Slow-mo television

US-based Viacom announced some new China deals, and like other bargains struck in China's highly charged media sector, industry players will be watching to see how everything pans out.

They include a partnership with Beijing Television (BTV) and a broadening of coverage for its MTV music channel, trebling its reach to 3 million households in Guangdong province. Chairman and CEO Sumner Redstone said the partnership with BTV would translate into making Chinese-language music and entertainment programs for distribution in China and around the world.

"Partnerships with Chinese companies are central to our long-term strategy," he said, describing the deals as "a significant commitment to producing high-quality, locally produced content." Another agreement with national broadcaster CCTV will have Viacom's Nickelodeon producing programs for the children's channel, CCTV-12, launched earlier this year.

The announcements came amid reports that Viacom's efforts to co-produce programs with Shanghai Media Group had become bogged down after regulators failed to make scheduled changes to regulations allowing the co-venture to go ahead.

One source said the State Administration of Radio, Film and Television (SARFT) is still drafting the new rules and until that work is done, the Ministry of Commerce, which must give its blessing to the project, won't budge.

Speaking off the record, one well-placed industry insider told China Economic Review that Viacom's latest moves appear to leapfrog past Rupert Murdoch's News Corp, which till now has proven to be the most adept foreign player in China's media maze. "But the real situation remains unclear with SARFT apparently unable to provide a firm sense of direction on the level of engagement wanted with the big brand media houses such as Viacom, News Corp, Time Warner, Disney and Sony."

He said the administration has a habit of announcing policies by flying up trial balloons and, if enough industry critics prick holes in them, the rules are withdrawn for redrafting. "They indicate a sense of direction – policy happens, but nothing is delivered on time."

Policy hiccups aside, liberalization should come in the long run. "Three years ago there were virtually no opportunities for foreign broadcasters in China. In the past three years, we've seen the 'reciprocal' deals for News Corp, Time Warner and Viacom, etc, where CCTV and others have been helped with distribution in foreign markets by the big players who have gained distribution for themselves, in turn, in China," the source said.

"Project those advances over the next three years, and there's reason for great optimism."

But everything hangs on branding. "The big money will come in national distribution with branded products that can attract premium subscriber revenues and the opportunity to go 'beyond television' into educational products and theme parks etc," he said. In short, no branding, no value – or very little anyway.

With digital pay-TV in its infancy – according to official data, there are only 200,000 digital set-tops deployed out of China's 100 million network connections – "there is everything to play for," the source said. "But the window of opportunity is rapidly closing, with the increasing sophistication of China's domestic product – thus the scramble to do deals with locals like Shanghai Media Group who are far from slouches and learning fast."

But local broadcasters still come up short on content and business management and therein lie the opportunities for foreign players, he said.

While broadcasters cut deals and wait for their China ventures to get off the ground, the real money remains in India, the source said. "There's very little compelling premium content in China so far, certainly little that subscribers want to pay real money for. India is awash with premium content."

China's recently announced digital standard – coupled with plans to wind up analog television by 2010 – got a dismissive response from this industry insider. "Yes, and pigs can fly," he said, mimicking a porker flailing to execute lift-off. "The whole scheme is just too ambitious. There will be digital in the big cities for 2008 and the Olympics, but the rest will be very tough."

China's media scene is changing across the board. Since the opening of the publishing industry's retail business to foreign investment last year, the State Administration of Press and Publications has approved 11 joint ventures for retail operation of publications. Germany's global media giant Bertelsmann is involved in one, but most deals, like Hong Kong's Tom Group, involve companies from either Hong Kong or Taiwan.

Last month, The Independent newspaper reported that Reuters planned to start offering data, research reports and news to China's private investors and business professionals directly via the Internet and mobile phones. It gave no clue as to how Reuters planned to break into China's tightly regulated media supply chain. "You could call this Reuters 'lite' for a new audience," the paper quoted a Reuters source as saying. But then a clue: On October 13, Xinhuanet released pictures of Reuters UK CEO Tom Glocer on a visit to its Beijing headquarters. From appearances, it looks like Reuters will funnel these products through the standard old Xinhua filter it and every other news organization uses for news products now.