Many of the world's biggest cable TV networks, including HBO and Nickelodeon, are taking advantage of newly relaxed laws governing media investment to get involved in setting up channels in China.
Nearly all the new ventures are tie-ups where a foreign player supplies program-developing expertise or actual programs for use on a channel developed for digital TV by a Chinese media company.
The partnerships are making the most of rules that go into effect next week allowing foreign firms to own up to 49 percent of joint ventures engaged in program production.
The foreign networks have effectively found a back door into China's potentially lucrative TV market by exploiting Beijing's desire to rapidly develop its digital TV infrastructure, observers say.
Until now, only four foreign firms have been allowed to operate TV channels in China's tightly controlled media market, and all four were limited to the affluent southern province of Guangdong for widespread broadcasts.
"As far as I know, just about everybody is talking to SMG or CCTV as well as some others like that," said Ward Platt, Asia managing director for the National Geographic Channel, which has formed a China-targeted channel, World Geographic, with CCTV.
"It's not really unique that we're doing it," he said. "We moved a little faster than some people."
Viacom's Nickelodeon got the show rolling as early as March, when it announced a deal to supply 90 minutes of daily programming for a children's channel being set up by CCTV.
Since then, Time Warner's HBO and National Geographic have entered into similar deals. Sony, owner of the Animax TV channel, is also in talks for a new cartoon channel being developed by Hunan Broadcasting Group, China's fourth biggest media firm.
Discovery Communications has an existing relationship with Shanghai Media Group and "a long-standing goal" of providing its product to China viewers on a full-time basis, a spokesperson said.
"We continue to work with a variety of parties toward achieving this goal," she said in a written statement, declining to be more specific.
ESPN Star Sports, a joint venture between the Walt Disney's ESPN and News Corp's Star Group, is also believed to be in discussions for a similar deal.
All the players are seeking entry or expansion in a media market that is still highly fragmented but has the potential to become one of the world's largest. Print and TV ad revenue totaled an estimated $18.7 billion last year, and is expected to grow at double-digit rates for the foreseeable future.
China now boasts about 100 million cable TV subscribers, the vast majority with analog service. But with the recent rollout of newer distribution systems, Beijing has set a target of 30 million digital users within the next few years.
To do that, observers say, it will need compelling programming of the kind foreign media firms produce.
Many of the new channels are still works in progress, but the recently launched World Geographic offers a glimpse into what is likely to emerge.
They willingly gave up the better known National Geographic moniker as required by Chinese wary of letting foreign brands get wide recognition so early in the game, Platt said.
"About 60 to 70 percent of the channel is National Geographic content," he said. "We're in talks with them to do a formal long-term partnership. As to whether it's a partnership or some other mechanism has yet to be determined."
(CRI.com/Reuters November 25, 2004)
