Trade Resources Industry Views Body Moots National Cable Network

Body Moots National Cable Network

China plans to launch a countrywide cable television network by integrating existing listed local networks into one public company by the end of 2020, said a government circular posted online on Friday.

In response, stocks of six A-share companies engaged in cable television, among others, rose some 1 percent.

There are an estimated 30 local cable TV networks in China, six of which belong to listed companies that are also engaged in other businesses.

While content creators could expect huge nationwide audiences, viewers would be able to access a wider range of shows. For example, viewers in Beijing could watch Shanghai cable TV, said analysts.

They further said more details of the plan, whenever they are made available, may well benefit the entire sector, especially those segments involved in the creation of cable network infrastructure.

Eventually, investor sentiment toward cable stocks may also improve.

The circular was posted on an official WeChat account of the Academy of Broadcasting Planning. It cited guidelines from the State Administration of Press, Publication, Radio, Film and Television, and said the plan aims to consolidate provincial cable television network resources and improve integration of cable television and internet networks.

The plan said that by the end of the 13th Five-Year Plan (2016-20), integration of State-owned cable television networks shall be "approximately completed".

The integrated cable television company will have China Broadcasting Network Ltd as the major shareholder, and provincial cable television networks as joint shareholders.

The company will run on a parent-subsidiary structure in the form of a national corporation with a countrywide network.

The establishment and funding of the new company will be in two phases, the guideline said.

In the first phase, CBN will use its shares in provincial networks, assets in national broadcasting and television cable grids, and cash to fund its stake in the new company.

Shareholders of unlisted provincial cable television networks will pick up a collective stake of no less than 51 percent in the new company.

In the second phase, the public listing of the new entity will be pushed forward through equity replacement and merger, after integration of existing listed cable television companies, the guideline said.

The guideline, however, did not specify which existing companies will be involved in the plan, or a detailed time frame for the integration process.

Xu Chun, analyst with Changjiang Securities, said in a research note that a China-wide network would compel market players to expand and modernize their distribution channels

China's broadcast sector, which spans news, information, education, culture and entertainment, has been undergoing reforms in recent years, to meet the changing viewer demand for value-added content.

Source: China Daily
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