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220 919 Åë°èÄ«¿îÅÍ º¸±â   ȸ¿ø °¡ÀÔ È¸¿ø ·Î±×ÀÎ °ü¸®ÀÚ Á¢¼Ó --+
Name   ÆÛ¿À¹Ì
Subject   Squeezing Profits From Propaganda
THE MEDIA

CHINA ;
Squeezing Profits From Propaganda

A long-expected reform of the media has kicked off with newspapers that blackmail subscribers as the first targets. The party, however, is determined to keep editorial control even as it opens the sector to market forces and investment


--------------------------------------------------------------------------------

By Susan V. Lawrence/BEIJING

Issue cover-dated July  10, 2003


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THE ANNOUNCEMENT on the June 20 evening news was brief. Even on the front pages of official newspapers the next day, it was only a sentence. The Communist Party's Publicity Department (the former Propaganda Department), the State Press and Publications Administration, and the Post Office were barring all newspapers and periodicals, except scientific publications, from taking any subscriptions for 2004 until the end of September. It said the move was part of an effort to stop publications from engaging in coercion to secure subscriptions.

  REFORMS BUT NOT A REVOLUTION YET
 
• The state seeks to stem losses from the print media without diluting its propaganda message
• So it plans to stop forced subscriptions and cut links between newspapers and official bodies
• It may even allow foreign investment, while retaining its editorial control

The significance of this move could easily be missed. Scholars and media executives say, however, that it is the first concrete step in a long-anticipated shake-up of the media in China. The immediate target: thousands of small party- and government department-affiliated publications that, by flaunting their official links, force people to buy subscriptions and take out pricey advertisements. A typical publication doing so is a newspaper run by the local tax, commercial or police bureau. Subscribe or advertise and, by implication at least, you are protected against a tax audit, losing your business licence, or worse.

The party's next step, scholars and media executives say, is a plan, which could be approved by the Publicity Department this month, requiring most party and government publications to cut their links with their official parents before subscriptions can resume. They will then be left to swim, or more likely sink, in the marketplace. This mirrors earlier campaigns to force official departments and the military to give up running businesses, on the grounds that such enterprises consumed official resources and fed corruption. Their official backing also gave them an unfair edge against competitors. The crucial difference this time is that the party aims to retain its control over the publications' content even after they are forced into the market. Exactly how this continued editorial hold will be achieved is unclear.

Equally surprisingly, some scholars say the official reform plan, which was originally drawn up by the State Press and Publications Administration, also provides for minority foreign and domestic private investment--perhaps up to a 40% stake--in previously closed parts of the sensitive media industry.

"This kind of regulation will come out very soon," predicts Yu Guoming, a high-profile media scholar who saw an early draft of the plan and believes it will survive vetting by the Publicity Department largely intact. Referring to the investment provisions, Yu, the vice-dean of the Renmin University School of Journalism in Beijing, says that for Chinese media groups to succeed as companies, as the government wants, "they have to have capital from all sorts of sources. Just relying on the state channel [of investment] isn't enough, I'm afraid."

Even as they contemplate tapping new, even foreign, capital, the authorities have made it clear they have no intention of allowing nonstate investors into the editorial operations of major media companies. The corporate model being promoted by China's propaganda tsars is one in which media companies spin off their nonsensitive operations into subsidiaries that could be opened to outside investment. Editorial control, meanwhile, is retained by their corporate parents, which are meant to stay 100% state-controlled.

But some observers say allowing nonstate investment in any part of the operations of news organizations will inevitably have an impact on content. Du Gangjian, a professor at China's elite training academy for state officials, the National School of Administration, suggests that distributors, because of their proximity to advertisers and subscribers, can easily slide into a role in which they would begin influencing editorial decisions--by noting, for example, that certain kinds of content are good for advertising, while others aren't.

Renmin University's Yu also sees a more market-oriented media as having real implications for content. In China, he explains, only the market has the power to "bargain with the government on the question of control of the media."

The reforms are part of a campaign by a new generation of party managers to improve the economic performance of the media while retaining control over content, experts say. Officials speak openly of their hunger for China to have media conglomerates capable of taking on the world's media giants. They are impatient with a media landscape cluttered with publications that one senior official described on an October television show as "low level" and "redundant." China currently has 70 media groups, 38 of them newspaper groups, and none remotely able to compete with the global behemoths that China wants to emulate, such as AOL Time Warner and Germany's Bertelsmann. Indeed, the head of China's State Press and Publications Administration, Shi Zongyuan, noted in a book last year that sales revenue for Bertelsmann in the 1999-2000 financial year exceeded sales revenue for the entire Chinese press and publishing industry the year before.

The scale of China's ambitions helps to explain longstanding foreign investor interest in its media industry. For ideological reasons, Chinese officials have been wary of allowing in foreign capital. But Yu says that they are starting to recognize the need for infusions of foreign capital and management know-how to power a rapid expansion of media groups so that the country can hold its own internationally. The editor of one mid-sized official newspaper says he, for one, has no ideological objections to foreign investment. It could bankroll an increase in circulation, he says, and put the paper on a firmer financial footing.

To be sure, the State Press and Publications Administration blueprint on reform now being considered by the Publicity Department wasn't widely disseminated. Senior editors at three leading publications say they haven't been told about its foreign investment provisions, and are sceptical the party would allow that in a sector it is intent on continuing to control.

Media groups, of course, could also raise money by listing on domestic stock markets. Propaganda officials in the past have blown hot and cold on that idea. An article in March in the Beijing-based Business Post reported that six newspaper groups had prepared proposals for listing on China's domestic A-share market, but most for now had put the plans aside.

Until recently, foreign investment in China's media was banned. Foreign companies had to make do with cooperative agreements under which Chinese partners used their titles and content, usually in return for a portion of advertising revenue. Newsstands are full of foreign titles from such arrangements, including Chinese-language editions of Madame Figaro, Marie Claire, Cosmopolitan and National Geographic Traveler.

In December, China for the first time allowed foreign equity investment in a part of the print media--retail newspaper, magazine, and book distribution. The State Press and Publications Administration began accepting applications for such investments on May 1. The official China Daily newspaper reported in April that more than 60 overseas companies had opened offices in China with the aim of applying. According to its commitments to the World Trade Organization, China is scheduled to start allowing foreign capital into the wholesale distribution business from December 2004. The deeper significance of the changes in the investment rules now being mooted is that they could also permit foreign investment in other aspects of print-media operations.

The picture for domestic private investment in the media is more complicated. Although regulations officially restrict investment to state media companies, a number of state, private, and even listed companies hold stakes in Chinese publications.

If broader foreign investment is allowed, a key precondition for official approval will almost certainly be the Chinese firm's successful separation of its ideologically sensitive editorial activities--which will remain off-limits to foreign or domestic private investment--from the rest of its business.

A Publicity Department vice-minister, Li Congjun, spoke about the need for such a division in October in a TV discussion programme, a rare public forum where propaganda officials talked about media reform. Chinese media companies, Li said, needed to be managed as companies and to be mindful of their "ideological characteristics" and "obligations to guide correct opinion." Indeed, State Administration of Radio Film and Television Minister Xu Guangchun listed on the programme four things that would never change: the media's role as the party's "throat and tongue," party management of the media and media personnel, and the media's role in "guiding correct opinion."

To manage the tension between party-controlled content and the market, Li said that media companies should "separate propaganda business from operations." He gave the Shandong Dazhong Newspaper Group as an example. From 2001, it created seven subsidiaries, each handling a different aspect of the business, such as advertising, distribution and printing. It kept editorial activities in the parent company, and created an investment-management company to control its assets. Foreign investment would presumably be allowed only in subsidiary companies.

The aim of the party's move to end coerced subscriptions and force official papers to operate according to market rules is similarly to improve the financial fundamentals of the media industry. One major goal is to cut the numbers of publications. China has more than 2,000 newspapers and nearly 9,000 periodicals. The National School of Administration's Du estimates that half the newspapers are in financial trouble. They drain funds from the party and government, and from victims of coerced subscriptions and advertising. Du estimates the average village government spends more than 1,000 renminbi ($120) a year on forced subscriptions--up to three years' income for a farmer in some parts of China.

To relieve burdens at all levels, Renmin University's Yu and others say the party wants to retain just one affiliated newspaper group per province and city. The Beijing-backed Hong Kong newspaper Ta Kung Pao said on June 24 that "in principle" all district- and county-level party and government papers will be eliminated.

It's unclear exactly how party and government departments will divest themselves of publications. Some scholars suggest that the government may have to drop its requirement that all publications have official sponsors. This could open the way for publications to be openly run by nonstate players. Du sees a more "pluralistic" market as inevitable. "The ruling party cannot prevent the emergence of non-'throat-and-tongue' media," he says.
 
 

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DATE: 2003.07.07 - 16:35

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