In this publication, Yang Limeng discusses a recent new policy by the Chinese State Administration of Radio, Film and Television (SARFT), which is aimed at further regulating (foreign) entertainment programs and advertisements on national television.

In an attempt to further regulate (foreign) entertainment programs and advertisements on national television, the Chinese State Administration of Radio, Film and Television (SARFT) promulgated a series of new administrative regulations and circulars. The regulations were issued in October 2011 and will come into effect on 1 January 2012. They include, amongst others, the Circular on Strengthening the Administration on TV Advertisement (the ‘Circular’), the Opinion on Strengthening the Administration on Satellite TV Channels (the ‘Opinion’, or the ‘entertainment limit order’), and the Supplementary Provisions to Circular 61 (the ‘Supplementary Provisions’, or the ‘advertisement limit order’).

The Circular
The Circular reiterates provisions set out in existing legislation on the broadcasting of television advertisements and strengthens the supervision on compliance thereof. It requires the local branches of SARFT to put more efforts in investigating non-compliance with respect to television advertisement broadcasting.

Non compliance could be found in, amongst others, overtime broadcasting of advertisements (the length of all the advertisements aired by every TV channel may not exceed 12 minutes per hour and within the prime time from 19:00 to 21:00 may not exceed 18 minutes in total), launching TV shopping advertisement without qualification and false advertisements in health products.

The entertainment limit order
The Opinion on Strengthening the Administration on Satellite TV Channels restricts national broadcasting of entertainment programs by limiting their airtime and simultaneously stimulates the airtime of news programs:

(a) the total length of news programs on each TV channel may not be shorter than two hours (every day from 6:00 to 24:00 o’clock); at least two self-produced news programs must be aired between 18:00 and 23:00 o’clock and the length of each of these news programs may not be shorter than 30 minutes;

(b) there may not be more than nine ’excessively entertaining programs’ across the nation from 19:30 to 22:00 o’clock. In this context, excessively entertaining programs include dating and matching shows, games, talk shows and reality shows. Moreover, all channels are not allowed to air more than two entertaining programs every week and the length of each of those programs may not exceed 90 minutes (every day from 19:30 to 22:00 o‘clock).

Restriction of foreign formats
Moreover, pursuant to the entertainment limit order, it will be more difficult for foreign production companies to introduce their formats to China. The introduction of overseas program formats is subject to SARFT approval, which will decide on a case by case basis whether the formats suit the Chinese culture and social situation.
The entertainment limit order is a heavy blow to local television stations. Entertainment programs have over the last years gained more and more popularity with the Chinese public and the advertisements that are aired during these programs have brought the stations large profits. They are now forced to give more time slots to less popular news programs, most likely considerably lowering their income out of advertisements.

The advertisement limit order
For those stations having their last hopes on TV dramas after the entertainment limit order was issued, the Supplementary Provisions, which are publicly known as the ‘advertisement limit order’, is definitely a cold shower. Pursuant to these provisions, all advertisements during TV dramas are prohibited. In the past, advertisements were allowed in each drama episode once and twice during prime and non-prime time hours, respectively. Although these allowable time slots were already quite limited, they brought great profit to TV stations as advertisers were willing to pay extremely high prices for them.

Public opinion
SARFT is known in China for its critical review on films and TV programs and constant circulars to regulate the industry. This time however, the new regulations aroused large amount of public attention due to the potential influence on the competition pattern of the media industry, as well as the habits of the audience.

Television stations have been developing various measures in respond, such as including more product placements in TV programs, prolonging the interval between the episodes and producing TV dramas on their own instead of purchasing dramas in an attempt to cut costs and enable product placement. On the other hand however, the new regulations might bring opportunities to new media like video-sharing websites, some of which already raised the quoted price after the new regulations were released.

The Chinese public used to believe that the purpose of similar actions by SARFT were to restrict the more entertainment oriented local television stations and to ensure the leading position of CCTV (China Central Television), the largest state television broadcaster and known to be conservative and mainly focusing on cultural and news programs. As it turns out however, this assumption was incorrect, as CCTV will also be greatly affected by the new regulations. It broadcasts some of the most popular television dramas which have been a big source of income. During the 2012 prime time advertisement auction which took place in the beginning of November, the final bid for advertisements inserted in prime time dramas on its Channel One reached the amount of RMB 740 million (approximately USD 117 million).

Compliance with the new Policy on Chinese Culture
In our view, the main reason behind the stringent new set of rules can be found in the recent new policy on reforming China’s Cultural System and promoting the development of the Cultural Industry. Pursuant to the ‘Decision on Deepening the Reform of China’s Cultural System and Promoting the Development of the Cultural Industry’ the Communist Party will put more effort in enhancing the soft power and international influences on Chinese culture, as well as improving the people’s sense of culture. Around that exact same time in October, the new set of regulations was issued, showing great resemblance with the guidelines in the Decision.

Moreover, on 15 December, a draft of the Film Industry Promotion Law was issued for public commentary. We believe this is another government measure in respond to the Party’s new policy on the Chinese cultural industry. Amongst others, the draft Law emphasizes that the government will encourage private capital to come into the Chinese film industry; promote the film industry across the nation, especially in rural area; take measures such as tax preference, IP protection and financing supports to support the industry; and encourages international cooperation although subject to prior approval of SARFT.

Future tendencies
We expect that the Chinese government will proceed with this policy and will take additional measures on further limiting (foreign) entertainment programs and advertisements, in order to stimulate a “healthier and more productive cultural environment.”

Limeng Yang