Letv.com says will make corrections, halts box sales

Chinese online video content provider Leshi Internet Information and Technology Corp, also known as letv.com, announced Monday that it has submitted a rectification plan regarding its set-top box business to the country's media regulator and its business model remains unaffected.

The company admitted that its Internet-based set-top boxes violated regulations and it is making rectifications with its cooperator China Central Television (CCTV), according to a statement posted on the Shenzhen bourse. The company also said it has suspended set-top box device sales.

Tie-up with licensed content distributors other than CCTV will be halted during the rectification and will be resumed afterward, said the statement.

The State Administration of Press, Publication, Radio, Film and Television criticized letv.com for violating regulations and the media regulator notified several licensed content distributors to stop cooperating with letv.com, financial information portal asstock.com reported Thursday.

The company said in the statement that it will complete rectifications and resume the set-top box sales as soon as possible.

Letv.com resumed its share trading Monday after Friday's suspension. The share price of letv.com closed at 35.21 yuan Monday, 7.84 percent up from the previous trading day.

The company saw its already battered shares plummet by the daily 10 percent cap to close at 32.65 yuan ($5.29) in Shenzhen trading on Thursday before trading suspension, but the statement said the capital market was overreacting.

Letv.com believes that the regulation policy is designed for healthy and orderly industry development so it is positive for letv.com's long-term development, according to the filing.

The regulation policy does not change letv.com's business model so the company's advantages are not damaged by the regulation policy, the statement said.

In addition, a new channel, jointly created by the Publicity Department of the CPC Central Committee and letv.com, formally went online Friday, mainly broadcasting CPC publicity programs.

The media regulator recently imposed a series of strict limits on set-top boxes, including forbidding foreign TV series and movies and stopping sales of unapproved terminal devices, according to media reports.