Television Media in China

MA-Thesis / Master von Torsten Hoffmann

Introduction:

‘The presence of television is influencing the future of China in ways that no other technology or human agency can’. Given its importance, both culturally and politically, the television industry is one of the most interesting industries in China. Candidate 114608’s career background is in distributing linear TV channels. However, a quick review of regulations and market realities showed that there are virtually no foreign channels in the country and probably won’t be for a while; therefore the focus of this report is foreign television content entering China – and, to a slightly lesser degree, Chinese content in global markets. All video genres are discussed here, with news and current affairs programming being a special case.

The first part of this report is a short introduction that includes the history of political influence and a review of existing regulations. After this overview, the industry and major players are introduced and analyzed - supplemented with various facts and statistics. Here, the issue of cultural imperialism, or Western media influence is elaborated on. Then, the paper discusses the opportunities for international firms in the Chinese media market and the tension between Government control and market liberalisation. A compelling answer to the question of who will dominate the domestic market in 10 years is developed. Finally, the impact of Chinese content on international markets will be assessed within the same timeframe. This is particularly interesting as media is not a traditional manufacturing industry and poses different challenges i.e. creative skills.

This report relies on data and insights from around 45 academic books and journal articles, 5 dissertations, 60 news and popular press sources, 10 analyst reports, and 15 online resources. English-language materials are widely available, even about Chinese companies and regulatory bodies; the majority of industry data is less than 5 years old. Class materials from the Global Strategy course and theoretical frameworks such as AAA, ADDING, Five Forces and the National Diamond are applied. Additionally, 12 personal interviews with high-level media executives were conducted, mostly at Europe’s largest industry event in Cannes, France in April 2010. These insights were particularly useful for the 10-year outlook.

Table of Contents:

Text Sample:

Chapter 3, Government Control Today:

3.1, Broadcasting System and Regulators:

Since 1983, the Chinese TV industry is structured into four levels.

‘The first of these four levels is the central national (or state) television station CCTV. The second level consists of the provincial broadcasters, including the TV stations of the provinces, municipalities and ethnic autonomous regions. The third level is made up of the cities, and the fourth is the counties (towns) and regions whose political administrative rank is lower than that of the cities. These four levels of broadcasting institutions are all answerable to the corresponding levels of administration. However, the non-central stations are not dependent branches of the central station and do not need to consult them on technical, management or financial matters. Their points of reference are local. Policy control is exercised through the party propaganda departments at the different administrative levels’.

This structure enables local Governments to establish TV stations without additional cost to the central Government and the numbers of stations multiplied in the subsequent ten years. The WTO entry in 2001 generated an intense restructuring including a merger of radio, television, and cable companies into larger groups. It is further planned to change the structure to a two-level system (central and provincial) in the future. State Administration of Radio, Film, and Television (SARFT), an executive branch directly reporting to the State Council, is the central control organ, which is developing and enforcing all rules and regulations for the television, radio and film industry since 1986. This body ‘uses two categories to describe the different television broadcasting institutions of China: ‘national stations’ (guo jia tai) and ‘local’ stations (di fang tai). Under the category of ‘national’ there is only China Central Television (CCTV), whereas all other stations are in the ‘local’ category.” This plays an important role in censorship and tighter control for CCTV and allows ‘local’ channels more freedom. SARFT does not only regulate content but also strategically invests in the roll-out of digital terrestrial broadcasting services to rural areas.

This central regulatory body form a barrier that foreign companies are facing and that make non-market strategies crucially important in this market. Institutional voids that oftentimes prevail in many emerging economies are less problematic in China, where the organisation of the whole industry lies at this top-level body which is managed rather transparently. The following report shall focus less on the complexities of central and regional Government institutions but more on the actual rules and regulations set in place by SARFT that may affect foreign players.

3.2, Rules and Regulations:

Various regulations represent formal and informal barriers to entry for foreign entrants. Formal Rules include:

Foreign investors can only invest in production Joint Ventures with a registered capital of minimum 5 million RMB for a maximum 49% equity stake.

Later this was restricted further to only one JV per foreign company. Also, no shareholding in broadcasting companies is allowed. The general message set by the Government is clear: ‘Foreign investment is permitted as long as the Chinese party remains in control of the venture and as long as any goodwill that flows from the venture accrues to the JV and not the foreign partner directly’.

Import quotas were set in 1995 that allowed a maximum of 10 Hollywood Blockbuster hits per channel and year. These rules were later relaxed.

A Rule from 1994 limits the allowed quota of foreign drama content to 25% (15% during prime time) on any channel. In 2009, SARFT issued a new rule that limits the number of dramas (domestic or foreign).

All imported content must be screened and approved by SARFT before being allowed to be broadcasted.

Current affairs and news remain 100% state-controlled, while non-controversial genres such as arts and leisure, sports, fashion are relatively unregulated. There is, however, a ban on foreign animation imports.

In 2004, newly elected Hu Jintao started to reduce the influence of Western media that were seen as ‘harmful’ to Confucian traditions. Broadcasters had to dedicate more primetime slots to local productions that highlight family values and foster a harmonious society.

Restrictions for foreign broadcasters and publishers to enter China. As such, the import of content is handled through a Government ‘licensed’ agencies that sells onto domestic channels.

All satellite channels have to go through a central satellite hub and cable operators can only downlink from one satellite. This remains a tightly-controlled piece of the delivery chain.

Since 1993 it is illegal for individuals to install satellite dishes and receivers into their private homes but at the time 11 million dishes were already in place – growing to 45 million in 2001. Clearly this law is not enforced thoroughly and in fact, the People’s Liberation Army manufactures and sells small dishes to private households.