Hunan TV or the spectacular rise of a Chinese network

Article  by  Evelyne LETAWE  •  Published 25.11.2010  •  Updated 16.12.2010
Hunan TV website
How do private Chinese channels like Hunan TV successfully balance the search for television audience share and economic resources with respect for governemental audiovisual norms?


Summary

Since 2008, China has ceased to be our planet’s factory. It is no longer a mere market of one-and-a-half billion customers. China has stopped patiently (and passively) waiting for Western transnationals, with their products and services, to open the doors of the world of consumption. China has emerged strengthened from the financial crisis and, during its integration into the global economy, has made few mistakes. The country is now feeling strong enough to cope with foreign multinationals, both in China and abroad.
 
This is also reflected in the development of its television landscape, which, despite having only emerged in the last thirty years, nonetheless counts a third of the world’s viewers. On the country’s half-billion sets, 2500 channels are presently broadcast, virtually all Chinese [+] NoteAnd officially, no foreign one, exception made of a few experiments in Guangdong province, see explanation after.X [1]. And its media groups now have worldwide ambitions, although these global players of tomorrow are of humble origins.
 
These channels, originally created at the local level, have long lived in the shadow of CCTV, China Central Television. The State channel, CCTV was the first to entertain the Chinese audience with games and shows, supplanting official press and radio mass media as the medium of reference in the 80s. However, forced to maintain the formal image of a government television station, CCTV faced increased competition in these fields from bolder regional stations from the 1990s onward. These channels proliferated in a favorable context of broadcasting decentralization, growing to more than 4,000 by the turn of the century.
 
Among these newcomers that challenged CCTV, Hunan TV Station, from Hunan Province in the center of China, set itself apart with its early pioneering attitude and a series of almost uninterrupted successes, which have turned its holding structure, HBS, Hunan Broadcasting Group, into the second-largest television group in China.
 
Hunan province (source: Chinamtours)

Its early success was built on a succession of remarkable feats and an accurate strategic vision of the sector’s evolution. Hunan TV has built its success by focusing on youth and entertainment. This positioning is the result of a constant adaptation to the many changes that have occurred in China since 1983.

Remarkable beginnings

At this time, the Chinese government decided to extend TV broadcasting, up until this point largely limited to CCTV. It instructed provincial, municipal and local authorities to create and fund their own television and radio transmitters. The economic situation was gradually liberalizing and decentralization was occurring. Local authorities now had the ability to stimulate their communities and make them grow, not only economically but also in terms of image, by having these local media at their service. Their success was astonishing: 52 channels in 1983, 586 in 1992, 4000 in 1997, and 2500 currently. Competition is fierce, but restricted by the local roots of these regional broadcasters.
 
To conquer new market shares, the only option lay in satellite broadcasting [+] NoteLet’s make clear that we are not talking about individual satellite dishes for private viewers (this was officially forbidden in 1993), but about satellite transmission to the local cable distributors scattered all over the country.X [2]. Via the packages offered by cable operators throughout the country, Chinese viewers were able to receive the full array of CCTV’s offering, as well as local and regional channels. In the remaining slots, satellite channels from other provinces directly competed for audience attention.

By 1999, all provincial chains had their own satellite channel. In this niche, Hunan Satellite Television stood out for the first time. Thanks to its bold and original programming, focused on drama and variety, it surprised and attracted crowds. Very soon, it started exceeding its original local base, winning national fame and undeniable predominance. It remained, for example, the leading satellite channel in terms of audience for no less than 80 consecutive months (almost seven straight years).
 
Hunan TV therefore started to build a name for itself from the late 1990s onward. It took the path of popular entertainment, based on market research, perfectly calibrated formats[+] NoteAs the academic Bai Ruoyun notices, this evolution is a worldwide trend.X [3], as well as series (very profitable in terms of advertising revenue and syndication, and ubiquitous on Chinese screens). Hunan TV therefore joined the wave of globalized culture very early on. It created a surprise throughout China, still largely culturally closed, sometimes with a hint of scandal: a weather forecast program in 2003, on which starlets dressed suggestively to give the presentation, suffered the wrath of the censors and swiftly went out the window.
 
While its tone and quality sometimes created a stir, it grew by leaps and bounds in terms of audience and market share. In ten years, its audience grew from 65 to 880 million viewers. But it was not until 2005 that the rest of the world found out about Hunan TV, thanks to "Super Girls", or more precisely, "The Mongolian Cow Sour Yogurt Supergirl", sponsored by Mengniu, a brand of dairy products. Basically a simple amateur singing competition based on "Britain's Got Talent", its impact took on phenomenal proportions, with 300,000 applicants, 400 million viewers who tuned in for the final – or 11.6% of the audience – and 60 million votes by SMS. In the groundswell of popularity prompted by the program, the success of mass voting via SMS provided regulators with food for thought. Hunan TV was simply aspiring to earn money with these paid SMS. But these fans of pop music proved that it was possible for Chinese citizens to make their choices and transmit them instantly – the antithesis of the mechanisms  of representation in place at the time. Furthermore, the victory of Li Yuchun, a tomboy who broke with stereotypes of the average pre-formatted Chinese mandopop[+] NoteMandopop : abbreviation for « Mandarin popular music »X [4] starlet, created sensation and generated debate.
 
This reputation for transgression made Hunan TV popular. Its audience gave it confidence, as proven by a recent rumor according to which Hunan TV had sought permission to develop its own newscast, instead of retransmitting the 7PM newscast from CCTV-1, as all other Chinese channels do. The information was quickly denied, but illustrates the image of independence that Hunan TV has. If we stopped our analysis here, we could simply present Hunan TV as a breath of fresh air and a vector of modernity for Chinese viewers. With its young, dynamic programs, and its unabashed boldness, does Hunan TV represent a David of the contemporary era, up against the Goliath of government regulators and central authorities?

The answer is more complex. By taking a bit of distance and observing the progress in an institutional and administrative environment, it is actually easy to see that Hunan TV and its development illustrate as well as they adhere to the objectives and long-term policies of the central government. In fact, despite the considerable expansion of which Hunan TV is already emblematic, the budding sector reached its limits in the late 1990s. The ensuing bottleneck forced a rethinking of the Chinese media landscape and its preparation for an opening up to globalization. The government’s response was to take back control of the sector, initiating a phase of consolidation associated with an overhaul that Hunan TV used to its advantage to strengthen its position.

In reality, Hunan TV is neither a potential opponent nor a body acting at the margins of the system. It embodies a new version of the Chinese media landscape: commercialized, institutionalized, and placed back under the direct influence of the authorities. Following some structural changes, it is ready not only to resist the transnational companies, but to conquer the world and its market share. The political and diplomatic positions of the Chinese government no longer appear in its program schedule[+] NoteA visit on its website proves it; its homepage and the largest part of its editorial content are only devoted to programs and entertainment. Its “news” section only covers gossips and trivia, official news only appearing through the republishing of a newswire.X [5], but its grip, which now lies in the field of popular culture, remains strong.
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The overhaul of the Chinese media landscape

The growth of the 1990s that provided Hunan TV the opportunity to emerge also caused sizeable problems for the new Chinese television industry.
 

SARFT logo (source: SARFT)

In fact, the supervisory authority, the all-powerful State Administration for Radio, Film and Television (SARFT [+] NoteDirectly depending from the State Council.X [6]), can only exercise control over this burgeoning myriad through the regions, municipalities and provinces, which causes a loss of direct influence for the central government. In addition, their local implementation and local administrative and bureaucratic limitations prevent these channels from expanding, creating partnerships with each other or external actors, thereby depriving them of reaching a state of maturity and financial viability.
 
Additionally, these new channels were badly stricken by the Asian crisis of 1998. The decline in advertising revenue that followed hit them badly. While they had peaked with an annual increase of 80 to 90% in the late 1990s, advertising revenues fell to less than 20% from 1998, and only 10% in 2000. The Asian crisis revealed a new phenomenon for China: the exposure of its economy to external events and circumstances. And the context of liberalization announced by its adhesion to the WTO brought about the realization that its audiovisual sector, among others, remained a highly fragile structure despite its tremendous growth. And concerning foreign influence, Rupert Murdoch and his News Corp. – perpetually rebuffed, sidelined and eventually giving up the game after ambitious and costly attempts – provided the clearest example proving to the authorities the need to prepare for the transnational competition that awaited.

Consolidation and modernization were therefore necessary. The goal was to create an industry strong enough for it to work under the rules of free market while preserving the official message and views. The issue here clearly goes beyond economics. Beijing was seeking, in a Chinese context in which politics, culture and social order are always closely intertwined, to strike a balance between free market logic and the control of its public opinion. As is often the case in China, the wave of reform came from above and its effect was decisive. Between 1999 and 2004, with a series of documents and announcements issued by the State Council and the SARFT, as well as the open support of the 16th CPC National Congress (2002), the transfer was initiated:
  • These media groups were placed back under the direct authority of the Party's Propaganda Department. They are thereby protected from the influence of their natural "owners" (regional and local authorities who had tended to their creation in the 1980s), thus strengthening their ties with central government.
  • They were "invited" to separate their commercial and administrative structures from their newsroom activities, with news remaining under full official supervision. These newsrooms kept operating as government entities. But the rest of the production activities were structured and managed as commercial enterprises and could evolve according to market rules, receive external capital or go for IPO.
  • The development of partnerships between various media or trans-regional groups was allowed and promoted. Provided they have been previously vetted by the government, private companies have the right to co-produce television programs.
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Hunan Broadcasting Group, an internationally-oriented new conglomerate

Contraction at the millennium was difficult to digest for those young television stations in development, including Hunan TV, which wavered for the first time and went through a serious financial crisis. The chain persisted in its bet for commercialization: in 2002, Hunan TV decided to focus its energies solely on the population segment of 16-24 year olds. It thus removed all generalist programs from its schedule and produced more series, talk shows and games, while trying to take advantage of all their commercial revenue potential. In doing so, Hunan TV confirmed once again that it remained at the forefront of reforms and changes, often leading them off successfully.

Even from a structural standpoint, Hunan TV took the lead. In 1997, the group split its operations. All activities not related to information were transferred to a new structure called Hunan TV & Broadcast Intermediary Corporation. The corporation was listed on the Shenzhen Stock Exchange in 1999[+] NoteThe chain owns 51% of its shares some 29% of staff members and private investors the remaining 20%.X [7]. This movement was judged a little too bold for the SARFT, which temporarily prohibited such practices that same year. It eventually advocated them as a guideline to follow some years later. Hunan TV opted for diversification and intensification of commercial activities in an environment that allows opportunities for synergy. Over the past two years, crucial partnership agreements have been concluded, widening the scope of Hunan TV. Already the owner of EEMedia, which represents some of the most famous Chinese artists, with its intense development of television series and music programs, HBS is going even further. In 2009, Hunan TV started a production and distribution company called Shengshi Films, in association with Shanda International. The company has a capital of 600 million Yuan RMB, provided mainly by Shanda, which is far from being a neutral partner: it is the leader in China’s ultra-popular online games sector, and also owns a publishing house. This offers extensive opportunities for synergy and varying offers of a specific product or content through different media and platforms.
 
Hunan TV resolutely seeks to access the opportunities created by new media. The prospects are indeed enticing: the rate of growth of online video advertising is expected to increase by 35% to 45% within 5 years, with a market estimated at $5.2 billion in 2014. Following Happigo, a teleshopping channel launched in 2006, in 2009, Hunan TV allied with Taobao.com, the Chinese equivalent of eBay and, in 2010, with QQ, the Chinese instant messaging software and veritable social network. Another agreement was also concluded in 2010 with AdChina, opening the market for expertise in B2C and e-commerce. As Hunantv.com CEO Ruobo Zhang stated: "Hunantv.com is Hunan TV’s only new online media platform, and has built an entertainment product line that integrates news, online video, social networking, online games and wireless value-added services across Internet, mobile and digital TV platforms [...]."

In television, two recent breakthroughs have established its new status as a national and international media group, the first being the 2009 takeover by Hunan TV of Qinghai TV, the official channel of the Qinghai province, a poor desert province in Southwestern China. Technically, this concerns the creation of a production company responsible for all programming on Qinghai TV, besides the local news. Hunan TV has a majority share in this new company and provides most of its staff. In short, this buyout seems to have benefitted everyone: QTV counted 174% more viewers between December 2009 and March 2010. Nowadays, its profile is that of the group’s "green" channel, aligned with the rural and wild character of Qinghai itself.
 
Hunan TV’s ambitions exceed the borders of China, and this is no new phenomenon. Here again, Hunan TV was the first provincial broadcaster to impose itself. It has been present in the United States via satellite since 2000. In 2002, Hunan Satellite TV launched an international chain, “The Global Channel”, based in Hong Kong and therefore benefiting from more autonomy from the mainland supervisory authorities. In 2004 it joined the "Great Wall Chinese TV Network", a group of Chinese channels available by subscription. Now well-established in Canada, Australia, Hong Kong, France, Mexico, Brazil and Taiwan, among others, Hunan TV is the most popular provincial Chinese broadcaster overseas. But its vision is evolving. Broadcasting programs intended for a mainland Chinese audience to its overseas community is no longer enough. This is why it launched MangoTV in April 2010 – a channel exclusively dedicated to the satellite broadcasting of entertainment content. The channel is resolutely turned toward the outside: international campaigns are launched to recruit presenters and candidates amongst the Chinese diaspora, and special attention is paid to the globalized characteristics of these new audiences in terms of program content – shown by the evolution of its slogan "Kuai Zhongguo" ("happy China") to "Kuai Le Quan Qiu Hua Ren" ("happy Chinese worldwide"). And more than just Chinese, as well, as China and its population, wherever they may be, are more and more culturally and socially similar to the rest of the world. By correctly anticipating this fusion, and in order to retain its preeminence, China has embarked on this overhaul of its television business.
 
Today, backed by its strong position in the global economy in the wake of the 2008 crisis that opened the doors to international markets, China now feels able to cope with transnational companies on its own territory. As Zhang Huali, vice president of Hunan Satellite TV, explained in an interview concerning the ins and outs of the consolidation of the 2000s, “only when such a situation occurs can large companies form, and only then can we compete with international companies like Murdoch […]. Otherwise, no matter how much the government puts in to bring the channels to Europe or the Americas, only overseas Chinese will watch them.”
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Conclusion

Success seems complete for Hunan TV and the Chinese television industry. But, underlying the story of this remarkable success, questions remain about the system’s sustainability. The changes were rapid, and their repercussions may be as well. The redesign and development that occurred over the past decade seem to obey free market rules. Let us not forget, however, that this is only an institutional process activated at the behest of the central government. Currently, while the search for profit is a goal shared by the party, what would be the outcome if goals were to come into conflict with official plans? Similarly, the arrival of outsider actors, stock market investors, companies and partners will only serve to reduce the grip of the authorities.
 
The dual identity of these new Chinese media groups provides a practical solution to reconcile presumably opposite dynamics. It also raises the question of their nature – part administrative body, part public institution, part business. This multiplicity of statutes does not exist in the west, but is increasingly the predominant structure used by Chinese socialism in its economic relations with the rest of the world.

Similarly, we must bear in mind the cultural and political aspects of this expansion. In the words of Wang Jing, a researcher who focuses on Chinese popular culture, "Not only has the post-socialist state not fallen out of the picture, but it has rejuvenated its capacity, via the market, to influence the popular culture agenda.”
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Bibliography

Ruoyun BAI, "Media Restructuring, Commercialization and the Blitz of Television Entertainment in the New Millennium China", Annual meeting of the International Communication Association, New York City, 25 May 2009
 
 
David BARBOZA, "Hunan TV cancels the bland to bring the offbeat to China", The New York Times, 27 November 2005
 
Zhen CAO, "Hunan TV’s success leaves others trailing", Shenzhen Daily, 27 July 2007
 
Liminand CHEN, Zhiwei FENG, "Hunan TV, Taobao.com set to form alliance", ChinaDaily, 30 December 2009
 
 
CFensi "Hunan TV aims for the world", 12 March 2010
 
 
Wei LIU, "TV stations cooperate in new venture", ChinaDaily, 27 May 2010
 
Rose MAJOR, "Hunan TV HK launch is first move outside China", Baidu.com, 18 May 2009
 
Myfew.net "Hunan TV International: An Introduction", 21 April 2010
 
 
PR Newswire: "Shanda Announces Joint Venture with Hunan TV", 12 November 2009
 
Doug YOUNG, "News Corp sells controlling stake in China TV channels", Reuters, 9 August 2010
 
Yi Lei ZHOU, "Hunan TV brings television shopping craze", HKDTC.com, 11 April 2006


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Photo credit : hunantv.com screenshot
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  • 1. And officially, no foreign one, exception made of a few experiments in Guangdong province, see explanation after.
  • 2. Let’s make clear that we are not talking about individual satellite dishes for private viewers (this was officially forbidden in 1993), but about satellite transmission to the local cable distributors scattered all over the country.
  • 3. As the academic Bai Ruoyun notices, this evolution is a worldwide trend.
  • 4. Mandopop : abbreviation for « Mandarin popular music »
  • 5. A visit on its website proves it; its homepage and the largest part of its editorial content are only devoted to programs and entertainment. Its “news” section only covers gossips and trivia, official news only appearing through the republishing of a newswire.
  • 6. Directly depending from the State Council.
  • 7. The chain owns 51% of its shares some 29% of staff members and private investors the remaining 20%.
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