SMEG a rising star on China's media, entertainment market

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Last updated at: (Beijing Time) Sunday, February 22, 2004

SMEG a rising star on China's media, entertainment market

Chinese television viewers now have another authoritiative source of important news besides China Central Television (CCTV).

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Chinese television viewers now have another authoritiative source of important news besides China Central Television (CCTV).

Journalist Xiao Kai said he was "very impressed" by the reports from Shanghai-based Dragon TV on a recent fire which claimed 54 lives in northeast China's Jilin Province.

The Dragon TV anchorman talked over the phone with a Xinhua reporter at the site, and provided detailed information for viewers.

"Similar measures are extensively used by CCTV, but not by any locally-based TV station", said Xiao Kai, who tuned into Dragon TV by accident, but stayed with it throughout the 40-minute program.

Dragon TV, the former Shanghai Satellite TV, was launched at 6:00 p.m. on Oct. 23, 2003 with a completely revamped line-up. Now airing programs throughout China's mainland except for north China's Tianjin Municipality and south China's Fujian Province, as well as in the Macao Special Administrative Region, Japan and Australia, Dragon TV is the country's second TV station with a national reach, following CCTV.

Meng Jian, a journalism professor at Fudan University, said Dragon TV, which is owned by the Shanghai Media and Entertainment Group (SMEG) and oriented to serve urban dwellers across the country, will intensify competition among China's TV stations.

"Major competitors of Dragon TV include CCTV and some other foreign TV stations," said Meng.

Experts said Dragon TV will win the competition only by rationally using the resources of its parent company, SMEG.

SMEG is a conglomerate of Shanghai-based media, film production, and radio and television production companies, performing art troupes, conference centers and sports clubs. It was established in April 2001 as product of a national policy to develop the country's "culture industry." The conglomerate reported a total income of over six billion yuan (about 726 million US dollars) in 2003.

In fact, the launching of Dragon TV was only one of a series of high-profile moves made by the conglomerate to reshape the country's media and entertainment market.

In May 2003, SMEG formed a strategic partnership with the U.S. business TV channel CNBC Asia Pacific. According to the agreement, SMEG will provide Chinese business news for CNBC's television network, while CNBC offer international business news for SMEG.

It is the first time for a mainland-based company to produce programs for mainstream foreign TV channels.

Alexander Brown, president and chief executive officer of CNBC Asia Pacific, said China is the most dynamic market in the Asia-Pacific region, and SMEG is a perfect partner for his company in China's financial center, Shanghai.

Now, the five-minute China Financial and Economic Briefs is broadcast six times a day on the CNBC network.

In July 2003, SMEG integrated its financial reporting resources into the single-brand China Business Network (CBN), airing the same financial and economic programs simultaneously on the SMEG network, and TV and radio stations. At the moment, SMEG is preparing to publish a newspaper and integrate SMEG's media resources further.

"Our goal is to become China's Dow Jones," said CBN President Gao Yunfei.

Two months after CBN was launched, SMEG paid 180 million yuan (about 21.8 million US dollars) to the China Football Association to become the exclusive broadcaster of the China Football Super League over the coming three years, beating CCTV, China's all-time exclusive broadcaster of sports events and attracting unprecedented public attention on the Group.

In addition to SMEG's bold moves in the media industry, the conglomerate demonstrated the same courage in the country's entertainment world.

In 2003, Shanghai Grand Theater, affiliated to SMEG, successfully staged the Broadway musicals Les Miserables and Cats, reporting full-house occupancy in all the 74 performances. The Theater plans to repeat this success this year by introducing musical classics such as Phantom of the Opera and Sound of Music, which are widely expected to break last year's box-office records, and competing with other major domestic art markets such as Beijing and Guangzhou.

In addition, SMEG also teamed up with Times Warner to build ten "world-class" cinemas in major Chinese cities including Shanghai, Beijing, Nanjing and Wuhan. Investment in SMEG's 2,200-seat cinemain Nanjing totals 25 million yuan (about 3 million US dollars).

Ren Zhonglun, president of Shanghai Film Group, a SMEG member, said the cinema-constructing scheme is only a small part of cooperation between SMEG and Times Warner.

"The two parties will join hands in producing, marketing and selling films and other entertainment products," said Ren.

In fact, SMEG has already teamed up with partners from France, the United States, Germany, Switzerland and Japan in co-producing a series of documentaries, TV dramas and commercials.

At present, over 2,000 buses in Shanghai have been equipped with TV sets broadcasting programs provided by SMEG. The conglomerate also plans to extend its territory by developing new-media and new-entertainment services such as mobile TV, interactive TV, mobile phone TV and wide-frequency TV.

In December 2000, China's first provincial media and entertainment group was established in central China's Hunan Province. Similar groups appeared quickly in localities such as Beijing, Shanghai, Shandong and Jiangsu. SMEG is second only to China's largest media and entertainment conglomerate -- China Media and Entertainment Group -- in terms of total assets.

Critics once doubted that such giants formed according to administrative measures could survive the increasingly cutting-throat competition in China's media and entertainment market, especially in the conditions in which more private and foreign capital were allowed into the field.

In fact, some of the conglomerates, including the Hunan Media and Entertainment Group, which achieved market success in 2000 and2001, have report losses recently due to over-diversification of their businesses and failure to effectively respond to market needs.

To avoid similar mistakes, SMEG has taken a series of measures to coordinate its resources and avoid making wrong business decisions from the very beginning of its foundation. The measures seem to have been rather effective.

In 2003, SMEG's total assets amounted to 15 billion yuan (about1.8 billion US dollars) and it reported a profit of one billion yuan.

Niu Weiping, a SMEG manager, said the Group has conducted careful feasibility studies on profit margins and social impacts of each program it has invested in. "We are doing business and cannot afford huge losses like in the past, when the operation of many SMEG members completely depended on government funds," said Ren.

"Market needs are our priority concern," said Li Ruigang, a graduate of the prestigious Columbia University and now President of SMEG's media group.

The 35-year-old president's practical spirit was echoed in a series of SMEG's business moves. According to an article in a recent issue of the Financial and Economic Weekly, the SMEG is very likely to become a "new leader" in China's media and entertainment market.

Source: Xinhua

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