China Keeping a Firm Grip on Its Media

BEIJING —  The Communist Party’s rule over China, as former Chairman Mao Tse-tung famously said, depends on keeping a tight grip on “two barrels,” the gun barrel and the pen barrel.

The party is trying to commercialize its media--or update its pen, as it were--without losing its grip politically. A recent wave of media mergers and stock listings has not put state media machines out of business, but instead made them stronger. The results are an example of how the Communist Party is co-opting the capitalists.

“Investors in media are unwilling to assume political risks,” said Yu Guoming, head of the People’s University’s Public Opinion Research Center. “So as the market becomes increasingly commercialized, it will take a turn toward conservatism.”

The political risks of running media are plentiful. In recent months, authorities have closed down or reorganized nearly a dozen newspapers and warned others not to report sensitive news, from local corruption scandals to news of the Falun Gong spiritual group.

In May, authorities removed two top editors at Southern Weekend, formerly China’s boldest and most popular weekly, dropping its circulation of 1.3 million by almost half, sources close to the paper say.

But the closure of papers also is part of an overall consolidation of the media that’s been going on for at least two years. The popular business magazine Caijing has reported that the consolidation has affected roughly a third of the industry, bringing down the number of newspapers from 2,200 to roughly 1,800.

Though ostensibly a move to save money by eliminating unprofitable government and party newspapers left over from China’s era of the planned economy, the consolidation also has targeted many smaller tabloids and papers that have operated independently and irked censors.

The remaining party papers are not competitive and have seen their circulations drop. Read mostly by officials and relying on state-subsidized office subscriptions, these papers are required to print soporific official pronouncements, state media and international news from the official New China News Agency.

Meanwhile, advertising revenues have shifted to the mass-appeal papers, which target urban consumers who pay for newspapers with their own money. These papers avoid propaganda in favor of soft news, consumer features and politically safe international news translated (usually in violation of copyright) from the Internet.

“Capital inflows will push China’s media further toward a mass-appeal model, based on public opinion and the needs of average citizens,” Yu said. The consolidation also has led to the formation of several large media conglomerates, often shotgun weddings of tabloids with money-losing party papers, arranged by the government to keep the party papers afloat financially.

The landmark newspaper People’s Daily has more than a dozen publications under its aegis, including the popular Automotive News, which it acquired in a recent round of consolidation, and the new Beijing Times, launched in cooperation with a company listed on the Shanghai stock market.

As many as 40 Chinese media companies have raised private capital by obtaining listings on the country’s two stock markets, despite a long-standing ban on ownership of media by private and foreign companies and individuals, state media have reported.

For the moment, authorities will not allow private investors to appoint managers or decide newspapers’ editorial directions. A private software company recently lost its entire investment in two Sichuan-based newspapers when a dispute over appointing management prompted local press authorities to revoke their publishing licenses, state media have reported.

According to industry insiders, authorities are preparing to issue regulations for media stock market listings, specifying what media sectors will be open to private and foreign investors and what percentage of shares they can hold.

Foreign media firms have made quiet inroads into the China market in recent years despite formal bans on their involvement.

In broadcasting, Phoenix Television is the model that foreign investors are emulating. A joint venture between Rupert Murdoch’s Hong Kong-based Star TV network and a consortium of Chinese investors, Phoenix is watched by an estimated 45 million households in China and has won the government’s tacit approval. Content is left to the Chinese investors and Phoenix usually avoids political news that might anger Beijing.

In print, Boston-based International Data Group has carved out a niche for itself, investing in more than a dozen Chinese technology-oriented publications, including the successful Chinese edition of PC World. Other companies have made similar investments in fashion and sports publications.

The Chinese government already is profiting from the media market. In 1998, tax revenues from media surpassed those from tobacco to enter the government’s top four tax sources, according to Caijing magazine.

The reforms have helped to streamline the bureaucracy, raise capital more effectively in an era of rising costs and fierce market competition and package and deliver the government’s views more attractively and effectively.

But the government is not the only winner in the process. Market forces, not ideology, are controlling a larger part of the media. And the view of the media as a nonprofit state propaganda tool is slowly giving way to the idea of a for-profit industry.

Investors and journalists, “dancing skillfully between the party line and the bottom line,” as Simon Frazer University media scholar Zhao Yuezhi put it, also have reaped gains.

Yu said the annual rate of return for Chinese newspapers between 1988 and 1998 ranged from 17% to 50%.

Despite consolidation, Chinese consumers have benefited from the increase in information as the number of newspapers has gone from 186 in 1978 to a peak of 2,200 in 1996. More investigative reporting has increased citizens’ consciousness of their legal rights.

Though China has no plans to surrender its control over political news to private or foreign investors when China joins the World Trade Organization, analysts say the trend underlying the capitalization and consolidation is that media already are positioning themselves for the day when the Communist Party loses that monopoly.