Shanghai Media Group restructure puts focus on content production

SMG, which is controlled by the Shanghai authorities, announced recently that it would split into two company units: one non-profit division will deal with news operations will remain with its head office; the other unit, named Shanghai Oriental Media Group, will contain advertising, distribution and content development.

The split is a response to broadcast industry restructuring plans put forward by China's State Administration of Radio, Film and Television (Sarft), which has been calling for a nationwide separation of production and broadcasting functions. However, it is thought that the non-news unit will now be in a position to seek outside capital and become a more market-driven operation. 

Warren Hui, MD, China Media Exchange, said: “The restructuring will have no major impact on advertising rates as SMG still has a monopoly in Shanghai, but this move will increase opportunities for TV production houses and advertisers. There will be new opportunities for advertisers with more market-driven TV entertainment production.”

Hui added that separating broadcasting and production for TV entertainment and drama programmes has been the trend in China for the past few years. Local drama productions have dominated the TV ratings among the mass audience, whereas the popularity of imported TV programmes from Hong Kong and Taiwan has dropped. "The Chinese Government hopes to strengthen and enhance local TV entertainment content, so if the TV market is opening up, it won’t be dominated by overseas productions.” 

SMG's president Li Ruigang has this year been pushing for an overhaul at SMG to allow external investment in the company. 

However, one media analyst in Shanghai said that SMG faced a challenge in that its staff are not yet focused on responding to the market. “China media companies are in two worlds, one commercial and the other as a department of the Chinese Government,” he said. “SMG is making lots of money, though it is frustrating for advertisers as it is not a company set up to make profit. Advertisers want to advertise on programmes that would be popular among young and affluent audiences, but the Government doesn’t want to run programmes that would be offensive to older people or too controversial for a mass audience."

He added: “The people working in companies like SMG are civil servants. They move up the career ladder and get promoted when they follow the Government's policies and do not focus on market needs. The reorganisation is still good news but at the end of the day it depends who is in charge. SMG needs people who are media savvy and interested in making a profit.”