China eases grip on media industry

Shanghai may take lead in the revamp of the sector as party leaders push for greater use of the digital platform and open doors to investors

PUBLISHED : Monday, 09 December, 2013, 4:50am
UPDATED : Tuesday, 10 December, 2013, 2:43pm

An unlikely beneficiary of the liberalisation drive initiated by the third plenum may be the tightly controlled media industry, where the Communist Party leadership is pushing for greater digital orientation and has indicated it is open to private and even overseas investment.

And Shanghai may take the lead in this redrawing of the media landscape, as shown by a recent merger of two of the city's print media giants, followed by the launch of a joint venture between the local new-media leader and Walt Disney.

The Central Committee has reiterated that state assets would still play a dominant role in the media business, with the publicity departments or their investment units holding controlling stakes in new and old ventures.

But the growing desperation of the state-owned media groups, bled by social media and technological changes, to plug their massive losses is likely to lead to new alignments and an evolution in content offerings in keeping with the demands of the digital age.

The newly created Shanghai United Media Group through the merger of Jiefang Daily Group and Wenhui-Xinmin United Press Group, the two largest commercially run newspaper groups, came on the direct initiative of Shanghai party boss Han Zheng. He wants Shanghai United to use information technology to cater to readers.

"The fast growth in IT has ushered in a sea of information," said Shenyin Wanguo Securities analyst Yu Bin, explaining the rationale of a rethink about the industry.

The Central Committee's statement made it clear that social media sites and internet portals would be given greater freedom to produce their own content to attract readers.

Shanghai United executives said the firm would look to tie up with domestic internet giants, including Baidu and Tencent.

Several of its loss-making subsidiaries are set to be closed as it seeks to survive in the new media environment. Just the staff costs of the group, which has more than 4,000 employees, exceed 1 billion yuan (HK$1.27 billion) - far more than the revenue from its print media businesses.

"Company officials signed the death warrant for the print media," said one source at Shanghai United. "They want to bank on the increasingly popular digital channels. It's do-or-die for the state propaganda machine."

Last week, BesTV New Media, an internet-linked television service provider owned by Shanghai Media Group that controls the city's major television and radio stations, said it was launching a digital consulting venture with Walt Disney, in a sign the government is easing the grip.

But a publisher of a state-owned magazine in Shanghai said censorship would remain a concern. "The rigid bureaucracies at the state media firms would also be a major stumbling block."