China censors assert online authority in blow to U.S. TV shows

Reuters

By Paul Carsten

BEIJING, May 1 (Reuters) - China's censors are asserting their authority over foreign TV content on the country's booming online video sites, after years of hands-off regulation, raising the risks for U.S. distributors left in the dark about which shows might fall foul of the rules.

Chinese authorities gave no reason when they unexpectedly slapped internet video sites with rare takedown notices for popular U.S. TV shows The Big Bang Theory, The Good Wife, NCIS and The Practice.

None of the shows are known for the political or sexual content that usually makes Chinese censors queasy, raising suspicions among some experts of a covert attempt to protect the revenues of ailing state broadcaster CCTV.

The uncertainty is a problem for the U.S. companies that license TV dramas for online streaming in China.

"Chinese video sites will hesitate to introduce potentially risky U.S. shows, because of concern that they won't be approved," said Hu Yong, an associate professor at Peking University's School of Journalism and Communication.

"They probably will turn to buy more Korean and domestically produced shows, in order to maintain their video revenues."

CBS Interactive, a subsidiary of CBS Corp , is responsible for The Good Wife and NCIS in China, while Warner Brothers Television, part of Time Warner Inc , sells the rights for The Big Bang Theory, online video companies told Reuters.

It was not immediately possible to establish which company licenses The Practice for China.

SENSITIVE CONTENT

Charles Zhang, CEO of Sohu.Com Inc, one of the companies targeted, told a conference call with reporters on Monday that he saw the move as a one-off event rather than a shift in policy towards American TV shows.

His comments were made after the price of shares in Sohu and rivals Youku Tudou Inc, Baidu Inc and Tencent Holdings Ltd tumbled on the news.

iQiyi, the online video unit of Baidu, said the removal notice from the State Administration for Press, Publication, Radio, Film and Television (SARFT) was because of sensitive content.

"The directive on the four American TV plays from SARFT is due to their content, including certain violations of state regulations," said a spokeswoman for iQiyi in an email. "It is not an intentional sanction on American TV plays."

Youku Tudou and Tencent declined to comment.

But the four TV shows will likely come back online soon, according to one source familiar with the matter, after offending footage is cut from the programmes.

SARFT declined to comment.

China's online video industry saw its revenues more than quadruple from 2010 to 2013 to reach 12.8 billion yuan ($2.05 billion), according to data firm iResearch. This is expected to almost triple in size by 2017.

Such growth is an obvious threat to established broadcasters such as China Central Television (CCTV), widely seen as a dinosaur in China's fast-developing media industry.

As online video revenues grew four-fold, CCTV saw the growth of its annual budget drop for three years running from 2010 to 2013, and growth of sales of some of the broadcaster's most valuable advertising slots for 2014 also appeared to slow, according to Barclays.

"ANNUAL SHAKEDOWN"

Even as the four, relatively tame shows were being removed from streaming sites at the weekend, CCTV, better known for its turgid news broadcasts, was screening HBO's violent and raunchy medieval fantasy drama Game of Thrones.

That, and CCTV's confirmation to Reuters on Monday that it had bought exclusive broadcast rights to The Big Bang Theory, prompted some experts to see another motive.

"CCTV has gone out and licensed the show and realised Sohu and the others are already pumping it out, so who's going to watch it on their platform?" said Mark Natkin, managing director of Beijing-based Marbridge Consulting.

"One answer is, let's complain to regulators these guys haven't gotten proper approval and they are violating our rights because we've licensed the broadcasting rights. It's time-honoured, CCTV does an annual shakedown."

CCTV told Reuters the broadcaster had nothing to do with The Big Bang Theory and other shows being taken down from websites.

"Pulling the shows offline is because of SARFT regulations. Every overseas TV programme has to be assessed and approved before it can go back online, so it has nothing to do with CCTV," said a CCTV official who declined to identify himself.

"We got the exclusive permit for the overseas TV show broadcast, so only one channel can have it and other channels can't broadcast it," said the official, who declined to say whether the exclusive rights applied to both TV and online.

The removal of the four TV shows also comes as China's online crackdown intensifies, with various branches of the government vying to assert their authority over the Internet.

In an unprecedented move, the anti-pornography office last week imposed fines and revoked online publication, audio and video licences for Sina Corp, after the company was accused of distributing pornography.

Previously the authority had only exercised control over traditional, rather than online, media, experts said.

SARFT's directive indicates it too may now be adopting a more hands-on approach to how websites use foreign-made TV, said people familiar with the matter.

"SARFT has been working to set up a team but over the years it was still being discussed. Sooner or later they will have a dedicated policy on imported TV dramas," said one of the people.

"It's a new government, there's a crackdown on media and right now it's hard to predict, but it will come out." ($1 = 6.2530 Chinese Yuan) (Additional reporting by Michael Martina and Beijing Newsroom, and Ronald Grover in LOS ANGELES; Editing by Alex Richardson)

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