Chinese media to accept foreign investment

CHINA: China has scrapped a ban on foreign investors buying into local broadcasting and film production in a surprise move which…

CHINA: China has scrapped a ban on foreign investors buying into local broadcasting and film production in a surprise move which could signal a fundamental change in the communist government's control of the media.

Broadcasting is the most politically sensitive of all media in China and changes in rules on foreign ownership are unlikely to weaken the Communist Party's role as overseer.

But the reforms, described by a top official as a "major liberalisation", are the first signs of freedom in the state's formal monopoly in broadcasting, which it has held in an iron grip since Mao Zedong's revolution in 1949.

"Now we allow foreign companies and domestic companies to set up joint ventures to produce all kinds of TV programmes, except for news programmes," Mr Zhu Hong, an official with the State Administration of Radio, Film and Television was quoted as saying.

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"The government's main role is in supervision, not business details," Mr Zhu said.

The reforms are aimed at revitalising China's media industry, which is badly in need of fresh investment and in the throes of major restructuring.

Mr Zhu said liberalisation did not mean broadcasters would no longer be required to do the bidding of the Chinese Communist Party.

"We must uphold party control of the media and persist in correctly guiding public opinion," he told the Financial Times.

The state would remain the controlling shareholder in any spin-off firms.

Chinese state television, centred around the main broadcaster CCTV, which has 14 channels, can be turgid stuff, heavy on patriotic fare and propaganda.

However, the emerging middle classes spawned by booming economic growth are keen for international quality broadcasting. Expanding the pay TV sector is central to the government's plan to switch completely to digital TV by 2015. The government hopes reforms will introduce foreign production values.

There have been some recent signs of liberalisation in the media sector. Film censors no longer have to approve each stage of a movie's development, restricting themselves to looking at an initial proposal and the final product.

And the authorities also recently moved to raise the foreign investment allowed in cinemas in big cities to 75 per cent from 49 per cent.

It is television, however, that is likely to draw the most interest from both foreign firms and Chinese private companies.

Last year saw some major restructuring in the Chinese media, including the merger of five television and radio stations in the rich southern province of Guangdong, an effort to streamline business and recapture market share from Hong Kong and foreign broadcasters.

A handful of foreign firms are also allowed operate in Guangdong, including US media giant Time Warner's Mandarin-language China Entertainment Television Broadcast Ltd. The Star TV arm of Rupert Murdoch's News Corp and Phoenix Satellite TV, in which News Corp has a 38 per cent stake, also have rights to broadcast channels.