bonsai
02-12-2004, 01:13 PM
China to let private investors take media stakes
Reuters, 02.10.04, 3:33 AM ET
By Jonathan Ansfield
BEIJING, Feb 10 (Reuters) - China has cleared private investors to take direct ownership stakes in the media, a groundbreaking policy shift that unshackles the state-owned industry to list stock and lure investment.
Newspapers, broadcasters, publishing houses and other outlets can apply to spin off pilot enterprises that can bring in private investors, according to new guidelines outlined in a government circular seen by Reuters. The enterprises could also apply to list on stock markets, the circular said.
The measures would not end the Communist Party's role as overseer of the media nor remove controls on content, and they would guarantee the state firm a controlling stake in its spun-off entity.
Still, the rules are the first to legally crack the formal state monopoly over the industry, more than ever commercially run but still China's most closely guarded.
"Before, the ownership make-up and main body of investment remained singular," said People's University journalism professor Yu Guoming. "Now they're allowing for some private ownership rights and individual operators."
The news comes a day after officials said China had eased a ban on foreign investment in television programming as part of a series of reforms aimed at revitalising a cash-strapped and bloated media industry.
The new guidelines on direct investment specifically refer to domestic private investors, but at no point do they rule out foreign investment by companies.
"It's not saying absolutely no," said Yu. "There could be some operational schemes to allow for that at a later point."
GUARANTEED RETURN
The guidelines, which took effect as a five-year trial from January 1, could greatly reduce risks for investors who currently rely on back-door agreements for tie-ups with state media.
"It's very significant long-term, for both traditional media and in communications," said Anne-Stevenson Yang, managing director of the U.S. Information Technology Office in Beijing.
"Now, they've at least cut out a space where ownership is clear. Even if you have to sell, you are guaranteed a return."
In the past decade, private investment has seeped through advertising, distribution, title licensing and other roundabout channels into regulatory grey areas of the media.
So the reforms could have big implications for deep-pocketed domestic media and advertising firms such as Shanghai-listed Chengdu B-Ray Media Co Ltd, founder and chief investor of the Chengdu Shangbao, a popular business daily in the southwest.
International publishers operating in China -- such as International Data Group, Hearst Magazines, Hachette Filipacchi and Bertelsmann -- may also benefit down the line if foreign companies can take part in the plan, which allows investors to use their trademarks and other intangible assets to take stakes of up to 40 percent.
The symbolically charged guidelines had been approved by the powerful 24-person Politburo, sources said.
They signalled progressively minded media tsar Li Changchun, backed by new party boss Hu Jintao, was winning out over old-guard propaganda bureau officials, a year after the new leadership assumed power.
"This early, to me, it's unexpected," said a Chinese media consultant familiar with the circular. "They've been working on this in the past year but the central publicity department was a big obstacle. But in the end, the politburo passed it."
The circular was released by the office of the State Council, China's cabinet. A key article reads: "The operational part of Party newspapers, Party publications, radio stations and television stations can be split off and restructured into an enterprise and, on precondition the state's absolute controlling stake is guaranteed, can absorb capital from society."
"Those (enterprises) meeting the conditions can list on stock markets," the carefully worded circular also says.
It was not clear which media would be granted the privileged status first or when.
But sources said officials in Beijing, one of the pilot testing grounds, already had identified a list of prospective applicants, including state television CCTV and Beijing Youth Daily, one of the country's most lucrative newspapers, which last year declared its ambitions to float shares.
Copyright 2004, Reuters News Service
Reuters, 02.10.04, 3:33 AM ET
By Jonathan Ansfield
BEIJING, Feb 10 (Reuters) - China has cleared private investors to take direct ownership stakes in the media, a groundbreaking policy shift that unshackles the state-owned industry to list stock and lure investment.
Newspapers, broadcasters, publishing houses and other outlets can apply to spin off pilot enterprises that can bring in private investors, according to new guidelines outlined in a government circular seen by Reuters. The enterprises could also apply to list on stock markets, the circular said.
The measures would not end the Communist Party's role as overseer of the media nor remove controls on content, and they would guarantee the state firm a controlling stake in its spun-off entity.
Still, the rules are the first to legally crack the formal state monopoly over the industry, more than ever commercially run but still China's most closely guarded.
"Before, the ownership make-up and main body of investment remained singular," said People's University journalism professor Yu Guoming. "Now they're allowing for some private ownership rights and individual operators."
The news comes a day after officials said China had eased a ban on foreign investment in television programming as part of a series of reforms aimed at revitalising a cash-strapped and bloated media industry.
The new guidelines on direct investment specifically refer to domestic private investors, but at no point do they rule out foreign investment by companies.
"It's not saying absolutely no," said Yu. "There could be some operational schemes to allow for that at a later point."
GUARANTEED RETURN
The guidelines, which took effect as a five-year trial from January 1, could greatly reduce risks for investors who currently rely on back-door agreements for tie-ups with state media.
"It's very significant long-term, for both traditional media and in communications," said Anne-Stevenson Yang, managing director of the U.S. Information Technology Office in Beijing.
"Now, they've at least cut out a space where ownership is clear. Even if you have to sell, you are guaranteed a return."
In the past decade, private investment has seeped through advertising, distribution, title licensing and other roundabout channels into regulatory grey areas of the media.
So the reforms could have big implications for deep-pocketed domestic media and advertising firms such as Shanghai-listed Chengdu B-Ray Media Co Ltd, founder and chief investor of the Chengdu Shangbao, a popular business daily in the southwest.
International publishers operating in China -- such as International Data Group, Hearst Magazines, Hachette Filipacchi and Bertelsmann -- may also benefit down the line if foreign companies can take part in the plan, which allows investors to use their trademarks and other intangible assets to take stakes of up to 40 percent.
The symbolically charged guidelines had been approved by the powerful 24-person Politburo, sources said.
They signalled progressively minded media tsar Li Changchun, backed by new party boss Hu Jintao, was winning out over old-guard propaganda bureau officials, a year after the new leadership assumed power.
"This early, to me, it's unexpected," said a Chinese media consultant familiar with the circular. "They've been working on this in the past year but the central publicity department was a big obstacle. But in the end, the politburo passed it."
The circular was released by the office of the State Council, China's cabinet. A key article reads: "The operational part of Party newspapers, Party publications, radio stations and television stations can be split off and restructured into an enterprise and, on precondition the state's absolute controlling stake is guaranteed, can absorb capital from society."
"Those (enterprises) meeting the conditions can list on stock markets," the carefully worded circular also says.
It was not clear which media would be granted the privileged status first or when.
But sources said officials in Beijing, one of the pilot testing grounds, already had identified a list of prospective applicants, including state television CCTV and Beijing Youth Daily, one of the country's most lucrative newspapers, which last year declared its ambitions to float shares.
Copyright 2004, Reuters News Service