As competition heats up for advertising revenue in China's television industry, foreign companies are scrambling to get a piece of the action. One of the more interesting new operators is Rainbow TV, a Sino-Swiss joint venture. Rainbow TV's parent is Opus Productions, a joint venture between a Chinese company and Swiss media giant Publicitas. Opus rode the wave of the booming magazine market in the late 1990s with Madame Figaro and Pregnancy and Parenting. This convinced executives that the company could repeat its success with television.
Opus is negotiating a consulting deal with Ningxia Satellite TV that will allow Rainbow TV to run everything from programming and production to marketing and advertising. Ningxia, located in China's less developed western region, will continue to hold its license and will receive a cut of profits under the arrangement.
Last year, the ailing provincial satellite company was near the bottom of a list of 30 satellite stations in China, with revenues of just US$2m (Beijing Satellite TV heads the list with US$40m). Winnie Gao, an executive with Opus Productions, says this is less than the annual revenue for one of Opus's local magazines.
Gao says, however, that Ningxia Satellite has great potential. Thanks to its status as an inland province marked for development, the station is one of a handful of provincial satellite stations that are downloaded in both Beijing and Shanghai, home to China's wealthiest consumers. Only five satellite companies have been able to get into the well protected Shanghai market.
Gao says the company is positioning itself as "international quality content, but with a Chinese look." Rainbow is buying programming from a number of sources in Europe and the US, but it will seek to provide a local angle. One of the programmes it is hoping to air is Forbes on Fox, a business weekly programme shown on Fox News Channel in the US. The Chinese version will have local commentators on hand to try to make the content relevant to Chinese viewers. Sony Movies is also talking with Rainbow about movie rights on the satellite channel.
The company will also seek to pull in viewers with several 'reality television' programmes, which are now popular in China. It is in the bidding for the China rights to produce a local version of the successful Australian programme Pop Stars. The show, which searches for the pop stars of the future, has been a hit in several Western markets.
Rainbow plans to do much of its own television production work, and is building two production centres, in Beijing and Shanghai.
Programming will be aimed at China's up-and-coming urban elite. "We're targeting the 20-40 age segment, which is well educated and which has had experience overseas or with foreign cultures," says the 29-year-old Gao, a Beijing native and an MBA graduate of Concordia University in Montreal. "These people are more open and they want to know what's going on outside China."
Chinese broadcasters are purchasing more and more foreign programmes, but these can only be aired dubbed in Chinese – no foreign language programmes are allowed. The recent line-up includes the XFiles and newly arrived Tianxian Baobei, or 'Antenna Babies,' better known in the West as Teletubbies. Fortune Test, the Chinese version of the British game show The Weakest Link, went on air in February, and there are also reports that a Chinese version of Friends is in the making.
Britain's Granada has worked with the Beijing Yahuan Audio Video Co to produce Joy Luck Street, a take off on Britain's Coronation Street. However, the producers decided to take out much of the gritty realism that made the programme a hit back in the UK – Chinese viewers found the content too depressing.
Gao says there is an increasing emphasis on better and more varied programming, which she attributes to the opening of the local industry to foreign participation. Earlier this year, China gave approval to three foreign media companies – Phoenix, AOL Time Warner and News Corp – to land their satellite signal in the Pearl River Delta area.
"TV executives are aware that once the market opens wider to foreign competition, Chinese will prefer to watch BBC, Star or Phoenix and that no one will watch Hunan TV or Jiangsu TV any more," says Gao.
China's television market is huge, with an estimated 400m homes and close to 90 percent of them having access to at least one television set. About 100m, or a quarter of all homes, have access to cable television. However, competition is growing as the number of channels mushrooms and advertising revenue shrinks.
One analyst estimates total advertising revenue for 2001 as high as US$11bn, but others say US$6bn is a more realistic figure. While television accounted for about 70 percent of advertising income in 2000, its share of the pie last year contracted, with strong performances from the radio and outside advertising sectors. "That's why TV has to change," Gao says. "If you don't, you'll lose your position in the whole market."
David Wolf, a media specialist with Burson Marstellar in Beijing, agrees: "If you're going to bring in advertising dollars, you're going to have to prove you have gripping programming."
Wolf says the "growing sensitivity to what it is people really want to watch" proves that Chinese television "has gone from purely supply side to one where consumer demand is regulating a growing number of choices in programming."
Rainbow TV is now working out final arrangements with Ningxia TV and overseas content suppliers, but an official at the company said it hoped to come to a favourable agreement within three months.