Despite continued sensitivity in Beijing, SMG has long been seen as the most likely competitor to CCTV on a national scale and, within the next three to five years, SMG hopes to transform the existing Channel Young from a local station to a national fashion and lifestyle brand. Promoted as China’s answer to Martha Stewart, ENJOYOUNG will target young professionals with a mix of Channel Young programming, print publications, plus expanded events, online and mobile TV offerings. “It is time to expand SMG’s focus from local to national and from television to multimedia,” said SMG President Li Ruigang at a press conference 26 May 2009. Domestic capital markets will provide the bulk of the financing to help SMG buy newspapers and New Media assets in other parts of China, though Li emphasized that the TV and radio businesses will remain state-owned. When the re-launch is complete, the channel aims for non-TV advertising revenues to generate 40 percent of the company’s total sales events. Channel Young currently relies on TV advertising for more than 95 percent of its revenues. CMM Intelligence asked Li Ruigang about his plans for SMG and ENJOYOUNG ahead of the re-launch. CMM-I: Can we understand this is SMG – now ENJOYOUNG’s – attempt to move to the capital market to expand its holdings and also perhaps to begin to look to overseas markets? Li Ruigang: Right now, it is quite difficult for us to make the whole of SMG as a group to public because there are a lot of regulations and the whole issue is very sensitive. However, we do hope to split off some of our divisions, like fashion, entertainment and animation production. If we can split some of those divisions and market them, maybe in one or two years we can go public. That’s our ambition, definitely. What about IPTV? Will this be the large portion of your push in the coming months and years? IPTV is one of our very important New Media experiments in SMG. I think this year our IPTV subscribers will reach nearly two million households around the country. In other words, maybe we can become the biggest IPTV operator, even in the world. So far our IPTV operation has been quite successful and we are going to have our first round of financing for IPTV. When will that happen? Very soon. We are still in negotiations. You say you plan to split some of your business lines from SMG as a group, with the aim of possibly launching an IPO in the future. Splitting broadcasting from production arms is one of the biggest challenges for Chinese media organizations that want to go public. How can they resolve this problem? It will take some time to completely change the current situations and policies. The broadcast industry in China is very complicated and it has to comply with many government policies. Media organizations should not expect the government to change the situation by releasing new policies. We need to try to solve the problem ourselves by looking for solutions that meet the requirements of the market. I think the situation will gradually get better. Separating broadcasting from production is one feasible way for Chinese companies to overcome the barriers that prevent them from realizing their full market value. Is separating production units from broadcasting units the only obstacle that media organizations need to overcome before they launch an IPO? I don’t think so. Chinese media groups do not know enough about capital markets. They have to overcome a lot of internal challenges before they can meet the requirements to launch an IPO. It is not just government policy that makes it difficult for media groups to launch IPOs. Apart from going public, will you launch any other initiatives to go abroad? Will you look at buying foreign media entities, for example? Going abroad is a long, long journey for us to consider. I think there is a lot of potential for us to explore here in China. A lot of TV stations and radio stations are just limited to their local markets. We still need to work out how to set up the nationwide syndication and how to discover markets … there are still a lot of tasks for us to do. If you look at the New Media sector, we still need to find better ways to manage our resources and expand to other platforms. There is still a lot of potential for us. So right now, I think I will just concentrate my energy on this market. Another very important issue for us to consider is how to “marketize” ourselves. If you want to go abroad, to get access to the foreign media, you have to learn how to market yourself first. Then you can go abroad. You said before that media organizations should take steps to reform the broadcast sector and not just wait for new government policies. How far can media companies go in terms of effecting change? We can do lots of things. We can maximize the revenues we gain through advertising, for example. We can also explore other business models that are not as restricted by government policy as broadcasting, such as events. We are going to focus on three main areas in the future: television broadcasting, online media and events on the ground. We will try to create a community by enticing our TV viewers to visit our website and attend our events. We expect ENJOYOUNG to generate fresh sources of revenue because it will not be as restricted by policy.