China Makes Up Its Mind: Cable Consolidation 中国终於下决心：有线电视行业整合

This posting marks the official launch of “China Makes Up Its Mind,” an occasional mini-column where I look at one of Beijing’s latest macro industrial policies, its chances for success and the potential impact on industry players. This first post takes a look at Beijing’s latest push to consolidate its vast and highly fragmented cable TV industry. Noises coming from the regulator show it is making a renewed push in this direction, which is smart as it’s only through economies of scale that China can develop the kinds of high speed networks and good programming to compete with the West. The problem is, the regulator tried a similar a campaign around 5 years ago and failed miserably due to interference from local interests. There are some interesting reports coming out saying Shanxi province has already begun consolidating its networks, showing that maybe consolidation is possible, after all. (English article) Perhaps a province-by-province consolidation, followed by a national one, is  the right way to go this time. If it succeeded, such consolidation would benefit the likes of set-top box makers like ZTE (HKEx: 763; Shenzhen: 000063), while providing competition to companies like China Telecom (NYSE: CHT; HKEx: 728), which is trying to develop its own national digital TV network. Still, I’d give this latest effort just a 30-40 percent chance of success, again due to resistance from all the local interests.

Bottom line: China’s latest effort to consolidate its fragmented cable TV sector is likely to fail, benefiting competitors like China Telecom.

从今天起，我将推出一系列以”中国终於下定决心”为主体的迷你专栏，分析中国最新的宏观产业政策调整及其对业界公司的影响。今天先说有线电视这个大而不统的市场的整合。监管层传出的信号表明，北京有意推进有线电视业的整合。这是明智之举，因为只有充分发挥规模效益，中国才能建设高速、高质量的有线电视网络，与西方公司竞 争。但问题是，政府曾在5年前发起一场类似的运动，但由於地方保护势力的干扰，以惨败告终。近期有报导说，山西省已经开始整合其有线电视行业，看来整合并 非无望。也许逐省整合後再全国整合，才是成功之道。如果整合成功，对中兴通讯<0763.HK><000063.SZ>等机顶盒生产企业将有助益。但对中国电 信<CHT.N><0728.HK>来说则意味着增加了竞争对手，因为中国电信正在自行建设全国性的数字电视网络。我认为，这场整合运动成功的可能性只有30%-40%毕竟，地方保护主义势力还是不可小觑。

一句话：中国政府主导的又一次有线电视业整合运动成功可能性不大，对中国电信来说倒是好事。