Latest Sale Exposes Sputtering China Digital Revolution 上海文广股权低售凸显中国数字改革路漫漫

By newsdoug on June 28, 2011

SiTV valuation shows China digital revolution going nowhere China’s drive to consolidate its cable industry is designed in part to spur development of state-of-the-art digital delivery networks that will someday offer Chinese consumers the wide variety of programming and other services now available through fast-developing on-demand networks in the West. But that digital dream is still very much just a distant wish, at least based on the latest transaction to make the local headlines. Chinese media are reporting that Shanghai Automotive has put its 19 percent stake in SiTV, the digital TV operator under Shanghai Media Group, China’s second largest media conglomerate, up for sale for a mere 25 million yuan, or just $3.7 million. (English article) Some quick math will show that the price — if Shanghai Automotive finds a buyer — would translate to a valuation of just under $20 million for SiTV, which was launched with much fanfare around 5 years ago as digital platform of the future. Anyhow who believes that China will hum with digital delivery networks in anytime soon should go ahead and buy up this stake, which would represent a huge bargain as it represents the dominant player in the country’s second biggest media market. But my guess is that Shanghai Automotive is selling this stake largely because it sees the investment going nowhere, at least in the near term, and it’s unlikely to find many buyers in the market. I’ve said in previous posts that China’s latest drive to consolidate its cable TV networks and create a giant with the resources to forge a national digital network seems to be gaining momentum, and could now stand a 50 percent chance of success. (previous post) But such consolidation could still be at least 5 years off or even more. In the meantime, local digital networks like SiTV are likely to languish, and perhaps even be overtaken as video Internet companies like Youku (NYSE: YOKU) and Xunlei, and fixed-line telcos like China Telecom (HKEx: 728) take the lead in digital delivery systems.

Bottom line: The low valuation for Shanghai’s leading digital cable network operator based on a recent sale reflects the poor state of such networks in China.

中国推动有线电视业发展的努力，其中部分在於推动先进的数字传输网络的发展，後者终有一天会向中国消费者提供目前已在西方推广的按需点播的电视节目和其他服务。但中国的这一数字梦想现在还只是一个遥远的期待，至少我们从媒体报导的一项最新交易中可见一斑。中国媒体报导称，上海汽车信息产业投资有限公司转让其持有的上海文广传媒集团旗下的上海文广互动电视有限公司19%的股权，挂牌价只有2,500万元(370万美元)。简单算一下你会发现，如果上汽真的以这一价格找到买家，意味着上海文广互动的估值不过2000万美元。任何认为中国会很快启用数字电视传输网络的人都应该立刻行动，成全这笔性价比很高的买卖，因上海文广互动是中国第二大媒体市场的佼佼者。但我认为，上汽出售这些股权，主要是因为它认为这笔投资看不到出路，至少短期是这样，而且他们也不太可能在市场上找到很多买家。我在之前的博客中曾说过，中国近期加强有线电视网络的工作，以及整合各种资源打造一个全国性数字网络的传媒巨头的努力似乎正蓄势待发，且现在可能有50%的成功机率。但这种整合可能至少还要五年或更长时间。同时，上海文广互动等区域数字网络很可能被冷落，甚者可能被优酷<YOKU.N>、迅雷等视频网络公司和中国电信<CHA.N>等固网电信运营商超越，因为後者在数字传输系统中处於领先地位。

一句话：低价出售上海文广股权反映出中国类似数字电视网络的可悲境遇。

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