China’s Answer to Larry King?

 

International Herald Tribune – 2/7/05

 

Chris Buckley

 

Talk show host sees wealth of opportunity in rising TV industry

 

BEIJING Jack Pan says he hopes one day to be "the Chinese Larry King," as well known in China as CNN's talk show host is in the United States. It is a grandiose ambition for a Chinese television host who began his career as an engineer and propaganda official and whose own show just started broadcasting here.

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But Pan, like many Chinese and foreign television programmers, is betting that an opening of the industry in China over the coming years will offer lucrative opportunities. And he has already coaxed an eclectic list of international celebrities to appear on his one-hour interview show, "21@21," which began broadcasting weekly on Shanghai's Dragon TV on Jan. 7. So far they include Yoko Ono, Nicole Kidman, Arnold Schwarzenegger and Dennis Rodman.

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"I believe we will make a lot of money," said Pan, who spoke in slightly stilted English but exuded the chatty confidence of a television pro. "In 10 to 15 years, as a host I won't make as much as Larry King, but if audiences still like me, I will make half as much as Larry King makes."

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That Pan's show is on the air at all underscores how reforms in the past decade, including new investment rules announced late last year, have guardedly opened China's state-controlled television production to private domestic and international investors who have the money, patience, and stamina to deal with mazes of bureaucracy.

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But the media remain one of the Chinese government's most tightly guarded investment sectors, and many aspiring players have tales of frustration and disappointment, including Pan. His company, Pan Media, is a minnow compared with multinationals like Viacom, Time Warner and News Corp., but its journey highlights the shoals media investors here must navigate.

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"It's battle after battle after battle," said Steve Chung, Pan Media's chief operating officer. "It builds character."

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Pan's television show is his latest stop in a career that began as an engineer and then propaganda official in China's Ministry of Construction. At 30 he moved to the United States, where he worked as a dishwasher in New York's Chinatown and then as a jewelry salesman before returning to China in 2000 as the sales chief for Audi, the German carmaker.

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During his hotel stopovers while promoting cars, Pan watched the thin diet of television programs available to Chinese viewers.

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"The more I watched, the more dissatisfied I felt. I saw a market opportunity," he said in a recent interview. He first worked as a television host for Phoenix Television, the Hong Kong-based satellite channel that broadcasts into parts of China, before setting up his own production company in 2003.

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Pan, 46, is not alone in his faith in the future of television in China. Over the past decade, the number of stations has surged from a few dozen to close to 300 with hundreds of different channels, including many that are available nationwide on cable services. The number of households with televisions has grown from 310 million in 1997 to 350 million in 2004, including 105 million cable television households.

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From 2003 to 2004, the money that advertisers spent buying time on Chinese television grew by one-third to $24 billion, according to Rita Chan, director of AGB Nielsen Media Research in China. Judging from early ad sales for China's main television station, growth this year will be about 20 percent, and Beijing's 2008 Olympics are likely to fuel continued double-digit growth, she said.

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This swelling potential market has spawned an appetite for better-produced programs that the state-controlled channels cannot satisfy. Many of China's hundreds of channels recycle constant reruns of old films and dramas, both Chinese and foreign.

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"Consumers are getting more sophisticated, and so TV and advertising must also become more sophisticated," said Jeanne-Marie Gescher, the founder of Claydon Gescher Associates, a Beijing-based company that advises companies about China's media market.

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"But China doesn't have enough content to cover all these channels," she noted, citing industry executives' estimates that China makes about half of the television programs it needs.

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The Chinese government has cautiously allowed international media companies into the country. In November, the State Administration of Radio Film and Television announced the latest rules, which relaxed some controls on foreign investment in Chinese television production.

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The restrictions remain stringent, however, for foreign partners. They cannot hold more than 49 percent of a joint venture with a state-controlled Chinese partner, must use "Chinese themes" in two-thirds of their programs and cannot produce news programs.

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"The Chinese government's approach to the multinationals is, 'Let's let them in just far enough that they're interested in participating,"' said David Wolf, who analyzes the Chinese media for the public relations firm Burson-Marsteller in Beijing.

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Nonetheless, China's market of 1.3 billion people holds a powerful attraction for international media investors. Among the earliest was Rupert Murdoch's News Corp., which owns 38 percent of Phoenix TV and also holds Star TV, which is allowed to broadcast sports and entertainment in some areas of China. Viacom, Sony and Time Warner have sought to enter China's market by signing co-production deals with state-owned companies.

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But even if broadcasters can get their foot in China's door, there are still many political and commercial obstacles to getting on the air. Some, such as Time Warner, have abandoned partnerships with Chinese companies after delays and frustrations. In 2003, Time Warner sold its stake in China Entertainment Television, a co-production company with China Film, after stymied expansion plans led to major losses.

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And the chairman of Viacom, Sumner Redstone, has had to make many visits to China to secure a small foothold for his company's programs, including the music channel MTV.

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Even Pan's tiny company, with initial investments of $500,000, had to deal with sensitive ownership issues. Pan Media was originally registered in Hong Kong to attract international investment. But Pan found that Chinese partners were wary of dealing with a non-mainland company, and now he is in the middle of transferring corporate registration to Beijing - effectively changing from a "foreign" to a local company.

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"Everything becomes easier when you're a local company," Chung said.

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China wants to keep foreign broadcasters at arm's length while it builds its own media conglomerates to ensure that the government can maintain some control over what Chinese viewers watch, analysts say. It also hopes that those stations will become commercially viable and capable of providing Chinese television programs to the world, according to the analysts.

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"China is determined to grow its media into an industry," said Wolf, the media analyst. "Senior leaders see the role of BBC and CNN, and they want to build global media businesses."

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China's emerging media conglomerates are eager to soak up the expertise and technology of international companies, but they are wary of protecting their local dominance. This is especially true of China Central Television.

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After a distribution deal with a new commercial satellite TV company fell through, delaying the launch of Pan's program by months, he approached CCTV as a possible partner. But he was frustrated by what he said were CCTV's overbearing management and its demanding financial terms - a reaction apparently shared by many potential investors.

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"CCTV is the proverbial 800-pound gorilla," said Wolf, the media analyst. "They're extraordinarily difficult to negotiate with. It's a lot easier dealing with the regionals," he added, referring to the smaller stations controlled by China's provinces and biggest cities.

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Pan then turned to an ambitious regional broadcaster, Shanghai Dragon TV, which is owned by the Shanghai Media Group.

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"We felt we need a big brother, a more powerful TV brother to partner with," said Chung, who gave up a job at Goldman Sachs to try his hand in China's fledgling media market.

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In China, where the distributor dominates, Pan Media must pay Dragon TV to have Jack Pan's show broadcast nationwide, in return for the right to advertising revenue from the broadcast.

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State-owned Chinese allies not only give private and foreign access to audiences; they are also often important brokers in coping with China's many-layered media controls, since censorship rules are often far from clear. Pan said he made sure that his Shanghai partner vetted all his possible guests, as well as the list of questions. Then the finished interview is inspected for any content considered unacceptable before the interview goes on the air.

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"I used to work for the propaganda department, and all the TV, the press, the media is usually under the management of the propaganda department," he said. "We don't want to make any mistakes in terms of politics and political sensitivity."

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Pan, a Chinese citizen, was a member of the Communist Party of China before he moved to the United States, and now he belongs to a minor party allied to the Communist Party.

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For the time being, Pan wants to concentrate on honing his talk show, which garnered 1.3 percent of the television audience in Shanghai for its first broadcasts, a respectable showing in China's fragmented market.

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Pan may aim for the same status as a U.S. talk show host, but he conducts his interviews with a decorum rare on many U.S. shows. Even his meeting with Rodman, the volatile former basketball player and actor, was gentlemanly, Pan said.

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"I didn't expect to have such a nice, friendly conversation with him," Pan said. "He said, 'Jack, you are a very, very nice brother."'