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Broadcast Industry Opening Up Further

The Chinese Government's move to allow Chinese companies to enter joint broadcasting production arrangements with foreign firms is not only good news to international investors, but to the country's media industry development, executives and analysts say.

The State Administration of Radio, Film and TV and the Ministry of Commerce released a temporary regulation on Wednesday, saying that foreign broadcasters can form joint or cooperative companies with Chinese partners in China starting next Sunday.

Before, only 30 foreign broadcasters had been allowed to provide programs in the Pearl River Delta in south China and some luxurious hotels and residential areas, or could sell programs to local TV channels. The new regulation will offer an opportunity for them to produce entertainment, cartoons, and other programs except for current affairs-related content.

The joint ventures will be regarded as domestic production companies and have the same rights.

"This is a huge step in the reform of China's TV and radio industry," said Li Yifei, president of Viacom China.

In March, the US media giant Viacom said it would form the first joint venture in cartoon program production with the Shanghai Media Group.

Li said the preparation of the joint venture is well under way and Viacom will consider expanding the model to other content. He said he has been in discussions with several other TV channels in China.

Yu Guoming, a media professor at Renmin University of China and a senior industry analyst, said the opening up will bring some pressure to purely domestic production companies, and will be helpful in introducing competition into the somewhat monopolized media industry and lead to faster development.

"The weakest point for Chinese producers is not lack of capital, but building a healthy industrial base," said Yu.

Li with Viacom also believes that the introduction of foreign capital into broadcasting production companies will bring copy rights, production expertise, technologies and management know-how to Chinese firms.

She said another benefit for the country's TV industry will be to bring better content to TV cable-based broadband network.

Chinese TV and telecom network operators are competing to attract subscribers to their own broadband networks and the former is in a disadvantaged position, but with enriched content, it might change the scenario.

Despite opening the gate to foreign participants, the regulation also imposes strict restrictions on foreign investors.

The regulation says that among stake holders of joint ventures, there must be one single Chinese party owning at least a 51 percent stake.

While Chinese companies are allowed to invest with fixed and intangible assets, foreign investors must pay in cash.

(China Daily November 19, 2004)

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