In recent times, as the Chinese economy experiences a downturn, many companies have resorted to layoffs and pay cuts due to poor business performance. Shockwaves were sent through online platforms as netizens exposed that a satellite TV channel in a southern province of China has reduced salaries to a mere 38% starting this month, sparking widespread concern among industry professionals and the general public.
Reports of salary reductions, wage delays, and withholding of social security and provident fund payments by TV media companies have been surfacing on social media platforms in mainland China. The revelation that a satellite TV channel in the southern province slashed its employees’ salaries to such a drastic extent at the beginning of August has shaken the industry to its core.
This news has instilled a sense of unease among countless professionals in the field and has sparked intense discussions on social media platforms. Some netizens lamented the stark contrast between the former glory of these media organizations and their current precarious situation, expressing deep concerns about the current economic challenges. Others pointed out that traditional media outlets risk being phased out if they fail to adapt and evolve.
Bloggers have also been dissecting the underlying causes behind these issues. An analysis by a media transformation account revealed that announcements related to the shutdown of local TV media have been circulating over the past year. A blogger recounted a conversation over dinner with the director of a county-level integrated media center, where the director expressed pessimism about the future prospects of such centers, branding them as ineffective in terms of journalism and communication, ultimately leading to a waste of financial resources.
According to the article, China’s media landscape consists of a complex hierarchy of central, provincial, municipal, and county-level television channels, resulting in an excessive number of over 20,000 channels. Despite this vast network, the industry is facing a multitude of challenges today.
Firstly, TV viewership rates have seen a sharp decline, leading to reduced advertising and sponsorship revenues. With users increasingly relying on mobile devices for content consumption, traditional TV platforms are losing audience share rapidly. Data indicates that in the first quarter of 2023, the average daily activation rate of smart TVs in China hit a record low of 29.5%.
Furthermore, stagnant decision-making and management practices at some TV media organizations have resulted in a lack of innovation and extensive homogenization in TV programming. As digital media platforms continue to rise, the traditional distribution and advertising models of TV media have undergone significant shrinkage to adapt to the new normal. Without substantial financial support from local governments, many regional TV stations struggle to sustain themselves.
However, it is widely acknowledged that local finances in China are already strained to their limits. An article by Knowledge and Popular Science delves into the underlying issues contributing to the financial predicament of local governments under the Chinese Communist Party:
1. The rise and fall of land finance: Revenue from land sales used to serve as a crucial source of income for local governments. However, this reliance on land resources has proven fragile, especially as real estate market regulations tighten and land resources deplete. The cooling of the land market directly impacts local government revenue, rendering the once lucrative model of land finance less effective.
2. Impact of the pandemic: The outbreak of the COVID-19 pandemic acted as an unforeseen storm, halting economic activities and reducing local tax revenues due to its adverse effects on business operations. This, in turn, exacerbated financial pressures on local governments.
3. Risks associated with local debt: To bridge fiscal gaps, some local governments turned to debt financing for development. Nevertheless, the expansion of debt burdens brings about potential risks. Failure to control debts effectively and resorting to blind borrowing might trigger financial instability, plunging local finances into deeper turmoil.