In the news
Just as it was a shock for the US media industry when Amazon bought the Washington Post newspaper two months ago, the merger of two Shanghai-based newspaper groups earlier this week has shaken the domestic media industry.
The Shanghai Newspaper Group was officially launched on Monday, following a merger between Jiefang Daily Group and Wenhui-Xinmin United Press Group.
The new firm is one of China's largest media enterprises, with estimated assets of 20.87 billion yuan ($3.4 billion).
The new group aims to speed up the integration of its traditional media and new media units, as well as increasing the influence of mainstream media, the Xinhua News Agency reported on Monday.
Consolidation under way
Following the merger, there is now only one newspaper group in Shanghai, with more than 17 newspapers and journals owned by Wenhui-Xinmin now combined with the 12 newspapers and journals owned by Jiefang Daily.
Qiu Xin, president of the new group, declined to tell reporters at Monday's launch event whether some of the newspapers will be closed following the consolidation. Instead, he noted that the group is researching the types and number of newspapers the Shanghai market can accommodate.
Two of the group's newspapers - Jiefang Daily, established in 1941 and once the official newspaper of the Central Committee of the Communist Party of China (CPC), and Wenhui Daily, a major national daily newspaper - will get an annual subsidy of 50 million yuan each from the Shanghai municipal government starting from 2014.
"Fiscal subsidies could help newspapers partly relieve financial pressure and focus on producing high-quality news content," Qiu was quoted by financial news website caixin.com as saying at the launch event. "It also shows the government's support for the further development of traditional print media."
According to Wei Wuhui, associate professor at the School of Media and Design with Shanghai Jiao Tong University, the move can also be interpreted as the government putting a ceiling on the subsidies it will provide to the two newspapers, as their financial situation is not good.
"For other newspapers and journals in the group, they will largely rely on themselves and move toward being more market-oriented," Wei told the Global Times Tuesday.
The merger is a reflection of difficulties faced by China's newspaper industry, which is on a downward trend in the Internet era, Chen Shaofeng, deputy dean of the Institute for Cultural Industries at Peking University, told the Global Times Tuesday.
"The consolidation will reduce costs and increase assets," Chen said. "But the two press groups' businesses do not complement each other, posing challenges for further integration."
Partnership with Baidu
The new group's first move was signing a strategic cooperation agreement with Chinese search engine giant Baidu Inc, through which the two sides will jointly launch a Shanghai channel on Baidu's news website.
"The Shanghai channel will integrate abundant news resources from Shanghai Newspaper Group and Baidu's powerful technologies and platform to let users have a better understanding of the metropolis," Zhu Guang, vice president of Baidu, said when signing the agreement.
Bilateral cooperation will also include publishing reports on public opinion, and developing mobile reading services, according to the agreement. No financial details have been disclosed.
"The move indicates that the newly launched group will focus on turning digital, but merely 'going digital' does not mean it will make profits," Chen said.
Jiefang Daily Group launched a news website called sh.qq.com in partnership with Tencent Holdings, China's largest Internet company by revenue, in July 2012. So the new group's alliance with Baidu means that it has close links with the country's two largest Internet firms, Wei noted.
The number of newspaper titles in China
Hard to copy
The number of newspaper titles reached its peak at 2,163 in 1996, and dropped to 1,918 in 2012, according to official data, with many of them facing rising costs and declines in advertising revenue and readership. Ad spending on newspapers in China dropped by 8.7 percent year-on-year in the first half of 2013, according to data from meihua.info, an advertising information website.
Although reform of traditional print media is urgently needed, experts are not optimistic that the merger of the two Shanghai firms is a model that could be promoted nationwide.
"It only took a few months for the two Shanghai-based newspaper groups to merge, and the administrative force behind it played an important role," Wei said.
Jiefang Daily Group and Wenhui-Xinmin United Press Group were both under the administration of the Shanghai Municipal Committee of the CPC, so decision-making and implementation was easier during the merger process, he said.
According to Wei, the Shanghai model could only be copied in municipalities such as Tianjin and Chongqing, because in other provinces and regions, newspapers are usually administered by various provincial and city Party committees, making consolidation harder to achieve.
"In Beijing, newspapers are under the administration of various ministries and the municipal committee of the CPC, so it would be difficult to apply the Shanghai model there," he noted.
Where's the profit?
Traditional newspapers are suffering amid growing competition from Internet news sources, and media tycoon Rupert Murdoch predicted in 2012 that there may be no newspapers left in 10 or 20 years.
"I'm not that pessimistic. At least newspapers will not vanish in China, given their political functions," Wei said. "However, overall circulation will drop."
The difficulty of making profits in the digital age is a major challenge for newspaper owners, and even Amazon will have a hard time turning around the Washington Post's fortunes, Chen said.
"In China, Zhejiang Daily Media Group is a successful example that other newspaper groups could learn from, because it has successfully diversified its business to include diverse areas such as new media and online gaming," Wei said.
Zhejiang Daily Media's net profit is expected to jump by over 85 percent year-on-year in 2013, mainly thanks to the two online game companies it acquired in April, the Shanghai-listed company said in a statement on Tuesday.
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