-region' company.

Beijing Media is considered a pioneer in media privatisation. In 2004 it became the first media group to go public outside the mainland, listing in Hong Kong. Beijing Youth Daily, the mouthpiece of the Beijing Municipal Youth League, the youth arm of the Communist Party, holds 63 per cent of its shares.

In the past seven years, the company's efforts to expand beyond Beijing and into the provinces, and into television and radio, have been frustrated by Sarft. It has been unable to spend the HK$350 million from the company's HK$890 million initial public offering that was earmarked for expansion.

In 2006, it invested 15.3 million yuan to set up a joint venture with Hebei Youth Daily, a deal made possible only because the two are in the same youth league system.

Local governments resist media from other provinces because they worry about the ability to supervise them. A Beijing newspaper generally must comply with the wishes of the Beijing propaganda department, but can often safely ignore the censors of another province. That is why, for example, a scandal in Beijing is more likely to be uncovered by media from, say, Guangzhou or Shanghai.

Still, the media landscape may be changing. GAPP's May announcement that more than 6,000 non-political newspapers and periodicals would be turned into enterprises by the end of this year could be good news for companies like ShiFang.

The Hong Kong-listed company, which is a content provider and advertising agent for more than 10 newspapers on the mainland, said the GAPP ruling would make it easier for it to acquire shares in publications that become private enterprises.

Though private capital is limited to 49 per cent ownership of a media company, as a shareholder it will have a say in management.

'So we won't just be an agent; we can participate more in the work to improve quality,' said ShiFang chief executive Chen Zhi. 'Otherwise we can't have a long-term strategy in co-operation with newspapers.'

Also, for ShiFang, operating across different provinces is easier. Unlike Beijing Media with its government connections, ShiFang has no a 'mother-in-law' behind it. Regional propaganda offices have less to fear because, wherever ShiFang operates, the major shareholder will be the local media, which will remain controlled by the local government.

'We won't have a bigger influence over content,' Chen said. 'The newspaper will remain the controlling shareholder and the editor-in-chief will be appointed by the propaganda department.'

When Beijing Media went public, the editorial portion of the company, which produces the news, was separated from the listed portion. The listed arm only engages in selling advertising space and the printing and trading of print-related materials. The editorial side reports to the regional propaganda office. None of the listed mainland media included their editorial assets in the public portion of their company.

The split can cause contradictions. The listed arm has no right to interfere in issues such as the cost of the editorial team or the newspaper's content. If revenue declines, the enterprise might want to cut salaries or staff, but cannot. At the same time, the editorial product is not a competitive enterprise; it remains a creature of propaganda.

Normally, said Sun, 'editorial and management are integrated. If we separate them we are bound to see a lot of trouble.'

He said Beijing should allow the editorial portion of media companies to be part of the listing. He argued that authorities needed not be concerned about the 'direction of public opinion' since the government would 'maintain the right to appoint top management of the media'.

But if one of Beijing's goals is to broaden the influence of mainland media while retaining its grip on editorial control, why would foreign audiences, who already mistrust China's propaganda, bother to listen to it now? 'To speak out is better than keeping silent,' said Zhang. 'China must tell her side of the story because any understanding starts with expressing yourself.'

But Yin said government-led editorial would not work. 'The best way to introduce Chinese culture and burnish her image overseas is to encourage exchanges among the people, culturally or academically. Xinhua is already an aircraft carrier. But does it function effectively?'


The approximate number of newspapers on the mainland

- It has 9,800 periodicals

- And more than 1.9 million websites