China Cable Consolidation: Second Time the Charm? 中国有线电视行业整合势头正劲

By newsdoug on May 20, 2011

Despite seemingly long odds against it due to resistance from local interests, China looks determined to force consolidation of its fragmented cable TV industry in a bid to create a viable force to promote development of digital technologies and more offerings for content- and application-hungry consumers and businesses. Nearly half a year after launching the latest consolidation effort, the top man at China’s TV regulator is being quoted by local media as recently saying consolidation at the provincial level should be completed within 2 years, and a new national player will emerge shortly thereafter. (English article) I’ve seen a number of reports saying consolidation is underway in various provinces, though it’s always hard to tell if this is really happening or just wishful thinking. I previously pegged the chances for Cable consolidation gains momentum success of this latest initiative at 30-40 percent (previous post) but I might have to revise that figure upward to 50-50 in light of this new determination, following failure of a similar effort 5 years ago. From a business standpoint, such consolidation would benefit everyone, providing a big boost for programming makers like Huayi Brothers (Shenzhen: 300027) and video streamers like Youku (NYSE: YOKU). That, in turn, would create new business for not only the new national cable operator, but also China Telecom (HKEx: 728; NYSE: CHT) and China Mobile (HKEx: 941; NYSE: CHL), which are also working on digital TV offerings. Again, the major stumbling block is entrenched local interests that may try anything to avoid giving up their hold on local cable franchises.

Bottom line: Cable TV consolidation is gaining momentum, reflecting the government’s determination to make it happen, and now stands a 50-50 chance of success.

尽管因面临地方利益的抗拒而困难重重，但中国似乎决心对其呈现条块分割的有线电视行业进行强力整合，以推动数字技术的发展，更好地满足消费者需求。最新一轮整合行动进行近半年之後的今天，中国媒体援引行业监管部门领导近期的讲话说，应能在两年之内完成省级整合工作，一个新的国家级有线电视网将随後现身。我已看到一些报导称，多个省份都在进行整合，但很难说是的确有这麽回事，还是大家一厢情愿的想法。我以前曾预计此轮整合计划有三、四成的成功希望，但现在考虑到当局最新表现出的决心，我大概要把这一概率提高到五成了。从商业角度看，整合对各方都有好处，对於华谊兄弟<300027.SZ>和优酷<YOKU.N>等内容制造商来说更是个强心剂。内容提供方的利好消息又将意味着新国家级有线网络运营商和中国电信<0728.HK>和中国移动<CHL.N><0941.HK>等相关企业的新业务机会。当然，主要的绊脚石仍是根深蒂固的地方利益，它们将不计代价地力求保住自己对地方有线电视网的控制权。

一句话：有线电视业整合势头正劲，说明了政府的决心，目前的成功把握有五成。

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