September 22, 2004
A high-profile Sino-foreign joint venture set up to co-produce television programmes has stalled, with Chinese authorities yet to approval the landmark deal.
United States media giant Viacom has been unable to make any progress in its first mainland media joint venture, with Shanghai Media Group (SMG), since the deal was announced in March.
The two key regulators - the State Administration of Radio, Film and Television (SARFT) and the Ministry of Commerce - have not yet amended their legislation to pave the way for a venture that allows foreign investment in the restricted media sector.
"SARFT is still drafting detailed regulations governing foreign investment in the TV production business," an industry source said.
"Unless SARFT changes its regulations, the Ministry of Commerce is not going to approve Viacom's joint venture."
Viacom chairman Sumner Redstone was in Beijing yesterday to meet SARFT director Xu Guangchun and discuss the venture.
Mr Xu said Viacom was very supportive of all local co-production and promised to issue written approval as soon as possible.
Mr Redstone is in Hong Kong today to attend the Forbes global CEO conference and will travel to Guangzhou to announce a strategic expansion in the southern part of the country.
Viacom, which owns the Nickelodeon children's channel and MTV, announced in March that it would set up China's first Sino-foreign joint venture in television content production.
The new company - with an investment of "a few million US dollars" from both parties - has found an office in Shanghai and plans to employ about 30 people. Production is scheduled to begin this quarter with product launches in the first quarter of next year.
"Things are going as well as we expected," said Charles Chau, senior vice-president of network strategy and managing director for MTV North Asia, Viacom's only representative in China. However, he admitted the firm had not yet received the formal approvals.
Last December, SARFT announced in principle that it was going to allow foreign participation in domestic TV programme production. However, it has yet to settle details such as what qualifies as a domestic or a foreign party when setting up a joint venture, how much of a stake a foreign partner can take and to what extent foreign companies can use their logos in the TV content.
Foreign media companies are banned from showing their logos on domestic TV under present legislation. Star TV, for example, had to enter the mainland market under the name Xingkong Weishi.
A regulatory framework allowing foreign investment in the TV programming business would not be in place until early next year, some industry sources said, meaning Viacom would have to wait about six months to make its move.
"The deal was announced too early," another industry source said. "The market and regulations are not clear and ready at the moment."
As far as Viacom is concerned, it wants to enter China under its own branding. "We want to leverage the power of the brand Nickelodeon," Mr Chau said.
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