Bottom line: The closure of former Time Warner Chinese TV station CETV reflects the broader decline of traditional broadcasting worldwide, and also heavy restrictions on foreigners for operating video delivery channels in China.
CETV pulled from China airwaves
As Time Warner (NYSE: TWX) pursues a blockbuster merger deal with AT&T (NYSE: T) in the US, a much quieter story in China reflects the end of a frustrating chapter for the entertainment giant and many of its western peers that hoped to make a fortune in the world’s most populous market. That story has the relatively obscure Tom Group (HKEx: 2383) announcing the shuttering of its China Entertainment Television station, also known as CETV. Read Full Post…
There are at least three ways Netflix (Nasdaq: NFLX) can win in China. And they are realistic options that have worked for others.
But first, a few points about the situation in Chinese online streaming.
Point 1: The China entertainment market is rocketing upwards, and it will soon be the largest in the world. This huge opportunity is fueling a major fight between China’s cash-rich Internet and media giants. This hyper-competition is also creating a window of opportunity for Netflix because it has valuable things to offer to these competitors as they slug it out.
Point 2: Online media in China is very political and likely no foreign company will have control of a license or broadcast rights. So Netflix needs to be realistic about what is possible.
Point 3: The other big issue is the strong local competition. If Netflix wants to win in online streaming in China, they need to be prepared to fight for a long time.
Bottom line: Beijing needs to accelerate reform of traditional media in the face of rising challenges from players like Alibaba and Baidu, or risk seeing many of these state-run companies fall into irrelevance.
Alibaba challenges traditional media to speed up reform
A wave of mega-mergers sweeping through China’s Internet over the last 2 years saw its biggest deal to date announced late last week, when e-commerce leader Alibaba (NYSE: BABA) offered $4.6 billion for the more than 80 percent of leading online video site Youku Tudou (NYSE: YOKU) it doesn’t already own. The move marked the latest challenge to China’s traditional media industry, which has been monopolized for years by state-run broadcasters and printed publications.
If this latest mega-deal gets completed, a new Youku Tudou with access to Alibaba’s cash and other vast resources will almost certainly accelerate its challenge to traditional media by aggressively rolling out compelling new on-demand products and premium content. Read Full Post…
Bottom line: SMG’s Whaley Tech division has become the focus of its drive into the new media realm, following Li Ruigang’s departure from his post as group chairman to focus on the unit’s development.
SMG chief tries hand at smart TV
I don’t generally hold out much hope for traditional Chinese broadcasters for making the transition to new media, since most are bureaucratic, state-run outfits staffed by an older generation that doesn’t really understand the emerging industry landscape. But 2 companies that have the potential make the transition are Shanghai Media Group (SMG) and Hunan Satellite TV, which are both making big drives into digital products delivered in on-demand formats over the Internet.
Of the pair, my favorite is Hunan Satellite, since the company has a strong track record of innovation that has helped it to build a national audience despite its location in the relatively backward interior Hunan province. But SMG’s longtime chief Li Ruigang is also trying to show he can take his company into the new media era, with word that he’s formally quit as chairman of his group to focus on development of its new media businesses. Read Full Post…
Bottom line: Sputtering demand for luxury goods and cars is likely to hamstring Phoenix Satellite TV’s earnings for at least the next year, as the company increasingly loses ground to new media rivals.
Sliding luxury demand undermines Phoenix
The recent slowdown in China’s luxury goods market is claiming one of its first victims in the media realm, with Phoenix Satellite TV (HKEx: 2008) warning that a sudden chill in luxury ad sales has wiped out its profits in the first half of the year. The news certainly doesn’t bode well for traditional media companies, which are a favored place for luxury goods makers to advertise. Car makers are another major source of ad revenue for these older media companies, and rapidly slowing sales in that sector also means that names like Phoenix and even some new media high-flyers like Baidu (Nasdaq: BIDU) and Sina (Nasdaq: SINA) could be looking at a difficult period ahead. Read Full Post…
Bottom line: TVB’s choice of a Shanghai-based traditional broadcaster as its mainland partner looks like a bad selection to ensure its future, as such traditional media rapidly get overtaken by more nimble Internet-based players.
TVB places bets on Shanghai Gang
Hong Kong has been buzzing this past week over the latest mainland encroachment on its media sector, which is seeing leading broadcaster TVB (HKEx: 511) sell a stake in itself to a Chinese investor. But few have gone past the headlines to see what’s really behind this deal, and whether it can help to ensure the longer term survival of a company that has long dominated Hong Kong’s broadcasting scene. In a nutshell, TVB is placing its bets on a group of Chinese media high-flyers that I like to call the “Shanghai Gang”, because they are rooted in China’s largest media market and have strong ties to the city’s monopoly broadcaster, Shanghai Media Group (SMG). Read Full Post…
Quite a lot has happened in the last 2 decades for AOL (NYSE: AOL), which went from online start-up, to Internet superstar, to global media giant and back to its current form of humble Internet player during that time. At the pinnacle of its success following its merger with Time Warner (NYSE: TWX), the company made a splash into China more than a decade ago through a highly-hyped Internet joint venture with PC giant Lenovo (HKEx: 992). That venture ultimately failed miserably, but now AOL is finally making a second move into the market through a new partnership with a local media player. Read Full Post…
Rupert Murdoch’s News Corp (Nasdaq: NWSA) ended its stormy love affair with Chinese television late last week, when it sold its last remaining major asset to a private equity firm. The company’s gradual withdrawal over the last 3 years underscores the difficulty that many western media firms still face in China’s TV market despite rapid changes over the last year. Domestic and foreign companies alike need space to act more commercially in a streamlined regulatory environment for China to develop a truly world-class industry that can someday challenge the dominance of Hollywood. Read Full Post…
Many of the usual global CEOs are in China this week for the annual Fortune Global Forum in the interior city of Chengdu, but what’s really interesting this year is the presence of many big Hollywood executives. I use the word “interesting” instead of “surprising”, because the presence of top executives from names like DreamWorks Animation (Nasdaq: DWA) and Time Warner (NYSE: TWX) isn’t really that unexpected considering the sudden love affair between China and Hollywood that’s developed rather rapidly over the last year and a half. Even the music industry is finally starting to believe in the huge potential of the China market, with the head of the US-based Recording Academy, organizer of the Grammy Awards, also attending the event in Chengdu. Read Full Post…
The headlines have been buzzing this week with word that tarnished former Internet titan Yahoo (Nasdaq: YHOO) will shutter its Chinese Internet music service, with many pointing out the move reflects a broader reshuffling in the online music space. But from my perspective, the much more intriguing question is whether this move represents the first small step before Yahoo withdraws from the market completely — a step that seems increasingly likely as it focuses on turning around its core US search business.
Five or 6 years can be an eternity in cyberspace, which is clearly the lesson that former Internet high-flyer Tom Group (HKEx: 2383) is learning as it moves one step closer to irrelevance with word that its long-time partnership with Skype is on the verge of breaking up. That divorce would represent the end of one of its last remaining tie-ups with major western media firms that helped propel the company to fame nearly a decade ago.
The headlines have been buzzing this week with word that tarnished former Internet titan Yahoo (Nasdaq: YHOO) will shutter its Chinese Internet music service, with many pointing out the move reflects a broader reshuffling in the online music space. But from my perspective, the much more intriguing question is whether this move represents the first small step before Yahoo withdraws from the market completely — a step that seems increasingly likely as it focuses on turning around its core US search business.
Five or 6 years can be an eternity in cyberspace, which is clearly the lesson that former Internet high-flyer Tom Group (HKEx: 2383) is learning as it moves one step closer to irrelevance with word that its long-time partnership with Skype is on the verge of breaking up. That divorce would represent the end of one of its last remaining tie-ups with major western media firms that helped propel the company to fame nearly a decade ago.
