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China: skyrocketing ad market propels industry.

SHANGHAI

It looks like the "China dream" is beginning to be become the China reality.

True, foreign content on local channels is still limited by law, and foreign broadcasters are only just getting a toehold in the country. But TV advertising revenue--the key to better content--continues to go through the roof.

Nielsen Media Research figures show that the Chinese ad market surged by 40% in 2003, bringing it to $14.5 billion. Of this total, over 75% went to television.

Nielsen predicts that China, the world's fifth largest ad market, after the U.S., Japan, the U.K. and Germany, could be in second place within a decade.

Regulations brought in on Jan. 1 may slow the mega ad growth, but seem unlikely to change the bigger picture.

According to the rules, introduced by the State Administration of Radio, Film and Television, ads during the peak hours of 7-9 p.m. are restricted to nine minutes each hour. Peak hours generate close to 90% of total ad revenue.

On the production front, December saw the announcement of new co-production laws, allowing foreign media groups to establish joint-venture production companies in China.

"Strong and influential" foreign firms are new permitted to held minority stakes in production facilities, providing their local partner has previously received Film Bureau approval for at least two films or television programs. The new laws also encourage local production companies to develop new pay TV channels, a move clearly designed to counter disappointing take-up of emerging China's digital cable stations."

2003 was a big year for Shanghai, and in particular the city's media conglom, the Shanghai Media and Entertainment Group (Smeg).

In May, the media giant--which reported a profit of 1 billion yuan ($120 million) last year--signed a groundbreaking content-sharing agreement with CBNC.

In a second coup for Smeg and its media boss, Li Ruigang, October saw its launch of Dragon TV, the only regional station to broadcast nationally.

Previously, Central China Television (CCTV), with its 12 channels, had a monopoly on national broadcasts.

Several foreign broadcasters received cable landing rights in Guangdong Province during 2003, including MTV, joining a lineup that now includes Time Warner, News Corp and Phoenix.

Outside the prosperous southern region, however, foreign broadcasters are limited to satellite, available only in high-end hotels and foreign compounds.

One exception to this is Encore Intl. (EI), which continues to maintain a daily block of imported content on CCTV.

"For 2003, we looked at beefing up on Asian content," says EI prexy Michelle Whitten. "Korean, Japanese and Singaporean shows were all successful.

"In the late 1990s there was still a lot of hype about getting into China," she says. "These days, some distributors held back. They say, 'China's full of pirates. We don't want in.'"

EI's slate continues to grow, however Just this month, it announced a content deal acquiring 200 hours of telenovelas from Televisa and Global Media Distribution.

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Title Annotation:Territory reports
Author:Jones, Arthur
Publication:Variety
Date:Mar 29, 2004
Words:483
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