China's market-oriented media reform is likely to regain momentum this year. One major change may include partially opening state-owned media organizations' business management to private investment.

Some newspaper groups and TV stations have drafted their plans and are waiting for the final approval from the General Administration of Press and Publication (GAPP), an insider close to the media market watchdog has told China Business Weekly.

The theory is not new: separating media business departments--advertising, circulation and printing--from editorial departments, while attracting foreign and private investors.

Media organizations are also likely to reshuffle their personnel systems. Many have already developed plans to try to break journalists' "iron rice bowls," or lifetime employment, the insider revealed.

Ownership and employment issues were hot topics last year, but nothing happened.

China Central Television Station (CCTV) was the latest organization to make news with its plans for reform.

According to a scheme released last week by Cheng Hong, director of CCTV's editor's office, the state-owned station will spin off its production and non-broadcasting businesses, part of which may later be listed overseas.

CCTV posted revenues of more than 8 billion yuan (US$963 million) last year.

CCTV's sports channel is likely to be the first to undergo reform, owing to its popular programs and relatively simple business configurations, senior Chinese officials said.

A new group based on the current sports channel will be set up. It will sell its programs to its parent, CCTV.

Meanwhile, the station will financially support its new subsidiaries in the first three years, before they are expected to start turning a profit.

Investment bankers said listing part of the CCTV business will attract international investors, which are not presently allowed to run operations directly in China's media market.

In addition to the sports channel, CCTV Market Research Co. Ltd., an affiliate of CCTV, also declared recently that the station was preparing to be listed in Hong Kong.

Zhang Hui, an official with CCTV Market Research, said the move would help attract more strategic investors and strengthen the company's market expansion into Hong Kong and Taiwan.

A Bold Plan

CCTV's plan is part of the total media reform landscape in China, which was launched last year but did not live up to expectations.

A senior GAPP official told China Business Weekly that the administration had proposed in early 2003 an aggressive reform plan that would impact heavily on all state-owned media outlets.

The requirement that most party and government publications sever ties with their government agencies was the heart of the plan.

The publications would then be free to operate in the marketplace rather than continuing to serve as cultural units under government departments or social organizations.

The central government plans to end its direct financial support to, and mandatory subscription requirement of, all but three newspapers and two journals.

The government will continue funding People's Daily, the official newspaper of the party's Central Committee, and the committee's journal, Qiushi (Seeking Truth).

It had also been rumored that China was considering allowing foreign and private investors to hold up to 49 percent of the advertising and/or circulation departments of party media organizations.

All media organizations were required to report their initial financial reform plans, including their schemes to seek outside investors in their non-editorial departments, to GAPP before September.

While forcing the media to sink or swim in the market is not new in China, the nationwide reform of business department ownership is totally unexplored, said Zhao Xiaobing, president of Global China (Beijing) Media Consulting Co.

The SARS epidemic brought plans for reform to an unexpected halt last year.

While suspending other work on the agenda of the central government for three months, SARS also caused concern among top Chinese policy-makers about social stability, which they feared might be disrupted by massive media reform.

Momentum Resumes

According to Zhao, CCTV's plan to spin off some of its non-editorial and sports programs can be considered a resumption of last year's reform momentum.

Li Changchun, a standing member of the Political Bureau of the Communist Party of China, its top decision-making body, said on February 6 in Beijing that cultural industries--which commonly include the media sector in China--should liberalize their productivity by restructuring their management systems.

Li is the top Chinese leader responsible for publicity, ideology and culture. It is believed by some experts that Li's speech will fan media and culture sector reform.

Also helping to bolster momentum are the successful and ideologically safe trial cases of media joint ventures such as the partnership between China IT World and the US-based International Data Group, said Zhao.

The JV, which was established in the mid-1990s as an exceptional trial case, has developed into a media group of 14 profitable technical newspapers and journals.

More importantly, the old practice of letting media outlets make profits in the market while tightly reining their ownership and management creates enormous tension within the industry.

Zhao Yuezhi, an assistant professor of journalism at Vancouver-based Simon Fraser University, pointed out that the contradiction between profit-oriented market reform and media's stagnant personnel system is leading to low efficiency and, sometimes, the corruption of journalists.

The diversification of business department ownership would help attract outside investment in an institutionalized way, Zhao Xiaobing said.

But he added that although reform would come, it could not be carried out overnight.

"The situation is very complicated, and the right (reform) strategy will be on a case-by-case basis," Zhao said.

(CCTV.com February 18, 2004)