Bottom line: Closure of Shanghai’s Oriental Morning Post was inevitable due to the decline of traditional media, and its online effort ThePaper stands a better than 50 percent chance of longer-term survival due to relatively good execution.
On this next-to-last work day before the New Year, I’m taking a break from the usual high-tech buzz to zoom in on a subject that’s even closer to my heart — and wallet. That subject is the rapid transformation sweeping through the media both in China and the west, creating huge uncertainties. That wave is in the headlines today with announcement of the closure of one of Shanghai’s largest and most respected newspapers.
Here I have to admit my own bias, since as a Shanghai resident until recently I was at one point quite fond of the Oriental Morning Post, which has just announced it will cease publication on January 1. The news is hardly shocking, as it was first rumored in the middle of the year and a couple of my sources informally confirmed it for me since then.
Still, the official announcement, coming just days before the actual end, does seem to have a certain finality. But the announcement doesn’t end there, and the newspaper’s parent is putting a decidedly forward spin on the move. Alongside the closure, the parent is revealing it has just won 610 million yuan ($87 million) to continue its recent major push into new media with ThePaper, known as Pengpai in Chinese. (company announcement)
There are quite a few threads to this story, and of course it wouldn’t be complete if I didn’t close with my own personal assessment on how things are likely to pan out. Media watchers, and anyone else who follows the news, will know this particular trend has been happening for more than a decade in the west, as print media get slowly squeezed by more nimble online sources that can provide news more quickly and in a wide variety of formats.
Traditional Chinese media were somewhat shielded from the trend for about a decade longer than in the west, largely because China was around 10 years behind in terms of Internet development. What’s been surprising is the explosion of online media over these last 5 years here in China, and the huge and sudden impact it’s had on traditional media.
I’m not familiar enough with the national Chinese landscape to comment too broadly, but to the best of my knowledge the Oriental Morning Post looks like China’s biggest casualty to date among traditional media. In this case the move was driven by a number of factors besides pure commercial pressures. Chief among those was a government directive to all Shanghai media a few years ago to aggressively develop new media, sending an indirect message to de-emphasize traditional publications.
Oriental Morning Post’s management has pursued that directive with a vengeance, pouring huge resources into ThePaper by basically transferring them from the older newspaper. The result has been relatively impressive, with ThePaper now commanding far more respect and readership on a national scale than the older, more regional Oriental Morning Post ever had.
Encouraged by that fact, the newspaper has won the backing of the Shanghai city government, which has convinced 6 major local investors to pump the 610 million into ThePaper’s parent. The 6 will get 17.8 percent of ThePaper’s parent for their investment, giving this relatively dynamic new media a market value of about 3.4 billion yuan, or nearly $500 million.
That’s not a huge amount, but still certainly not bad for a media that was rapidly shriveling away until recently due to pressure from new media. Of course we should note that the value is probably slightly inflated, since all the investors are state-owned and were probably acting at least partly based on government pressure. What’s more, ThePaper also still enjoys the advantageous position of officially being allowed to report news, unlike its privately owned peers that are prohibited by law from doing their own reporting.
I’ve blown hot and cold over these last few years in my opinions about these new media projects of traditional state-owned outlets. I do think that most are poorly conceived, and are simply taking news that at one time would have gone into a print publication and putting it online. ThePaper still fits that description to some extent, as it’s largely a one-way news site with some video thrown in.
I would expect the government to give ThePaper and other state-run new media experiments another 5 or 6 years of protected status to see if they can succeed. After that it does seem inevitable that many of these state-backed publications will be forced to close for inability to compete. But that said, ThePaper does seem like one of the better executed experiments that’s taking advantage of its many strengths, and I would probably give it a better than 50 percent chance of surviving over the next decade.