The Ideology of Information
BEIJING --- Well, here we are then, the end of the millennium and, without doubt, the crucial turning point in the development of media industries in the People's Republic of China. As we have debated in China Media Monitor in recent editorials, the highly regulated Chinese state-owned TV industry is in danger of missing out on the most exciting period of growth in entertainment services ever contemplated.
As commercial and technical imperatives force adoption of new delivery mediums and government interest is swayed by the opportunity for China to achieve leap-frog benefits, the tide of events is fast moving away from conventional broadcasters which have long been protected from market forces by their key ideological status and which are now being restricted by executive order from developing new revenue streams.
Indeed, the major problems that face the broadcast sector in China are fundamental in nature and most simply cannot be overcome by half-baked tinkering measures such as Zhu Rongji's decision to effect a temporary ban on cable TV using its networks for telecoms applications [see CMM passim].
But, even without the pressure of various non-broadcast groups heralding the arrival of broadband networks and real competition from outside the mainland, the reality is that the Chinese state-owned media's first challenge is to face up to competition from the one source it never expected - itself.
While the expansion of terrestrial services at provincial and city levels in the 1980's served to extend the Party's propaganda reach, it also weakened central controls over ideological content and provided stiff competition for audiences in the major centres. Happy viewers.
Likewise, the introduction of cable TV in the 1990's proved to be direct competition for the local terrestrials and CCTV, but also helped sustain the incredible advertising growth China has witnessed this decade. Still happy viewers.
The situation started changing for the worse when the provincial TV stations decided to join pace setters such as Guizhou TV/Yunnan TV on satellite and became national broadcasters operating under regional licenses. As is now well acknowledged, this trend has resulted in many Chinese urban families having access to multi-channel television of virtually no interest to them.
To come back to the original point, all these developments which have now led to crippling competition in many markets have been orchestrated (often retro-actively) by the central regulator which must take ultimate responsibility for every achievement and every disaster.
As we close out the year, there is every reason to believe that will be many more achievements and disasters to come in the future. Not least, SARFT's decision to merge terrestrial and cable interests at local levels which is certain to result in power motivated face-offs between organisations and individuals that report to the same administration and which only exist to serve the Party's propaganda needs.
Nowhere are these conflicts likely to be more fierce than in Beijing where Beijing TV (China's second largest terrestrial) and Beijing Cable TV (China's second largest cable system) are both forwarding strong arguments as to why they should control any merged organisation. This debate is going on even as other factions (including "traitors from the broadcast cause") suggest that both TV stations should be relegated to content management roles.
The most immediate short term result of this policy is that the TV market in Beijing has become very murky ground for distributors, producers, advertisers and station workers alike as rumors abound and leaders seek to align themselves with allies (see BTV-3 Re-launches as Science Education Channel).
There is no doubt that SARFT would love to enact a national solution to this national problem, but the previous devolving of power to the provinces and then to cities leaves it with no opportunity to demand any single solution for places which now face very different market dynamics.
Once again, the conclusion that CMM-I reaches is that the production industry is the only sector of the broadcast infrastructure which can look to the long term future with any certainty (although this is limited in the short term by the uncertainty surrounding broadcasters).
We would also suggest that the production, distribution and advertising industries continue to represent the best opportunities to foreign companies interested in China plays and that any plans to support any one of the proposed new delivery networks may result in permanent disappointment.
As for the frenzied interest of internet players, the current lack of laws and regulations does not seem to be working in favor of anyone in the short term, except of course the outside investors who require China to deliver its fair share of exciting news to keep valuations high.
In this respect only one thing would seem to be certain, the introduction of more retro-active laws (and they will come) will not result in a more open environment for foreign operators - after all, what can be more open than the legal vacuum of China's internet industry today? A few may get through the holes in the near future, but China will undergo probably a series of regulatory campaigns that will restrict and negatively affect this sector's development before WTO gets anyway near. Happy New Year!