Profits Tumble at Listed Chinese Cable Network Companies Despite Lockdown

It was a tough six months for China’s traditional cable TV providers as policy changes and virus blowback ratcheted up pressure on an industry already vulnerable to disruption.

Profits of nearly a dozen mainland-listed cable networks crashed in the first half, as people opted to watch shows online, and as the government pushed TV providers to offer free content as a way of encouraging people to stay at home amid the Covid-19 outbreak.

User subscriptions slipped 1.48% quarter-on-quarter to 206 million in the first three months, and wired TV’s share of the nation’s overall TV market fell to 45.58%, compared to 64% at the end of 2016, according to data compiled by video industry research institute Guideline Research and China Broadcasting Network Corp. Ltd.

Government policies also cut into revenues, as the National Radio and Television Administration urged firms to offer certain programs, broadband equipment and services for free.

Shenzhen-listed Hunan TV & Broadcast Intermediary Co. Ltd., Hubei Radio & Television Information Network Co. Ltd., and Shanghai-listed Guangxi Radio & Television Information Network Co. Ltd., all went into the red in the first half, despite people spending more time at home during the pandemic.

Hunan TV & Broadcast Intermediary posted a net loss of 267 million yuan ($39 million) in the first six months after making a profit of 11.17 million yuan in the same period last year, attributing the loss to severe disruptions to its cashflows from advertising payments and travel subsidiaries.

The company reported a 15.4% decline in revenue to 2.46 billion yuan in its midyear financial report, with its tourism business revenues nosediving 79.1% year-on-year to 32.55 million yuan and advertising payments falling 14.96% to 1.26 billion yuan. The broader shift to wireless broadcasting technology also took a toll on the company’s cable internet business, which lost 195 million yuan in the first half of the year.

Wuhan-based Hubei Radio & TV reported a loss of 17.4 million yuan after making profits of 131 million yuan over the same period last year. Despite narrowing its churn rate — the proportion of people opting out of the service — revenue still declined 14.6% to 1.07 billion yuan.

Guangxi Radio & TV recorded the steepest revenue decline, falling 16.65% to 795 million yuan, leaving the company with a loss of 56.43 million yuan, its first since listing in Shanghai in 2016.

Further disruption is on the horizon for traditional cable providers. On Aug. 26, China Broadcasting Network Corp. (CBN), joined by e-commerce giant Alibaba and a number of regional network operators, announced the formation of China’s first national cable television provider and newest wireless carrier, whose name translates to Unified National Network.

The 101.2 billion yuan juggernaut will have a significant advantage over current players in the space by being able to offer a combination of 5G wireless, broadband and paid TV services.

CBN, which itself was formed six years ago with a goal of consolidating many of China’s regional cable TV companies, will hold 51% of UNN’s stakes. Units of Alibaba and State Grid Corp. of China will own 9.88% stakes in the company.


– This article originally appeared on Caixin Global.