China halts foreign investment in TV firms

Just think for a minute if we did this in the US, man the law sues would be bouncing off the walls.


China halts foreign investment in TV firms

By Mure Dickie in Beijing

Published: December 7 2006 23:56 | Last updated: December 7 2006 23:56

China has closed the door on new foreign investment in television and film production companies, telling international media companies to work instead through individual projects with local partners.

Zhu Hong of the State Administration of Radio, Film and Television (Sarft), made clear in an interview with the Financial Times, that Beijing had put aside landmark rules issued in 2004 allowing foreign investors to take minority stakes in local production units.

“Our policy is to temporarily not approve the creation of new joint companies,” Mr Zhu said.

“People can jointly invest in filming individual movies and individual television dramas, but we are not going to approve the creation of programme production companies.”

The decision to restrict foreign companies’ activities to one-off co-operation projects highlights Beijing’s reluctance to cede influence over the media sector.

While Sarft has previously refrained from ruling out new joint ventures, signs of a government change of heart on equity involvement became clear last year when Sarft limited most foreign companies to just one such venture and banned any considered “unfriendly” to China.

Since then, the top propaganda officials of the ruling Communist party have ordered tighter curbs on foreign involvement in the media to protect “national cultural security”. Only a handful of production *ventures were subsequently approved and their impact has been limited.

Some Chinese leaders are concerned that opening the television and film production sector could risk allowing international conglomerates to establish a dominant position in the local media market. By forcing international media companies to work through individual projects, Beijing hopes to give local companies the chance to absorb the management and technology they need to become globally competitive while keeping control firmly in Chinese hands.

Some media officials say local privately owned production companies – which have been playing an increasingly important role in recent years – feel there is plenty of investment capital available locally and thus no need to open the sector to foreign rivals.

Mr Zhu insisted China was continuing to open the film and television sector, highlighting the large number of films, dramas and cartoons imported by local broadcasters each year.

However, imports offer limited comfort to international media groups such as News Corp, Time Warner and Viacom that have laboured for years to win greater access to one of the world’s most strategic media markets.

Mr Zhu said that Sarft was not considering any widening of “landing rights” for foreign broadcasters, such as the News Corp unit Star TV.

Such landing rights are currently limited to upscale and three-star hotels, and the single southern province of Guangdong.

Sarft has recently been focusing much of its reform efforts on Chinese state broadcasters, such as China Central Television (CCTV), pushing them to raise efficiency and boost creativity by spinning off production and other non-broadcasting units.

However, it is determined that the broadcasting and newsgathering activities of these television stations remain firmly in local, state-owned hands.

www.worldtribune.com/worldtribune/nl53.html