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Monday, 3 December, 2001, 11:39 GMT
China's cable TV shake up
The deal was signed after the Apec summit in Shanghai
The futuristic Oriental Pearl TV tower in Shanghai
China is creating a new media conglomerate with plans to control up to one-third of the country's cable TV market ahead of the arrival of foreign competition, analysts have said.

At present, China's cable TV industry is fragmented between local government and province-level media companies.

Now a firm connected to the State Administration of Radio, Film and Television (SARFT) plans to buy up many of these local operators.

"What is taking place here is the important first step towards the Chinese cable television industry going commercial," said David Wolf of PR firm Burson Marsteller.

Big spender

China Cable Network (CCN) has secured bank credit lines worth up to 40bn yuan ($4.8bn) which will allow it to buy a base of about 30 million subscribers, the firm's vice-chairman Duan Yongji said.

Some analysts see consolidation around CCN as reflecting concerns about China's political control over the media and its industry as it prepares to open its markets to rival foreign firms.

China "is probably going to maintain and even increase its influence over one of the most important means of control it has left," according to Norman Waite of Salomon Smith Barney in Hong Kong.

Broadband vision

The future of China's network of 90 million cable TV subscribers is of interest to media moguls like Rupert Murdoch, but also to telecoms firms - which see as an important platform for the development of broadband internet.

Tom Phillips, public policy director of UK firm Cable & Wireless, called on the Chinese government to grant telecoms firms and cable TV operators "access to each others' networks" at a business forum in London last month attended by senior Chinese officials.

Consolidation of the cable TV industry will create a tougher bargaining environment for companies like AOL Time Warner and News Corp.

'Pricing power'

The creation of a big Chinese player "is going to affect pricing power," Andrew Collier of Bear Sterns in Hong Kong pointed out.

AOL Time Warner recently won the right to broadcast to 7 million homes in the southern province of Guangdong.

Australian media tycoon Rupert Murdoch's News Corp has also been building its position in China's TV market through its 38% ownership of satellite broadcaster Phoenix.

China's TV advertising industry is worth $2.4bn a year.

The expansion of China's media, telecoms and IT industries is the focus of top-level government attention, with the creation this year of a committee under prime minister Zhu Rongji to pull together the sector's reform.

The country's information industries have grown at an annual rate of 25% over the past 10 years, three times the growth rate of gross domestic product.

See also:

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Subscriptions prop up AOL results
25 Sep 01 | Business
AOL cuts targets after attack
01 Oct 01 | Business
China to invest $120bn in telecoms
09 Jan 01 | Asia-Pacific
China lets in BBC TV
23 Feb 01 | Media reports
Pirate Chinese TV defies state
22 Jun 01 | TV and Radio
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09 Aug 01 | Media reports
New rules for Chinese media
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