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Chinese ad revs rocket

Sino TV scene gets big boost from small satcast shows with mass appeal

Supergirl conquered China last year. Some 400 million Chinese viewers tuned in to watch a 21-year-old tomboy called Li Yuchun from Sichuan province win “The Mongolian Yogurt Supergirl Contest.”

The program’s success is but one example of the way TV has changed in China. The old days of endless programs showing the achievements of the air force, military marches and farming specials are giving way to western-style reality skeins and spectacular entertainment shows. And new technologies are opening up the market in all kinds of ways.

Super Girl was merely the latest in a wave of mass-entertainment TV shows to hit China’s screens prompted by the strong growth of a newly affluent middle class.

More than 350 million households have a TV now and China has been transformed from a broadcasting dead-end into one of the world’s largest television advertising markets.

Spending on TV ads last year was $31 billion, a jump of 25% from 2004, according to estimates in Nielsen’s survey of more than 600 terrestrial TV stations on the mainland.

Significantly, “Supergirl” was produced not by CCTV, the state-run broadcaster that can claim a billion viewers, but by a small local satellite company, Hunan Satellite TV.

A survey of the major cities showed 40% of city dwellers under 45 watched “Supergirl,” the kind of penetration that keeps western broadcasters awake at night, dreaming of riches from selling whisky, luggage and credit cards via TV ads in China.

Hunan Satellite’s parent, Hunan Broadcasting System, generated about $74 million in advertising revenue last year, putting it top of the satellite channels on the mainland. It’s still well shy of CCTV, but it’s a creditable performance.

CCTV is feeling the competition — the state broadcaster failed to reach its $743 million target in an auction for airtime this year. Although revenues rose by a respectable 10.8%, they were well shy of last year’s 18% increase and the broadcaster blamed increased competition from rival television stations, including Hunan Satellite.

But while CCTV may be feeling the competition, it still enjoys a monopoly, and there has been little change in the kind of programming that CCTV offers.

Added to this, local media fall foul of the state monolith’s monopoly when trying to compete.

The Chinese government is well aware that TV remains the most powerful propaganda tool out there and refuses to bow to foreign pressure to reform the industry more quickly or along the lines seen in other industries. At the same time, Beijing also has ambitions for its TV industry and would like to foster its own media giants. It wants CCTV to have the kind of global impact that CNN, Fox and the BBC have.

For this, Chinese TV needs better content and this is one area where the state is pushing for quick results. To produce the kind of programs that will work with wider audiences, you need the kind of expertise that foreigners have to offer and U.S. media giants are lining up to get in, including Viacom, Time Warner and Rupert Murdoch’s News Corp.

Their efforts seemed to be about to bear fruit in late 2004, when state media watchdog State Administration for Radio, Film and Television said foreigners could take up to 49% of joint ventures and could broadcast foreign made programs.

News Corp was among the most aggressive at trying to expand its Guangdong-based Star TV but the reforms were short-lived. By the summer, SARFT had rescinded all the freedoms it had introduced in November, leaving the foreign investors in limbo and Murdoch’s ambitions foiled.

SARFT said it was worried about the “very strong ideological component to production of broadcast television programs” and added that China must “prevent joint ventures or cooperation from bringing harmful foreign thinking or culture in.”

“They wanted to experiment with production and advertising management to find alternatives, but their speedy moves to work with foreign investors were too fast and have scared media authorities,” media analyst Professor Yu Guoming of Renmin University told the South China Morning Post newspaper.

Meanwhile the switchover to digital TV has been moving at glacial speeds. In 2003, SARFT said it planned to have 30 million digital TV subscribers by the end of 2005, but by the end of 2004, there were only 1.07 million households watching digital TV programs, according to Radio and TV Information magazine.

SARFT, trying to accelerate the pace, decided to launch promotional strategies where would-be viewers get a free set-top digital box if they promised to pay subscription fees for a number of years. They’ve also allowed private capital to lend the cable TV operators the money they need to fund the set-top boxes.

Earlier this year, Shanghai Interactive Television began its large-scale commercial operation of high-definition television, kicking off with one channel featuring 15 hours of programming daily.

In April, China is due to roll out its first commercial terrestrial digital multimedia broadcasting (T-DMB) system, using Korean technology.

Shanghai Media Group and the Shanghai unit of China Telecom have launched China’s first commercial Internet Protocol TV (IPTV) service in two districts of Shanghai called BesTV, which will initially be offered to residents of the Minhang and Pudong districts and then extended to cover the entire city by the middle of 2006.

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