U.S. Media See a Path to India in China’s Snub
By TIM ARANGO - New York Times - 4 May 2009
After many years of fervent lobbying and deal-making in China, American media companies have little to show for their efforts there and are increasingly shifting their attention instead to India.
Media executives still believe that Chinese audiences are receptive to Western culture — “SpongeBob SquarePants” is a big hit in China — but many companies have been pulling back out of frustration over censorship, piracy, strict restrictions on foreign investment and the glacial pace of its bureaucracy.
In recent weeks, America Online shut its operations in China, for the second time. Warner Brothers, the movie studio that shares a corporate parent with AOL in Time Warner, had plans as recently as 2006 to open more than 200 retail stores throughout China, with a local partner. Today there are no such plans.
“No one really has a decent-size presence there, and no one seems to know how to get one,” said Michael Del Nin, senior vice president for international and corporate strategy at Time Warner. “In terms of priorities, the focus is elsewhere.”
Increasingly, that focus is India, a country with a fast-growing economy and fewer government impediments for foreign media companies. In March, the Motion Picture Association of America opened an office in India for the first time, in Mumbai. A little over four years ago, Dan Glickman became the head of the association, and he has visited China several times.
“The feeling was that there were greater opportunities then than there are now,” he said.
This is a stark reversal. For many years, American media executives have extolled the potential of China, wooing executives and promoting the potential goldmine of reaching its one billion-plus population. Sumner M. Redstone, who controls Viacom and CBS, entertained Chinese officials in his Beverly Hills mansion over meals prepared by Wolfgang Puck.
But for media companies, frustrations have been growing. For several years, China has capped the number of foreign films that can be shown in theaters at 20.
Sometimes studios back away from even seeking the approval of Chinese authorities, as Warner Brothers did last year with “The Dark Knight,” because of a belief that the movie would not pass muster with government censors. “The Dark Knight” is the second-highest grossing movie of all time, with more than $1 billion at the worldwide box office, after “Titanic” (in dollars not adjusted for inflation).
In November, Warner became the first studio to announce it would make new movies available in China over a video-on-demand at prices low enough — about 60 cents to $1 — to compete with pirated versions. The service still is not under way.
Even with access, it is possible to reach only a tiny portion of the Chinese. In China, for example, CNN International is available only in hotels that cater to foreign business travelers and in embassies. Viacom has an MTV China, but it reaches only about 14 million homes in the Guangdong Province.
“It seemed like China captured everyone’s imagination,” said William H. Roedy, chairman of MTV International. “I think everyone expected too much, too soon. You have to be patient.”
Rupert Murdoch engaged in a decade-long odyssey — some say obsession — to entertain China’s vast populace. Mr. Murdoch found a wife, but very little revenue. His wife, Wendi Murdoch is paid $100,000 a year to “provide strategic advice” on the development of MySpace China, a joint venture operated by the News Corporation, according to regulatory filings.
Other than that, Mr. Murdoch’s activities in China are minimal. His Star TV, a pan-Asian satellite service, has channels in Chinese, but reaches only a small presence on mainland China. The company has significantly cut its staff in China in recent years.
Troubles with Chinese investments have even reached back to American shores. Yahoo and Google have been criticized in the United States for cooperating with Chinese censors.
When Jack Cafferty, the CNN commentator, insulted China last year by saying its products were “junk” and its leaders “goons,” Time Warner quickly apologized. But the episode has lingered in the minds of executives.
Their gradual disenchantment puts media companies at odds with many industries, like consumer products, that still look for large-scale growth in China. Nike recently said China was its primary area of growth in Asia, as revenues there increased 29 percent through the first nine months of its fiscal year. Coca-Cola is planning to increase its business there, despite a recent ruling by Chinese regulators that shut down the takeover of a juice company. And despite its problems elsewhere, General Motors remains a force in China.
In India, American-owned networks can reach far bigger audiences than in China, because of fewer government restrictions. Recently, Turner Broadcasting and its movie studio, Warner Brothers, which are part of Time Warner, established a new English-language channel called WB in India. Turner Broadcasting Systems, another unit of Time Warner, has started a Hindi-language pay-TV channel, REAL.
“We’re certainly focusing on India,” said Louise Sams, executive vice president for and general counsel of Turner networks. “There’s been a huge amount of growth in the number of networks in India over the last couple of years.”
Viacom, meanwhile, made a significant investment in India last year with Colors, which has become the top-rated entertainment network there in recent weeks. Its top show, “Balika Vadhu,” is a drama about a girl who marries at age 8. Another popular show is a locally based reality show with a premise like that of “Fear Factor.” MTV India of Viacom reaches 30 million homes, more than twice that of the network’s China outpost.
But executives remain alert to any signs of a thaw in China. When “Slumdog Millionaire,” which was filmed in India, won an Academy Award for best film this year, it caused a stir in China’s film community and raised hopes that China, out of regional rivalry and envy, might become more open to American studios.
“Now that they’ve seen ‘Slumdog,’ they want more movies produced in China,” said Jeanette Chan, a lawyer who represents United States film studios in Asia. “There’s this undercurrent, this competition, between China and India. Particularly when they see Bollywood do well.”
After many years of fervent lobbying and deal-making in China, American media companies have little to show for their efforts there and are increasingly shifting their attention instead to India.
Media executives still believe that Chinese audiences are receptive to Western culture — “SpongeBob SquarePants” is a big hit in China — but many companies have been pulling back out of frustration over censorship, piracy, strict restrictions on foreign investment and the glacial pace of its bureaucracy.
In recent weeks, America Online shut its operations in China, for the second time. Warner Brothers, the movie studio that shares a corporate parent with AOL in Time Warner, had plans as recently as 2006 to open more than 200 retail stores throughout China, with a local partner. Today there are no such plans.
“No one really has a decent-size presence there, and no one seems to know how to get one,” said Michael Del Nin, senior vice president for international and corporate strategy at Time Warner. “In terms of priorities, the focus is elsewhere.”
Increasingly, that focus is India, a country with a fast-growing economy and fewer government impediments for foreign media companies. In March, the Motion Picture Association of America opened an office in India for the first time, in Mumbai. A little over four years ago, Dan Glickman became the head of the association, and he has visited China several times.
“The feeling was that there were greater opportunities then than there are now,” he said.
This is a stark reversal. For many years, American media executives have extolled the potential of China, wooing executives and promoting the potential goldmine of reaching its one billion-plus population. Sumner M. Redstone, who controls Viacom and CBS, entertained Chinese officials in his Beverly Hills mansion over meals prepared by Wolfgang Puck.
But for media companies, frustrations have been growing. For several years, China has capped the number of foreign films that can be shown in theaters at 20.
Sometimes studios back away from even seeking the approval of Chinese authorities, as Warner Brothers did last year with “The Dark Knight,” because of a belief that the movie would not pass muster with government censors. “The Dark Knight” is the second-highest grossing movie of all time, with more than $1 billion at the worldwide box office, after “Titanic” (in dollars not adjusted for inflation).
In November, Warner became the first studio to announce it would make new movies available in China over a video-on-demand at prices low enough — about 60 cents to $1 — to compete with pirated versions. The service still is not under way.
Even with access, it is possible to reach only a tiny portion of the Chinese. In China, for example, CNN International is available only in hotels that cater to foreign business travelers and in embassies. Viacom has an MTV China, but it reaches only about 14 million homes in the Guangdong Province.
“It seemed like China captured everyone’s imagination,” said William H. Roedy, chairman of MTV International. “I think everyone expected too much, too soon. You have to be patient.”
Rupert Murdoch engaged in a decade-long odyssey — some say obsession — to entertain China’s vast populace. Mr. Murdoch found a wife, but very little revenue. His wife, Wendi Murdoch is paid $100,000 a year to “provide strategic advice” on the development of MySpace China, a joint venture operated by the News Corporation, according to regulatory filings.
Other than that, Mr. Murdoch’s activities in China are minimal. His Star TV, a pan-Asian satellite service, has channels in Chinese, but reaches only a small presence on mainland China. The company has significantly cut its staff in China in recent years.
Troubles with Chinese investments have even reached back to American shores. Yahoo and Google have been criticized in the United States for cooperating with Chinese censors.
When Jack Cafferty, the CNN commentator, insulted China last year by saying its products were “junk” and its leaders “goons,” Time Warner quickly apologized. But the episode has lingered in the minds of executives.
Their gradual disenchantment puts media companies at odds with many industries, like consumer products, that still look for large-scale growth in China. Nike recently said China was its primary area of growth in Asia, as revenues there increased 29 percent through the first nine months of its fiscal year. Coca-Cola is planning to increase its business there, despite a recent ruling by Chinese regulators that shut down the takeover of a juice company. And despite its problems elsewhere, General Motors remains a force in China.
In India, American-owned networks can reach far bigger audiences than in China, because of fewer government restrictions. Recently, Turner Broadcasting and its movie studio, Warner Brothers, which are part of Time Warner, established a new English-language channel called WB in India. Turner Broadcasting Systems, another unit of Time Warner, has started a Hindi-language pay-TV channel, REAL.
“We’re certainly focusing on India,” said Louise Sams, executive vice president for and general counsel of Turner networks. “There’s been a huge amount of growth in the number of networks in India over the last couple of years.”
Viacom, meanwhile, made a significant investment in India last year with Colors, which has become the top-rated entertainment network there in recent weeks. Its top show, “Balika Vadhu,” is a drama about a girl who marries at age 8. Another popular show is a locally based reality show with a premise like that of “Fear Factor.” MTV India of Viacom reaches 30 million homes, more than twice that of the network’s China outpost.
But executives remain alert to any signs of a thaw in China. When “Slumdog Millionaire,” which was filmed in India, won an Academy Award for best film this year, it caused a stir in China’s film community and raised hopes that China, out of regional rivalry and envy, might become more open to American studios.
“Now that they’ve seen ‘Slumdog,’ they want more movies produced in China,” said Jeanette Chan, a lawyer who represents United States film studios in Asia. “There’s this undercurrent, this competition, between China and India. Particularly when they see Bollywood do well.”