Shanghai is merging state-owned media companies Shanghai United Media Group (SUMG) and Eastday.com, with the aim of raising their competitiveness by giving market forces full play in running the businesses. Digitalised media products continue to eat into the businesses of SUMG, the city’s dominant print media company, and the Eastday news portal. “The focus of the reform will be on better media content [produced] by making better use of technologies,” SUMG said in a statement on Friday, after the Communist Party’s publicity department in Shanghai and the municipal government’s state-owned assets watchdog announced the decision to merge the two companies. It added that the consolidation would help the newly created media conglomerate raise capital and expand its footprint. The name of the newly created entity is not yet known. SUMG is mainland China’s second-largest print media group, with assets worth about 60 billion yuan (US$8.39 billion) in total. It trails only to its counterpart in neighbouring Zhejiang province. SUMG has been unable to generate profits over the past few years amid a decline in advertising sales and shrinking circulation, two officials at the company said. Eastday provides news, entertainment and travel information for Shanghai residents and is traded on the New Third Board, mainland China’s over-the-counter equity market. It had assets worth 4.8 billion yuan in total at the end of 2019, according to its earnings report. The company said its profit surged more than 10-fold to 561 million yuan last year, while revenue rose 224 per cent to 1.28 billion yuan. “Shanghai is eyeing a leading position in the media industry nationwide,” said Yan Jinglan, a professor with East China University of Science and Technology. “At present, it is easy to increase the size, but it will be difficult to enhance quality and improve corporate performance.” There is speculation in the market that Shanghai, mainland China’s financial and commercial capital, will eventually create a state-owned media behemoth by merging SUMG with the Shanghai Media Group, which owns the city’s major television and radio stations. For the past decade, Shanghai’s state-owned media organisations have lagged behind rivals in Guangzhou and Chengdu in Sichuan province, as far as overhauling their businesses and creating new products are concerned. In 2013, Shanghai decided to merge the city’s two largest print media groups, Jiefang Daily Group and Wenhui-Xinmin United Press Group, to create SUMG. The company has raised billions of yuan over the past years to launch online news outlet thepaper.cn and financial media website Jiemian.com. SUMG has also closed several underperforming print media products, including the Shanghai Evening Post , as it restructured its business.