by HU ZHENGRONG, WANG WEIJIA, ZHENG LIANG
Executive Summary
Whilst China’s huge TV market allures the powerful international media capital, the deficiency and incompetence of domestic program production churn out a great opportunity for overseas TV programs. Facing the state regulation and cultural barrier, how about the current situation of the overseas TV programs and what are the challenge and opportunity for them? This paper focuses on the size of China’s domestic market, production and importation of major TV programs, regulation on the program importation and finally, the future perspective of the development of overseas TV programs in mainland Chinese market.

Ⅰ－General Situation and the Size of the Mainland TV Market
The program content of TV in China is in severe shortage because of a huge audience population, incompetence of domestic program production and low market concentration in a vast territory. As of the September of 2004, there are in Chinese mainland more than 1900 TV, radio Stations, which covered 95.5% and 94.5% respectively of entire population. Over 2200 analog and 48 digital pay TV channels were run by these TV stations. The cable TV network reaches 4 million kilometers and has more than 100million subscribers. A multi-layered nationwide TV and radio network is basically established through cable, wireless and satellite technology. A great effort was also devoted to boost the TV & radio development in relatively underdeveloped ethnic regions and to promote Chinese TV & radio programs in overseas market.

The data concerning the size of mainland TV market are as follows:
1, the number of TV channels keeps increasing from 2124 in 2002 to 2262 in 2003, with the increase rate at 6.5%. With the development of digital TV, the TV channel will increase sharply, which makes evident the shortage of program content.

2, In terms of broadcasting time:

From the chart above, we may see that the overall broadcasting time is huge due to the number of channels.

3, the domestic TV coverage is steadily increasing, from 94.61% in 2002; 94.97% in 2003 to 95.5% in 2005. Considering China’s huge population, the coverage of more than 95% spells 10-digit audience number, which could never be ignored by any major media group.

4, Programs made by domestic TV stations in 2003 are 140,000 hours per week in average, which account for 70% of the program market. That means 30% need to be got through program market, but the program productions of various stations are underperformed and the program quality is relatively low, which makes the program market gaping after the high-quality programs. It is clear that station-made programs would be further reduced as long as the high-quality programs are guaranteed.

5, The market size of radio and TV is considerable. Among 31 mainland provinces, municipalities and autonomous regions, 20 of them reaped about one billion RMB from the advertising of their respective TV & Radio sectors, and 10 of them reaped about two billion RMB.

Ⅱ-Status Quo of mainstream TV programs and importation of overseas programs
According to the genre and audience diversity, China’s TV program could be categorized into TV drama, Feature and Science, Entertainment, Sports and News.

1, TV drama
TV drama is an indispensable part to China’s program market, in which the overseas TV drama was introduced more and earlier than other categories of program. The growth of TV drama market is more typical, and the probability for overseas entrance is high, so it is our focus. The TV drama of Chinese mainland before 1993 was mainly circulated by exchange among different stations, and after 1993, TV drama got involved more in the market with the thriving of sponsor’s advertisement and commercial advertisement. Since 1997, the competition between the city cable TV and wireless TV escalating, and TV drama was heavily bought by various stations, which and then precipitate the formation of TV drama exchange market. In 2000, a decree was issued by the State Administration for Radio, Film and Television (SARFT), which prohibits the overseas TV drama from airing in prime time. Consequently, the home-made TV drama sharply increased in number and the TV drama market enjoyed an unprecedented boom. There are more than 300 TV drama production companies in China, and its annual output reaches 11,500 episodes in 2004.

In light of the importation of overseas TV drama in recent years, overseas TV drama is losing ground because of the strict regulation of SARFT. A survey of China’s TV drama market indicates that in 2002, 18% of surveyed stations didn’t buy in the overseas TV drama, and 45% said the proportion of episodes of overseas drama is lower than 10% in its overall purchase. The showing rate of overseas TV drama accounts for 21% in those channels which air the overseas TV drama. In addition, the overseas TV dramas with different origin perform differently in market competition. Hong Kong-made TV drama holds the leading position on screen and TV drama from Taiwan is not as popular as before. South Korea is shadowing Hong Kong, whereas TV dramas from other countries underperformed and their future in market is gloomy.

There are also some noticeable developments on account of the state regulation and cultural difference. South Korean-made TV dramas gained remarkable audience rating; domestic production companies buy the copyright of 24 hour and Sex and City and reproduce them; Hot TV dramas such as Friends, Sex and City continue their popularity through VCD and Internet and their audiences are those who tend to embrace the overseas TV. From these developments we discussed, we see it clear that the audience of TV drama is diversified and so does their needs. For European and American producers, the underperformance of their programs can not be attributed only to the low market demand because sit-com such as Friends is popular among college-educated young people in China, but part of its content is in collision course with the mainstream ideology, which makes it impossible to pass the state censorship. A case in point is Friends, which was aired on one of China’s digital TV channels, was canceled later by the authority. In contrast, the top-quality program Band of Brothers elbowed to CCTV-8, TV drama channel. The key to the importation of overseas TV drama is not the need of audience, but the ideology.

2, Science and Education Program
It is easier to promote science and education programs for overseas producers because they have almost nothing to do with culture and ideology. Heavy investment and strict standards were requested for this type of program, which makes overseas producers far more advantageous than their mainland counterparts. Although the market demand for this program relatively low, the famous brand such as National Geographic and Discovery Channel have already seized hold of beachhead. The VCD serial of these two top science and education program producers are selling hot in major Chinese cities. For one thing, the program of the two channels has taken root in mainland TV stations long before their VCD serial. For another, overseas producers are superior in fund and production, which are happened to be the weak point of mainland producers. National Geographic and Discovery Channel staged their onslaught to mainland market from TV program market, then the video-audio products, and finally to books and magazines. This ambitious market strategy was later proved effective and successful.

Science and education program scarcely involved in the culture and ideology, meanwhile their state-of-art quality and heavy investment make their mainland counterparts give the battle. The advanced operation model and marketing skill expand their market and successfully nurture a stable audience group. In a word, the market entrance of Science and education program is satisfied and its future is promising.

3, Entertainment Program
The mainstream Chinese entertainment program consists of two types: the live night gala and entertainment, and the night gala is the traditional eye-catcher, but the audience rating of night gala dropped sharply in recent years. For example, the average time spent by audience on night gala is about 514 minutes in 2003, 268 minutes less then in 2002. The galas on memorial days and traditional holidays are leading the audience rating, and timing itself ensures the audience. The Spring Festival Gala of CCTV enjoys nationwide fame, and still keeps more than 30% of audience rating even if it is slightly dropped in recent years. In contrast to 1900s, the number of gala is steadily decreased because for one thing, audiences got bored about the program in which they could never participate, and for another, 1990s witnessed a spurt of different programs, which dispersed once concentrated audience group.

Since 2001, the entertainment program in general has gained more and more popularity. That was due to the successful promotion of game show and quiz show. Especially in 2004, the average viewing time of entertainment program in 76 cities is 3707 minutes and the entertainment program accounts for 6.7% of all programs, which also reaches its highest point in recent years. Quiz show of CCTV-2 like Kaixin Cidian and Xingyun 52 swept the screen and achieved instant success, and provincial stations soon followed suit, but as time goes by, the curiosity and focus of people on this type of program receded due to the sheer clone, which makes the entire program look similar. The new round of competition will focus on common people with generous bonus and state-of-art quality. In addition, the entertainment news, which is championed by private producers’ program, is sprouting, and young people are crazy about this casual, stylish show which focuses on celebrities and trends.

With the introduction of CBS hit program Survivor on CCTV, the Reality TV unveiled its mask to Chinese audience, and some home-made Reality TV also perform well because it knows more about the tastes of local people. Other programs also begin to borrow some elements of Reality TV to enrich them. The overseas entertainment program also reach the ordinary Chinese family once in a while, but largely concentrate on music, dancing or magic show. Due to the cultural difference, the home-made entertainment program is more acceptable to the local audience, but almost all the successful home-made entertainment are the clone of their overseas counterparts, especially in stage design, costume, lighting and camera position, but language and content are key to the local audience, so to cooperate with local producers and to invest in the local company is a practical option for overseas producers.

4, Sports Program
The audience of the sports program is more special in contrast to that of other programs. The male audience constitutes 69.5% of sports audience; female: 30.5%. (CSM 2003) As for age, the primary audience group for sports program aged between 15 and 54 years old, and group between 4 and 14 years old only accounts for 5.2%. The education level of sports audience is also generally higher. Audience of sports program enjoys better education, decent profession, mature age and satisfying income, and so this group possesses great potential in both buying and consumption.
A survey indicates that the live report of games and sport events enjoys the highest popularity. What really concerns Chinese audience are the famous international games and the games in which Chinese players participate. Football and basketball matches have the greatest market share, especially five League Matches in Europe and the NBA with Yao Ming. What’s more, matches which were formally based on segmented market, such as F1, Snooker, attract more attention from Chinese audience.

Sports program occupies more broadcasting time in CCTV than in provincial stations. CCTV-5, the sports channel, is predominant and actually monopolizes the sports program market. Besides CCTV-5, Beijing TV-6, Shanghai TV sports channel are popular among the local audiences. Meanwhile, many provincial stations jointly produce the Sports Report and Football Report, and to replay the games which CCTV is not eligible to. The superiority of CCTV lies on its control of the right to broadcast key matches. A decree issued by SARFT in Jan. 24th 2000 stipulates that “CCTV is authorized to negotiate and purchase the right to replay the key international sports events, such as Olympics, Asian Games, and FIFA World Cup (including the preliminary matches) within the Chinese mainland. Other stations, including cable TV stations, have no right to buy programs directly, and the right to replay in certain regions could be transferred, in consideration of the needs of provincial stations, through negotiation between CCTV and provincial stations, as long as the maximum coverage is guaranteed by CCTV.

Overseas sports program is mostly imported by the exchange of replay right, which resulted not in the common TV program, but the pictures. According to international practice, the complete rebroadcast right consists of three parts: game news (pictures more than 3 minutes are required to pay); programs based on games (pictures more than 15 minutes are required to pay); the live report, record and rebroadcast. With the economic development, Chinese sports fans are increasing in number with more money at their disposal, and sports channels of provincial level also make great progress. All of these factors are benign for overseas sports program.

5, News Program
Chinese audiences are watching news program for about 28 minutes daily in average, and they mainly tune in the CCTV news report and some local news of local channels. In May, 2003, CCTV News Channel came into being, and this is the first round-the-clock news channel in China. By combining hourly news update, live report, and rolling subtitle together, CCTV creates a brand-new news program in China. In-depth news report is the future of Chinese news program; Focus Interview and News Probe are two cases in point. Meanwhile, the localized news comes into view of ordinary people, such as MinSheng News (civil journalism). MinSheng news is a newly developed news program which features in its localized perception and production. The daily life, attitudes, joy and sorrow of the locals are the primary concern of the program. Remarkably, this programming strategy was proved to be successful by attracting a stable and ever-increasing audience group. Although CCTV news program is predominant nationwide, it is in a disadvantageous position when compared with local news in local context. Local stations enjoy the advantage of its flexibility and proximity to locals. Besides localized news, local dialect was used in news broadcasting and some entertainment factors were brought into news broadcasting to make hard news more soft and light.

In recent years, heavy investment and high quality are the key word for news program because TV stations of China growingly rely on news program to boost up their edge against competition, and the audience also becomes more demanding, critical and ready to choose. What they need here and now is high quality in-depth report with open and diversified perspective, and that make Chinese news program mature and compatible with international practice.

Due to the political and economic reasons, China’s news program is under strict state control and regulation, which makes it off limits for overseas programs.

Ⅲ-Challenge and Opportunity for Overseas TV programs
The deficiency and incompetence of domestic program production bring about a great opportunity for overseas TV programs, which and then have to face up to the challenge posed by state regulation and cultural difference.

Firstly, Chinese media have long been defined as mouthpiece of Party and government. Out of Party’s ideological and cultural concerns, a strict regulation was laid partly to protect domestic production and partly to cushion the ideological and cultural concussions generated by the overseas program. During the past decade, SARFT issued a series of decree to control the overseas TV drama.

1, Regulation on the importation and broadcasting of overseas TV program, which was issued on Feb. 3rd, 1994. It stipulates that in every single channel of different TV stations, the overseas TV drama could account for no more than 25% of overall TV drama broadcasting time, and during the prime time (18:00-22:00), the percentage is 15%.

2, Notice on control of the importation and broadcasting of overseas violence-featured TV drama, which was issued on March 8th, 1995. Its primary objective is to reduce the importation of overseas TV drama which features Kong Fu, cops and gangs, and so forth. Overseas TV drama which was already introduced must undertake strict censorship, and the violence scene should be cut out as much as possible. The overseas programs are not allowed to air in prime time.

3, Notice on tightening the regulation of overseas TV drama importation, joint-production and broadcasting, which was issued in Jan.2000. It focuses on tightening the regulation of the origin and genre of overseas TV drama. Overly concentrated on a single country or area and the repetition of genre should be prevented in overseas TV drama importation. The importation of court life and Kong Fu featured TV drama should account for no more than 25% in overall importation. All tiers of TV stations, cable TV stations are barred from airing overseas TV drama in prime time, unless they were authorized by SARFT to do so. A single TV drama is not allowed to broadcast on more than 3 provincial-level satellite TV channels.

4, Notice on tightening the regulation of satellite TV channel of provincial TV stations, which was issued in Jan. 2000. It focuses on regulating the number of overseas TV drama in different time slots.

5, Regulation on TV drama, which was issued in June. 2000. It stipulates that the overseas TV drama could account for no more than 25% of overall TV drama broadcasting time, and during the prime time (18:00-22:00), the percentage is 15%.

Secondly, the cultural difference is not as influential as state regulation, but it still plays a major role in overseas program importation. The cultural factors exert tremendous influence on the receptivity and mentality of Chinese audience, and their culturally-based needs have the final sway over the overseas program. For example, TV dramas from Korea, Japan and Hong Kong are generally more popular than their western counterparts because of their cultural similarity, and their topic, character, and plot are more acceptable to Chinese audiences from all walks of life. Their popularity largely stems from the heavy investment and advanced promotional skills, which is unparallel to mainland producers. While on the contrary, TV dramas which were hot in European and American market can only secure its popularity within a small group of audience in China, and that makes it out of favor of mainstream TV stations. So if European and American producers plan to enter mainland market in the near future, the local operation which is based on capital investment, technology and promotional skills is a more favorable option than direct export.

Whilst the ideological and cultural factors will still affect the overseas program in the foreseeable future, the rapid development of China’s TV market and the adoption of the digital and direct satellite technologies in TV sector offer a great opportunity for overseas TV programs.

Firstly, the advertising revenue of mainland TV stations keeps increasing, and the service of digital pay TV is in real operation. In 2004, the ad revenue of TV and radio sector increased 21% and rocketed to 40 billion RMB, 6.8 billion more than in 2003. A CCTV survey indicates that in the first half of 2004, the total ad revenue of mainland media is 102.9 billion RMB, and total TV ad revenue is 78.9 billion, increased 35% than the same period of 2003. During the Olympiad in Athens, Greece, the Olympics-related ad revenue of CCTV surpassed 500 million RMB.

China’s digital pay TV and radio came into being in 2003, but the prospect of profit is still far away because Chinese audiences are not used to pay for the TV program and the content is far from being satisfactory and diversified. In addition, the set-top box is costly and the related parties have yet to reach a consensus on how to allocate the interests. Anyway, the digital TV & radio is high on the agenda of the transition of broadcasting sector, and with the transition from analog to digital, the subscriber increased and the scope of service broadened, which make subscription practical. In 2004, SARFT approved 49 cities to test broadcast the digital cable TV, and this covered 28 provinces, autonomous regions and municipalities. All these cities have set timetable for the transition and a number of them have already begun the commercial operation. Qingdao, Foshan, and Hangzhou take the lead in the large-scale transformation from analog to digital and set up a complete system of technical support, maintenance and operation. So 2004 witnessed the formation of market competition with the establishment of Central Digital TV Corporation, Digital Pay Cable TV Syndicate and the 136 digital pay radio and TV channels.

A set of new service came into existence in 2004. CCTV opened its broadband-based IP TV. Shanghai and Beijing unfolded mobile TV and cell-phone TV. Shanghai, Beijing, Changsha, Zhengzhou, Guangzhou and Hefei consecutively launched their mobile TV service. On 28th, May, 2004. Beijing test broadcasted its mobile TV on 800 buses, and the signed AD contract exceeded 30 million RMB.

Secondly, the financing policy is loosened; the barrier for market entrance is relatively lowered and the capital operation is in motion. In Oct.2004, 3 years after China’s entry into the WTO, SARFT issued a new policy on the collaborative production of the TV program. The policy ordained that the Sino-overseas joint production of the TV program could be practiced by the setup of joint-venture companies, but the admittance of investors is strictly regulated. The overseas investors must be professional media enterprises and the domestic TV and Radio stations are barred from setting up the joint ventures, and only the program production companies are qualified to cooperate with overseas investors. What’s more, the registered capital of the joint venture should be no less than 50 million RMB, and the proportion of the overseas capital should be no more than 49%. As for the movie sector, SARFT ordained that joint movie production companies could be established on condition that mainland investors hold the company. New adjustments were also made on proportion of overseas TV program in pay channel, proportion of overseas capital in theatre restructuring and the import quota on Chinese language films. Since 2001, SARFT has ratified Chinese Entertainment TV (CETV)、STAR TV, Phoenix TV、 Hong Kong ATV, MTV and etc. in Guangdong province, and up to now, there are 31 overseas satellite TV channels in Chinese mainland. In August, 2005, The Notice on Foreign Capital’s Entry into the Culture Industry was jointly issued by China’s Culture Ministry, SARFT, The General Administration of Press and Publication (GAPP), The National Development and Reform Commission (NDRC), and Ministry of Commerce. According to the notice, the foreign capital was permitted to join such business as packaging, printing, distribution of books and newspapers, recordable disk production and artwork trade. The foreign capital was allowed to set up printing and recordable disk reproduction joint ventures under the prerequisite that the Chinese side hold at least 51% stock. The foreign capital could also set up the audio and video product distribution joint ventures (movie excluded) while the Chinese side retains the dominant position.

Facing the state regulation and cultural difference, the progress of the overseas capital and TV programs in mainland market is slow, but with the booming of Chinese economy, ever-advancing marketization and the severe shortage of program content, the future is doubtlessly promising.

Endnotes:
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[1] Hu, Z.R., Huang, W. Sun, X.H. (2005) ‘The Annual Report of Chinese Broadcasting Media in 2004’, in: ‘2005 Annual Report of the Development of Chinese Culture Industry’, China Social Sciences Documents Publishing House.

[2] The date can be found at the website of The State Administration for Radio, Film and Television at http://www.sarft.gov.cn and in The Yearbook of Chinese Radio and TV (2003, 2004) The Yearbook of Chinese Radio and TV Press.

[3] Li, J.B. (2005) ‘TV Drama Promotion and Marketing Strategy’, in: YingPing NeiWai. Vol.3

[4] Hu, Z.R., Huang, W. Sun, X.H. (2005) ‘The Annual Report of Chinese Broadcasting Media in 2004’, in: ‘2005 Annual Report of the Development of Chinese Culture Industry’, China Social Sciences Documents Publishing House.

[5] Organizing Committee of Shanghai TV Festival & CVSC-SOFRES MEDIA (2004): ‘Report on China’s TV Drama Market: 2003-2004’, Beijing, HuaXia Press.

[6] Huang, J.T. (2001): ‘Two Top-Grade Foreign TV Programs Vying for Domestic Market’ in: China Business Post, June.

[7] Xie, G.Y., Wang, C.P. (2004): ‘Market Report on China’s TV Entertainment Program’, in: Xin Wen Jie. Vol.4

[8] Xie, G.Y., Wang, C.P. (2004): ‘Market Report on China’s TV Entertainment Program’, in: Xin Wen Jie. Vol.4

[9] Organizing Committee of Shanghai TV Festival & CVSC-SOFRES MEDIA (2004): ‘Market Report on China’s TV Sports Program: 2003-2004’.

[10] Organizing Committee of Shanghai TV Festival & CVSC-SOFRES MEDIA (2004): ‘Market Report on China’s TV Sports Program: 2003-2004’.

[11] CVSC-SOFRES MEDIA (2004): ‘Report on the Growth of China’s TV Program’.

[12] Hu, Z.R., Li J.D.(2005):’ The Institutional Dilemma and the Ideological Roots: Regarding the Transition of Our Media Regulations’, in: Journalistic University, Vol.1

[13] Hu, Z.R., Huang, W. Sun, X.H. (2005) ‘The Annual Report of Chinese Broadcasting Media in 2004’, in: ‘2005 Annual Report of the Development of Chinese Culture Industry’, China Social Sciences Documents Publishing House.

[14] Hu, Z.R., Huang, W. Sun, X.H. (2005) ‘The Annual Report of Chinese Broadcasting Media in 2004’, in: ‘2005 Annual Report of the Development of Chinese Culture Industry’, China Social Sciences Documents Publishing House.

About the Author
Dr. Hu Zhengrong （huzhr@cuc.ede.cn）is professor of communication and director of the National Center for Radio & TV Studies. He also serves as the Executive Dean of the Graduate School Communication University of China. Professor Hu’s research areas are media policy and institutional transition, media development strategy, media management, and political economy of communication.

Wang Weijia (wega@etang.com), PhD candidate at School of Journalism and Communication, Beijing University.

Zheng Liang (edmondxj@gmail.com), MA student at School of Journalism and Communication, Communication University of China