As the dust settles on the dramatic events of 2008, China’s TV industry is getting back down to business as usual, The Beijing Olympics is now starting to recede into memory, and broadcasters are again focusing on the nitty-gritty business of catering to the world’s largest TV market by audience. Around 96.95 percent of China’s 1.3 billion-strong population can receive TV signals, mainly via basic free-to-air cable services. A total of 163 million households are connected to cable services grid through more than three million kilometers of cable and 45.01 million households are connected to digital cable networks. The content they watch is mostly local and heavily influenced by government policy. Restrictions on foreign content imports, plus limits on the activities of foreign media entities in China, keep mainland audiences largely shielded from the outside world. As a result, China is also fast becoming one of the world’s largest content producers. News and current affairs top the weekly TV ratings lists for key cities like Beijing and Shanghai. On average, Chinese audiences watch 22.8 minutes of news programs per day, a 12.95 percent share of daily viewing time, according to the CSM Media Research/STVF China TV News Report 2007-2008. General news accounted for 58 percent of news viewing, while entertainment news had a 10 percent share. Factual programming stayed at the top of the ratings in 2008, thanks to the dramatic events that unfolded throughout the year. More than 1 billion viewers tuned in to watch the reports on the earthquake rescue and relief efforts from May 12 to 18, setting a new ratings record for the Chinese TV industry, according to CSM Media Research data. The Beijing Olympics set impressive ratings records of their own. Around 90 percent of Chinese families tuned in to watch the spectacular opening ceremony directed by Zhang Yimou on August 8 and more than 86 percent of all households watched the Olympics broadcasts on TV everyday, according to AGB Nielsen Media Research. TV dramas are another important programming category. Drama series dominated the small screen in 2006 and 2007, accounting for 36.27 percent of the content broadcast on all TV channels and 48.91 percent of audience ratings, according to the 2008 Blue Book on China’s Radio, Film and Television published by SARFT. 2008’s top rated drama was CCTV’s The Legend of Bruce Lee (Li Xiaolong Chuanqi). The series saw ratings of 12 percent at the peak of its popularity, plus average ratings of 11.12 percent across the entire series. A CCTV drama called Magic Mobile Phone (Mohuan Shouji) placed second in the ratings races, followed by The Last Prince (Zuihou De Wangye) on Beijing Satellite TV. Variety shows fared poorly in 2008, after dominating ratings in 2006 and 2007. Broadcasters were forced to pull all variety and entertainment shows from the air during the period of national mourning instituted on May 19 for the victims of the Sichuan earthquake. By the time the government lifted the ban on July 7, broadcasters were focusing on the Beijing Olympics and many popular talent shows had been cancelled altogether. However, variety shows now do look poised for a resurgence, despite strict ongoing restrictions on format, scheduling and content. Leading provincial broadcasters such as Hunan Satellite TV, Shanghai Media Group and Zhejiang Satellite TV have announced plans to launch an ambitious line-up of new talent shows in a bid to gain viewers and a bigger slice of the advertising pie. The plans include new karaoke-style programs, as well as new seasons of old favorites, like Hunan TV’s American Idol-style hit Super Boys. No matter what programs Chinese audiences chose to watch in 2009, they will almost certainly be watching them via free-to-air basic cable services. Pay TV operators such as Beijing Gehua CATV Network ply their services in every province, but they have struggled to convince Chinese audiences to pay for their content. Lackluster programming that has little to differentiate it from the free-to-air offerings is at the heart of the problem. As a result, China only had around 4.52 million pay-TV subscribers by the end of 2008, according to SARFT. However, the content Chinese viewers watch is increasingly likely to be digital, or even high-definition content. China is undergoing a major drive towards digitalization with plans to invest RMB2.5 billion (US$365.50 million) to promote terrestrial digital TV coverage across the whole country within three to five years. The number of digital cable TV subscribers in China grew 67.6 percent year-on-year to hit 45 million by the end of 2008, according to SARFT. At the same time, CCTV is on a major drive to boost its ability to produce and air high definition (HD) programming. The national broadcaster launched the country’s first comprehensive, free-to-air HD channel (CCTV-HD) ahead of the Olympics in May 2008. Offering HD footage of the entire Beijing Olympics was just the start. CCTV has partnered with Intel to set up a research lab to develop HD technology. It plans to start broadcasting some of its current SD channels, such as the flagship CCTV-1 and CCTV-2, as HD channels in the future. The drive towards digital comes as the TV industry is being challenged to maintain its dominance in the face of new challengers with innovative new content, such as video-sharing sites. There is a lot of anecdotal evidence to suggest that TV audience numbers are leveling off as young, urban viewers switch off the small screen in favor of the relatively free and unlimited variety of content available via their laptops. The revenues reported by the mainland TV industry have yet to demonstrate any crunch, however. According to the official data from SARFT, the mainland broadcasting sector reported total annual revenues of RMB145.2 billion (US$21.22 billion) in 2008, an increase of 10.3 percent year-on-year. Advertising revenue accounted for RMB69.5 billion (US$10.16 billion) of the total revenues, while cable TV revenues accounted for RMB34.8 billion (US$5.09 billion), and digital pay TV revenues for RMB1.39 billion (US$203.22 million). Total advertising spend in China increased 15 percent year-on-year to reach RMB441.3 billion (US$64.52 billion) by the end of 2008, according to the 2008 Advertising Industry report released by CTR Market Research on January 22. Television accounted for 76 percent of the total, though other sectors such as print also notched up impressive annual growth. Many have predicted that TV ad revenues will start to fall in 2009, as advertisers channel funds into less expensive, high return-on-investment media in 2009. All of these developments spell good news for foreign media companies looking to do business in the mainland TV arena, though the best opportunities still lie in co-production and format licensing deals. Both types of deals have helped foreign content providers make inroads into Chinese TV, despite the ongoing restrictions on the broadcast of foreign films, TV dramas and animations in commercially attractive primetime slots. SMG recently announced the signing of a deal with Televisa to co-produce a mainland version of the telenovela Dumb Girls Don’t Go To Heaven, though the details of the deal remain confidential. The broadcaster is also in negotiations to co-produce a mainland version of the hit Telefe telenovela Montecristo with two unnamed companies, according to Jin Weiyi, Film and TV Drama Deputy Director. “We think the telenovela has a good story, so it will attract Chinese viewers,” said Liu Yong, Operations Director for Film and Dramas. “In the future, we would like to have more international co-productions but this year we have only arranged these two deals. If there are other popular foreign dramas in 2009, we may look at organizing more co-productions later this year.” On the format licensing side, the mainland version of the hit TV format Ugly Betty dominated the ratings in its timeslot in 2008, after Hunan Satellite TV and Beijing Nesound International Media licensed the co-production rights from Mexico’s Televisa. The program sponsor, Unilever, has successfully used the show to promote Dove shower cream, Clear anti-dandruff shampoo, Lipton tea and Bausch & Lomb. Hunan Satellite TV earlier signed a deal to produce a local version of Granada International’s popular Saturday Night Takeaway format. The station broadcast the format to an Asian audience for the first time in January 2008, after renaming it as Super 2008: Friday Night Takeaway. “Making local versions of several of our wide range of entertainment shows is part of our strategy to develop our presence in China. We are very pleased to be working with Hunan again on this ground-breaking format deal,” said James Ross, regional director at Granada International. The future is looking brighter for foreign rights owners looking to sell into China this year. The restrictions that marked the politically sensitive period in the lead-up to the Olympics have eased off and broadcasters are focusing in earnest on the serious business of winning bigger shares of audience numbers and advertisers. No significant new regulatory changes are in the works, as the government focus in 2009 will be on consolidating and building the existing regulatory regime and expanding new media services. TVAplus