Friday, 13 January 2012

Casting for Coffers

A man walks by a sign with the logo for People's Daily online
When I was living in Beijing, towards the tail end of my stay in 2010, there was talk of the central government wanting to wean off state-owned media companies from handouts.

So how were they going to get their money? IPOs.

And now two years later Xinhua News Agency and People's Daily are planning domestic listings of their websites this year, according to China Securities Journal in a report on Wednesday.

"These traditional, official media are facing a funding crisis, which is pushing them to adapt to the market and thus they will launch initial public offers," said Wu Dazhong, an analyst with Shenyin Wanguo Securities.

A report by AFP says China has been pushing state-owned media to stop relying on government handouts since the 1990s, but haven't been able to get them off the dole for the past 20 years due to competition from private companies like Sina.

Also social media like microblogs, similar to Twitter are taking off in China, challenging state media for viewers. These "weibos" are very effective for people to report incidents from breaking news to corporate and government malpractice, as state media is mostly ordered not to report on these events or to tone touchy issues down.

People's Daily is looking to raise more than 500 million RMB ($79 million) by issuing 69 million shares for listing in Shanghai, according to a prospectus released this week. Xinhua had no comment on its upcoming listing.

Analysts say the listings have been in the pipeline for two years but the global financial crisis and China's bureaucracy have delayed them until now.

And in any case to make sure no one person or company will control these state media companies, only about 25 percent of the total shares of People's Daily Online will be available for sale.

"They are very similar to the listings of those giant state-owned enterprises," said Wu. "I don't think their listings mean the government will loosen its control over the media."

While we all know that, the bigger question is -- who would want shares in People's Daily Online? What is this website going to offer that will entice more viewership when it's still heavily controlled by the government?

If it does successfully go public, along with Xinhua, it will force these companies to become more transparent in its annual reports, giving us a better idea of how these behemoths really function -- and make them accountable to shareholders.

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