SHANGHAI/NEW YORK (Reuters) - Turning China's 1.3 billion pairs of eyes into the world's top viewing audience is proving tough work for the world's top media firms, who are finding that big numbers don't always translate to big money.
News Corp.'s announcement last week that it would sell off a majority of its stake in a Chinese broadcaster marked the latest recent retrenchment by a major media firm in the market, as players realize that much-hoped-for quick returns will not materialize anytime soon.
China still remains "fertile ground" for future business, said one source at a major Western media conglomerate who, like others, would only speak on condition of anonymity for fear of rankling China's already tough media regulators.
"We knew, going in, it would be a slow rollout. China moves slowly," he said.
"The smart ones in Hollywood knew there is no such thing as instant results ... In America you look quarter to quarter. In China you think in 50-year (increments)."
Media multinationals are remain very interested in a market that has seen double-digit growth in ad spending in recent years. The market was worth $10.3 billion in the first quarter of 2006 alone, up 25 percent year on year, according to Nielsen Media Research.
But tapping into those numbers has been problematic.
Under its latest China revamp, News Corp. said last week it would sell 20 percent of Phoenix Satellite Television Co. Ltd., often called the CNN of China, to China's top mobile carrier and retain a minority 17.6 percent stake.
That move followed a setback last year when local media reported that the company, controlled by media mogul Rupert Murdoch, was trying to negotiate a backdoor deal for national TV distribution in China by working with a local broadcaster in the interior province of Qinghai.
According to the reports, the deal was ultimately scuttled when central authorities caught wind of it.
News Corp. has also met with mixed results with other past investments in China broadband and Internet ventures.
WEAK RATINGS
The company isn't alone in its weak showing in China, a tightly controlled market that most players privately complain is riddled with heavy-handed regulation and rules that appear to be relaxing one day, only to be tightened the next.
News Corp., Time Warner Inc. and Viacom Inc. all have TV channels in the country launched over the last four years, though each has been limited to mass broadcasting rights in south China's affluent Guangdong province.
The Walt Disney Co. applied for its own limited broadcasting rights in 2003, but nearly four years later has yet to receive permission for a Chinese version of the Disney channel.
Years after their launch, the three approved foreign-owned channels are still fighting to find an audience.
None has managed to win major market share in Guangdong province's capital of Guangzhou, although News Corp.'s Xingkong channel has occasionally approached the 5 percent share mark, according to CSM Media Research.
Partly due to frustration with the market, Time Warner sold off a controlling stake in its CETV channel to Hong Kong media firm Tom Group in 2003 for just $7 million, though it also retained an option to buy back control.
Viacom has also found the going tough, making only minor inroads with a Chinese version of its MTV channel and waiting more than a year for final approval of a children's programming joint venture announced in early 2004.
But while stiff regulation may make the going slow, foreign media themselves may also be partly to blame for failing to better localize their content, said Mark Natkin, managing director of Beijing-based Marbridge Consulting.
"They come in with the mistaken perception that all that needs to be done is translating whatever English text there is into Chinese, or if it's an MTV, having a Chinese-speaking VJ (video jockey)," he said. "They're not really thinking in terms of what they need to do in terms of (localizing) content and promotions."
