It's been almost a year since the Shanghai authorities brought nearly all the city's major newspapers under the one giant umbrella of the Shanghai United Media Group in a desperate bid to staunch the flow of red ink and turn the city's propaganda machines into genuine market competitors.
But as the group confronts its first-half results, it's becoming abundantly clear that its survival and growth will depend not on editorial content but on its prized assets: property.
Group general manager Gao Yunfei told an internal meeting this year that amid a sharp fall in advertising sales, the media giant's property assets would be the key to invigorating the group's businesses.
According to a transcript of the meeting obtained by the South China Morning Post, Gao sounded the alarm over the slumping media businesses, saying the group would continue to dispose of loss-making newspapers and lay off redundant employees.
The decline of the print operations continues despite the massive overhaul of the industry directed last year by the city's top party brass.
Shanghai Communist Party boss Han Zheng ordered the creation of the group last year from the merged operations of the Jiefang Daily Group and Wenhui-Xinmin United Press Group. The idea was to strengthen the industry's financial muscle and improve editorial quality. It was seen as a make-or-break decision for the local government mouthpieces trying to fend off challenges from online social-networking services.
After the consolidation, the group put its best digital foot forward, with the major dailies including the Oriental Morning Post and Jiefang Daily, shelling out millions of yuan to expand their online coverage. But the efforts failed to pay off.
Gao did not disclose the papers' first-half earnings, but profits were no doubt thin given that first-half advertising sales amounted to just 444 million yuan (HK$559 million), according to group sources. That total was around just half of the figure reported a decade ago.
He added that only 11 of the 32 media units controlled by the group met their first-half business targets set at the beginning of this year.
"Newspaper-related businesses, including printing and circulation, are stuck in a sharp downfall," Gao said. "The group is also saddled with legacy financial issues."
That legacy includes 35 million yuan in pension payments each year and a 100 million yuan interest bill for outstanding bank loans.
To cover those outlays and hopefully prosper, the management is shifting its revenue focus from media to property, with Gao promising to boost the group's land bank.
"A successful revamping of the group's businesses hinges on efficient use of the existing assets," Gao said.
The group's property portfolio covers 300,000 square meters and includes office buildings and production sites. The assets could bring in about 143.5 million yuan in rental income each year, Gao said.
The group also has a combined 2 billion yuan or so in equity in listed and non-listed firms.
All of this has implications for workers on the editorial front line. As the management seeks to use property assets to prop up its failing newspaper businesses, it's safe to say that any hopes held by reporters and editors of a relaxation in censorship to improve editorial competitiveness are unlikely to come to pass.
The message to local journalists is clear: follow the party and city leaders' line and you won't need to worry about your jobs.