According to the rules issued by the State Council, websites, having been transformed into companies, should establish an “editorial policy committee” that is supposed to ensure that the content of the website is in-keeping with the Party line. In addition, the rules say non-State capital is forbidden to participate in the pre-listing reform of these news websites. The organizations that directly run the websites, Xinhua News Agency and the People’s Daily in this case, should have a controlling stake of no less than 30 percent in the listed websites.
People.com was the first to transform itself into a share-holding company starting June this year, with investment mainly coming from the People’s Daily and Global Times. The rest came from China Publishing Group, China Film Group Corporation and Shanghai Media Group, each holding approximately 1 percent equity in the newly established company. Reportedly, the website was also planning to make State corporate giants like China Mobile and Sinopec its strategic investors.
According to media reports, thanks to arrangements made between news and securities regulators, at least one or two officially-run news websites are scheduled to debut on the domestic stock market before the end of this year. Yet the websites themselves appeared very cautious about the listing, and refused to disclose any additional information.
“News websites are the most difficult type of websites to operate in China,” said people.com President He Jiazheng. According to him, listing is a complex task, involving reforms in assets management, personnel and business adjustments, so “it takes time.” Gao Nan, xinhuanet.com’s assistant president, simply declined to comment on any timetable for his company’s public listing.
Market Challenges
Online traffic is the key to the survival of any website. In this regard, the government-owned news websites seem to be less appealing to news readers than other web portals. According to a NewsChina survey among a total of 198 college professors and students, only 12 out of those surveyed chose Xinhua as their primary source of daily news. The rankings at Alex positioned xinhuanet.com at 208th among all of the Chinese-language websites currently hosted within the country, compared with Sina’s news channel, which ranked in 16th place.
“It is a very challenging market for Xinhua,” said Director Zhao of Tsinghua Media Survey Lab. “The figures indicate that the website is unpopular among Internet visitors. It is an impasse.”
Reformers seem to have foreseen the business pressure that will bear on the as yet unlisted websites, so they allow for a five-year transition period during which the news websites are still entitled to State subsidies as well as tax breaks.
“If such websites fail to develop a competitive edge both financially and editorially by taking advantage of favorable policies, they will lose their attraction to shareholders, and will likely get bogged down in the technical side of capital operation,” said Zhang.
The operators of these websites are apparently doing their best to ignore this gloomy prospect. For example, Xinhua News Agency reached an agreement with China Mobile in August to jointly explore the mobile search engine market in China. Analysts believe that Xinhua’s news-gathering network across the globe as well as its recent development of its TV news wing will be a key boost for the future of xinhuanet.com.
However, such development requires a huge amount of investment, which could help provide an explanation why xinhuanet.com is the first to get the go-ahead for fund raising by floating shares.
November 2010
