BesTV to acquire Shanghai Oriental Pearl

First step of SMG's ambitious restructure to become Internet TV giant

Shanghai-listed media companies BesTV New Media Co on Saturday announced that it plans to acquire Shanghai Oriental Pearl Group Co, which will be the first step of their parent company Shanghai Media Group (SMG)'s restructuring and reform.

BesTV will acquire Shanghai Oriental Pearl and the new company will be named Shanghai Oriental Pearl New Media Co, in which holding shareholder SMG will have a 45.07 percent stake, according to BesTV's filing on the Shanghai Stock Exchange.

Meanwhile, BesTV plans to raise up to 10 billion yuan ($1.63 billion) via private placement of shares to acquire some other assets of SMG, the filing said.

The combined company will be a new Internet media firm with a goal of being China's No.1 Internet TV terminal, Ling Gang, a senior official at SMG, said at an investors' conference Saturday, news portal yicai.com reported Sunday.

When SMG launches its IPO in the future, it will indicate that the whole group fully "embraces" the Internet, Li Ruigang, president of SMG, said at the conference, noting SMG has put a remarkable number of operational assets into listed companies and will continue to do that, news portal caixin.com reported Sunday.

Li described a reasonable road map for SMG's future development, however, as a State-owned media group, whether SMG can develop an appropriate company structure and build a competent team are more vital for accomplishing the plan, Wei Wuhui, an Internet and new media expert with Shanghai Jiao Tong University, told the Global Times Sunday.

It will be difficult for a State-owned company to join the Internet sector without making necessary changes in the company operations and team, Zhang Yi, CEO of Guangzhou-based market research firm iiMedia Research, said, agreeing with Wei.

Li said the Internet is subverting traditional media with enormous content creators, therefore, traditional media which used to depend on content must build new channels for content delivery, according to the report.

After the restructuring, SMG will invest more in digital channels, including PC and mobile Internet, and focus on both content production and channel building, Li was quoted by the report.

Print media has been completely left behind Internet companies in terms of information delivery, no matter whether on PCs or mobile phones, Wei said.

Therefore, media watchdog State Administration of Press, Publication, Radio, Film and Television is trying to keep the television market, including Internet television, for traditional State-owned companies such as SMG, he noted.

The No.181 document, released by the media supervisor in October 2011, requires Internet TVs and set-top boxes to only have access to online content provided by seven licensed providers, which are mostly State-owned companies such as China Network Television, BesTV New Media Co and Wasu Media.

The media supervisor launched a campaign in June to enforce regulations on Internet TV sets and set-top boxes, resulting in almost all major video websites removing their TV applications.

The media watchdog is cutting the competition for State-owned companies such as SMG by using its administrative powers, which is negative for the industry, Zhang said.

Besides making ambitious plans in the Internet TV sector, SMG is also determined to move into overseas markets.

"SMG will have a series of global cooperation and exploration ventures. Our ambition is not limited to the group's restructuring but also about building a new image for Chinese media," Li said at the conference, according to Caixin's report.

He said SMG will launch a fund in Silicon Valley and the group will also set up a base there to develop Internet technology and then adapt it to the Chinese market, the report said.

SMG and Walt Disney Company jointly announced on Friday their cooperation will be extended to television content development, film co-production, content distribution and marketing, Xinhua News Agency reported Friday.

A nature documentary which will showcase China's wildlife and natural beauty is currently being co-produced by Disney and SMG in China, the report said.