Media merger about more than the bottom line
Shanghai's two big newspaper groups have joined in a bid to return them to financial health and avoid mass firings of journalists
Two of Shanghai's biggest press groups are merging with the blessing of the city's Communist Party publicity wing, in a tie-up that makes financial - and political - sense.
The Jiefang Daily Group and the Wenhui-Xinmin United Press Group have been consolidated into the Shanghai Newspaper Group, according to several reports on the mainland, although no official announcement has been made yet.
The merger comes at a time when many of the party's newspapers are experiencing worsening performance owing to intense competition and a flood of digital media products.
The move is expected to lead to the closure of some loss-making units and the disposal of overlapping assets, such as printing plants. There is speculation Jiefang's Shanghai Evening News may fold as costs are cut, giving the Xinmin Evening News, its cross-town rival, a cosy monopoly in Shanghai.
Editorial staff will work from a new office building owned by Jiefang in the suburban Xinzhuang area, while three high-rises owned by the new group will be leased out to generate revenue.
Sources at the Jiefang Daily said the group had lost 200 million yuan (HK$253 million) so far this year, while Wenhui-Xinmin has also reported declining sales due to the intense competition.
The Communist Party of Shanghai has released the names of candidates for several senior posts at the new company.
Qiu Xin, head of the Shanghai Media Group that controls the city's major television and radio stations, will be the chief executive of the new company. The 48-year-old veteran journalist, who was previously the editor-in-chief of the Jiefang Daily, is a reform-minded technocrat.
For the past decade, Shanghai's state-owned media organisations have lagged rivals in Guangzhou and Chengdu in Sichuan province in overhauling their businesses and creating new products.
Nonetheless, it would be wrong to regard the merger purely as a business decision. The tie-up, initiated by the Jiefang Daily, has political implications as city officials seek ways to prevent "social malaise" from getting out of control.
The local publicity department was blamed for maintaining a tight grip on the major state-owned newspapers, including the Jiefang Daily, Wenhui Daily and Xinmin Evening News, to ensure that their editorial content toed the official political line.
Jiefang proposed the consolidation with the publicity department, hoping it could brave the rocky start with the financial support of Wenhui-Xinmin.
The reason was simple: to avoid closing down state-owned media and sacking journalists.
Unlike most other workers who can take to the streets to protest against employers who fail to pay them salaries or have fired them, journalists working for party mouthpieces are often "within the circle" of power.
Some observe high-level government meetings and are privy to policymaking information. City officials are concerned that a mob of laid-off journalists could fuel social unrest as they publicly vent anger towards the government or individual officials.
It's hoped the merger will stave off such mass firings.
Shanghai's publicity department began talks with officials at the two groups at the beginning of the year, and their aim was to ensure stability after the merger.
So at the Shanghai Evening News for example, closure does not necessarily mean staff will be out of work, as they might be transferred to the Xinmin Evening News instead.
All in all, the merger is not only a sound business decision, but also a politically astute one.