Moves afoot to list China media outlets on stock exchange

Move to go public seen as part of Communist Party's goal to lift its global cultural image

PUBLISHED : Friday, 05 October, 2012, 12:00am
UPDATED : Friday, 05 October, 2012, 2:15am

Beijing is honing an ambitious strategy that will clear a path for the media industry to list on the stock market.

The new round of reforms to overhaul the propaganda machine is likely to spawn dozens of initial public offerings by media outlets and publishing companies in line with the Communist Party's goal of boosting the culture industry.

In April, the online news portal of the party's mouthpiece People's Daily, became the first state-run news website to list when it raised nearly 1.4 billion yuan (HK$1.7 billion) via an IPO in Shanghai.

Liu Binjie, director of the General Administration of Press and Publication, which regulates the print media, including newspapers, books and periodicals, told a government work conference last month that Beijing would set up a national conglomerate to own and manage the major state-controlled news organisations and publishing houses as part of an effort to encourage more media companies to go public.

Liu didn't disclose a timetable, but it is thought that serious steps will be taken after the close of the 18th National Party Congress next month .

"The publishing and media companies should be given free play in their business activities," Liu said. "Eligible publishing and media firms should accelerate their pace for listings."

The establishment of a national-level publication empire to oversee the major state-owned organisations would help them restructure to meet the listing requirements, Liu said.

The Communist Party's local publicity departments and other authorities would relinquish their responsibilities in directing and managing the press companies, which mostly print newspapers, and publication companies, which publish books and magazines.

The planned conglomerate is expected to oversee the 120 major press and publication groups nationwide.

Most major publishing houses are wholly owned by the government and cannot meet the requirements on shareholding structure set by the securities law for a listing.

Bureaucratic red tape and local protectionism often hamper the media and publication companies from completing fundraisings such as placing shares to new investors. It's also difficult for the companies to seal merger and acquisitions deals outside their own region.

"It is obvious the discussions on bolstering the culture industry will become a very important part of the upcoming 18th party congress," Changjiang Securities analyst Chen Zhijian said in a research note. "It's highly expected that strong incentives will be published after the congress."

The Communist Party unveiled its ambitions of promoting the culture industry last year, hoping to enhance China's global image amid its rising economic might.

To that end, Beijing intended to direct hundreds of billions of yuan to the sectors encompassing print media, movie making, book publishing, digital media and animation to strengthen their competitiveness. Stock market listings are regarded as a fast way to raise a lot of money.

But officials at the state-owned media companies said wider access to capital wouldn't necessarily result in a healthy growth of the organisations.

"Just take a look at the major press groups in Shanghai. Their downward trend is irreversible as profits continue to decline while competition from private content providers is increasing," said an official with Wenhui-Xinmin United Press Group . "Sadly, bureaucracy and egoism are still rampant. They are not psychologically prepared for reforms and listings."

Beijing launched a first round of reform on the media and publishing sectors in 2003 that was aimed at letting market forces rule the sectors. It entailed trying to commercialise the so-called shiye danwei, or administrative units. The units were government-subsidised, and typically ignored the business interests of the daily operations.

Admitting that previous efforts have mostly failed to make the media companies more competitive, Liu said the regulator now was adamant about deepening the reform process to create media organisations that could compete on a global scale.