State-owned enterprises (SOE) may be allowed to buy into companies like Youku Tudou and Baidu's iQiyi.com, as Chinese authorities reportedly consider tightening the oversight of video websites.
According to a Caixin Magazine report, the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) may allow SOEs to oversee the content and operations of video websites. SOEs may also have decision-making authority over the websites, the report said.
Quoting an anonymous executive from a video website, the Caixin report said the SAPPRFT is recommending that each video website sells anywhere from 1 to 10 percent of its shares to SOEs. The initial list of SOEs includes China National Radio, China Radio International, Beijing Media Network, Hunan Broadcasting System and Shanghai Oriental Pearl Media.
"If the method is proven effective, [the government] may consider adding more SOEs to the list," the anonymous executive was quoted as saying. The person said the plan has already been modified and the initial proposal "was more extreme."
"The SAPPRFT is currently consulting various parties, trying to learn if each party is interested in joining the plan, the percentage of shares involved, how to evaluate such equity stakes and other details. There is no final plan yet," the Caixin report quoted another source as saying.
The source said acquiring equity is just one of the plans currently being discussed and the discussion is still in the initial stages. Considering other factors are involved, there is still a long way to go before any plan can be actually implemented, the source said.
As for the plan's influence, the executive said video website content will be more strictly scrutinized, and some in-house dramas or reality shows may be modified.
The Caixin report has been removed as of press time.
A separate report by Bloomberg said the SAPPRFT met the video providers on May 18 to discuss the plan. The regulator suggested the signing of non-binding agreements between video providers and state companies by June 10, Bloomberg reported.
Both Youku Tudou and iQiyi.com declined to comment when reached by the Global Times.
Striking a balance
Analysts said the key issue is how to draw the line between the market and government supervision.
Luo Ting, director of the Phoenix School of the Communication University of China, told the Global Times that online video differs from other fields as "it involves ideology and cultural security."
"Given that there had been a proliferation of pornographic and unhealthy content on the Internet, the government should intervene," Luo said.
The Chinese government recently banned the portrayal of "seductive" consumption of bananas on live-streaming websites as part of its efforts to clamp down on "inappropriate and erotic" online content.
Xiang Ligang, CEO of telecommunication industry portal cctime.com, said the "special management stakes" shows the government is exploring new ways to supervise the Internet.
"For many years, there have been various problems on different media platforms. Most of these websites are privately-run … In the past, the government has had little influence over the operations of video websites. The government cannot punish [the websites] on a daily basis or shut down [a website] at will as it would trigger a backlash," Xiang said.
"To some extent, [the special management stakes] shows the government's attitude, which is that it wishes to find a way to exert influence on these websites," Xiang noted.
His views were echoed by Zhu Wei, deputy director of the Communications Law Research Center at the China University of Political Science and Law, who told the Global Times that the government wishes to create a mechanism to exert preventive measures, as current regulations only punish the perpetrators afterwards.