17 January 2006

FB Business, Technology

It is more than 11,000 kilometers from New York's various corporate headquarters to the skyscrapers of Shanghai, but the workings of media companies like Time Warner and NBC Universal loom large in the mind of Li Ruigang.

Li runs Shanghai Media Group, a budding Chinese conglomerate with a striking number of tentacles in media and entertainment and a thirst for partnerships with foreign companies chasing the dream of Chinese fortunes.

MTV Networks, VNU, CNBC, Universal Music Group, Sony, Discovery Communications and the National Basketball Association are just some of the companies that are in business with SMG, as the company is known.

"If you have a hundred partners, then you can learn a hundred different things from them," Li said at a recent meeting in his office.

The wide scope of its activities and the pace with which Li has sought out Western partners in less than four years have established him as a favored ally for companies that have been laboring to crack China's vast market.

"He is all over the lot," said Sumner Redstone, chairman of Viacom, which owns MTV Networks. "Li is clearly a pioneer in bringing innovative partnerships to the Chinese people."

In the process, Li is trying to transform China's government- controlled media from within. SMG was created just five years ago when the Chinese government consolidated state-run media by region to prepare for the country's entry into the World Trade Organization.

What started as a merger of mostly local TV and radio interests now encompasses pay television, TV production, a home-shopping venture, music labels, newspapers and magazines, sports teams and arenas, theaters, Web sites, and nascent mobile content and Internet TV ventures.

Li gives the impression of someone who could move easily among the lunch crowds at the Ivy in Los Angeles or Four Seasons in New York. He calls Rupert Murdoch of the News Corp., Robert Wright of NBC Universal and Redstone close friends, mentions a possible venture with Creative Artists Agency and says he has "met with all of the big investment banks."

A Chinese edition of Variety named him Showman of the Year for 2005. Although he speaks solid English, Li had a news anchor from SMG's Dragon Television network serve as an interpreter during an interview so that he could speak more confidently.

His partnership with Viacom includes deals to be the co-host of MTV Asia's annual Style Awards, which took place here in November; to co-produce children's programming with MTV's Nickelodeon channel; and to syndicate various MTV Networks programming through SMG's 13 over-the-air television channels and 17 national digital TV channels.

Viacom holds a 25 percent equity interest in its ventures with SMG the only foreign company to have such an arrangement, according to Redstone.

But Western companies eager for deals were reminded in 2005 that the media in China are still subject to strict and sometimes fickle oversight. A tightening of policies by the government of Prime Minister Wen Jiabao suspended several planned programming joint ventures, including Viacom's most ambitious plan, a Nickelodeon- branded children's channel.

Redstone said during a recent interview that he expected the project to gain approval, but declined to predict when. Li agreed. "It depends on the regulations and policies of the Chinese government," Li said. "The best thing to do is be patient now."

That channel and some of SMG's other ventures, which have been announced with much fanfare but have not yet amounted to much, underscore the central tension that Li faces. He has to balance carefully his desire to emulate the media titans of the West and his dreams of eventually taking the company public against the complex and shifting moods of the policy makers and censors in Beijing.

On the one hand, he is a civil servant given the task of preserving a "state asset," as he called the company. Yet Li must make SMG competitive with foreign media that can reach Chinese homes, whether through illegal satellite dishes and pirated DVDs or legitimate outlets like high-speed Internet.

Foreign media companies have formed ventures with several of China's other regional broadcasters and with China Central Television, the country's national broadcaster. But in echoing Shanghai's legacy as China's go-go international trading hub, Li has positioned himself as the most progressive of his peers.

"He's very commercially driven," said Wei Zhang, the chief operating officer of Star China, a subsidiary of the News Corp. In her previous role as managing director of CNBC China, Wei set up one of Li's first foreign joint ventures with the business news network, a TV program called "Strategic Decisions."

Li, who began his career as a TV reporter and documentary producer, said that he honed his media mogul aspirations during several months spent in New York in 2001 and 2002 as a visiting scholar at Columbia.

When not studying, he visited media executives in New York. He also came to know the inner workings of China's communications regulators; before Columbia, he worked for three years as an adviser to the deputy mayor of Shanghai, responsible for media.

Media research firm Media Partners Asia estimated that SMG had revenue of $385 million in 2005, which, Li said, was nearly double its size of three years ago.