MEDIA: CCTV Takes Aim At LeTV, JD.com
Bottom line: CCTV’s new attacks on LeTV and JD.com reflect its growing assertiveness to counter the rise of new media, and could become more frequent in the months and years ahead.
The rapid rise of new media is posing a serious challenge to China’s traditional media, which is perhaps partly behind a couple of headlines that have state-run broadcasting giant CCTV leveling separate attacks against online video high-flyer LeTV and e-commerce giant JD.com (Nasdaq: JD). The first case has seen CCTV sue LeTV for copyright infringement related to its popular Lunar New Year’s eve TV program. The second has CCTV airing an investigative report accusing JD.com of offering refurbished iPhones over its site that used unauthorized components, causing some to break down.
I should start by pointing out these 2 stories are quite different, even though they do both involve aggressive actions by CCTV against major Internet companies. The first case looks at least partly motivated by concerns over the rise of LeTV as a potential rival, and thus could be seen as CCTV’s efforts to fight back. The second case is more an extension of CCTV’s regular investigative reports, and in this instance CCTV was probably attracted to the story by the Apple (Nasdaq: AAPL) name and JD.com’s position as China’s second largest e-commerce company.
All that said, the bigger reality is that CCTV and China’s many smaller local media are feeling growing pressure from companies like LeTV, Sina (Nasdaq: SINA) and Youku Tudou (NYSE: YOKU), which offer independent and often far better video and print services than China’s traditional state-run media. The traditional companies have complained to the regulator that they face more restrictions than their upstart rivals. But the regulator has shown that it’s willing to tolerate these newer players, which often are better run and far more commercial than most traditional media.
Against that backdrop, CCTV’s lawsuit against LeTV looks like a form of protecting its turf, since CCTV is one of China’s biggest owners of filmed content. (Chinese article) The reports say that CCTV has sued LeTV for illegally broadcasting its 2015 Lunar New Year’s eve program live over its TV and mobile channels, and is seeking a relatively modest 3 million yuan ($500,000) in damages. A LeTV spokeswoman said the company has yet to see a copy of the lawsuit, and had no additional comment.
The small size of the damages shows that CCTV is more interested in protecting its copyrights than anything else. Accordingly, we could perhaps see it move more aggressively to make sure its popular programs don’t appear on LeTV or other popular video sites run by companies like Youku Tudou or iQiyi. Hunan Satellite Television, one of China’s most successful state-run broadcasters, has taken similar moves to stop third-party new media firms from rebroadcasting its programs.
Next let’s look at the other story, which has seen CCTV broadcast an investigative report accusing JD.com of selling refurbished iPhones containing unauthorized components that may cause the smartphones to break down. (English article) It’s unclear from the reports if the phones are being sold over JD.com’s own online store, or through a third-party merchant on the company’s open platform marketplace. I suspect the latter is the case, which would mean a third-party vendor might be selling the refurbished iPhones over JD’s site. It’s far harder for names like JD.com and Alibaba (NYSE: BABA) to control quality in such third-party marketplaces, which is often results in this kind of problematic product offering.
JD.com is saying it will conduct its own investigation into the matter, and added that its supply channel for iPhones that it sells directly over its own online story is completely trustworthy. JD.com certainly isn’t the first company to come under the microscope with this kind of investigative report from CCTV. But that said, it’s quite possible that CCTV could discover this kind of negative reporting is one way of fighting back against its upstart new media rivals, and thus we could see growing frequency of such reporting in the future.
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