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Business

Bertelsmann to Step Up Presence on Chinese TV Market

The German media giant is finally following in the footsteps of U.S. rivals and plans to massively increase its presence on China's television market as it makes Asia one of its key strategic regions.

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TV for the people

Following in the footsteps of U.S. media giants AOL Time Warner, Viacom and News Corp., Germany's Bertelsmann AG is set to massively increase its presence on China's television market as it makes Asia one of its key strategic regions.

During a visit to Beijing, Bertelsmann chief Thomas Middelhoff received binding permission from the Chinese government to produce television content in China.

The most likely first result from this agreement will be a joint production with Chinese partners of the successful game show "The Price is Right".

The show is expected to make its debut in July this year on TV-screens in Shanghai, confirmed a spokesman for Bertelsmann subsidiary RTL Group, which will produce the show together with local partners Sino Universal Media and Oriental TV.Handelsblatt has learned that preliminary talks are also underway between Bertelsmann and Hong-Kong based Sun Satellite TV.

Sun TV operates a satellite channel, markets TV content to local channels, and plans to become a leading provider of family programing.

Says Bruno Wu, chief executive officer of Sun TV: "We see great potential in a cooperation with Bertelsmann."Programs like "The Price is Right" have two distinct advantages in the politically highly sensitive Chinese TV market: they are non-political and thus unlikely to upset Chinese censors and they are aimed directly at advertisers.

Some 93% of Chinese households own a television and some 1,200 local channels are on the lookout for modern content, including programs that originated in the West.

Advertising volume totals around 2.4 billion euros and is to grow by around 13% this year, according to Xinghua Online. Asia's television market is new ground for Bertelsmann.

Even though television is the continent's biggest advertising medium, with a total volume of around $26 billion, and even though the Japanese TV market alone is twice the size of Germany's, RTL Group has yet to develop anything more than a minor local presence.

Bertelsmann's Middelhoff said he plans to raise Asia's share of total group sales to 10% over the next twelve years from the current 2.5%.

Since the established TV markets in the region are firmly in the hands of competitors, this goal can only be achieved through growth in China.

But Bertelsmann is joining the race in China at a late stage. Several U.S. channels have long been broadcasting from Hong-Kong to hotels and expatriate communities.

These experiences will now be useful for AOL, Viacom and News Corp. for their pilot program for the Chinese province of Guangdong. A speedy agreement on a cooperation with Sun TV thus looks all the more important for Bertelsmann.

In Europe, RTL has created a successful marketing instrument by linking television and Internet. Since Sun also owns Sina.com, China's largest Web Site, it could offer a chance for this instrument to be extended