Authorities Tell State Broadcasters to Get With the Times

China is encouraging traditional cable TV broadcasters to get with the times, as they lose market share to more nimble online rivals.

The National Radio and Television Administration (NRTA) on Thursday released a document (link in Chinese) encouraging radio and TV broadcasters to take controlling shares or at least invest in internet and tech companies to develop new media projects.

The regulator said that traditional broadcasters should “increase their awareness of market competition and enhance their competency” to bring into being a new kind of broadcasting enterprise with clear branding and strong capabilities by ways of joint investment, mergers and reorganization, or financing from the capital market.

The document comes two months after China debuted the Unified National Network (UNN), the country’s first national cable TV provider and newest wireless carrier, as part of a decade-long, state-driven consolidation of the country’s fragmented cable TV industry.

A unit of e-commerce giant Alibaba Group Holding Ltd. has invested 10 billion yuan in UNN, and the country’s national electric grid operator has also poured 10 billion yuan into the new company.

This consolidation drive has become increasingly urgent as TV networks face challenges from online TV platforms like iQiyi and Youku, which are increasingly eating their lunch in terms of advertising revenue.

Last year, advertising revenue won through traditional radio and TV broadcasts declined by 9.1% year-on-year, while the figure for online platforms increased by 68.5% year-on-year to 82.9 billion yuan ($12.6 billion), according to NRTA data (link in Chinese).

Meanwhile, viewer habits are changing. In the first three months of this year, cable TV subscriptions slipped 1.48% quarter-on-quarter to 206 million, and cable TVs’ share of the nation’s overall TV content consumption market fell to 45.6%, compared to 64% at the end of 2016, according to Guideline Research and China Broadcasting Network Corp. Ltd.

The coronavirus outbreak also dealt a blow to a sector already vulnerable to disruption. The profits of nearly a dozen mainland-listed cable networks crashed in the first half, as the government pushed TV providers to offer free content as a way of encouraging people to stay at home amid the virus outbreak.

The NRTA urged in the Thursday document that traditional broadcasters should prioritize internet aggregation and mobile app services. It also said that broadcasters should promote 5G networks and integration with UNN.

Anniek Bao contributed to this report.

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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