Music as "borrow" joint venture in Chongqing Cable Holdings

Reporter Shi Jian Shenzhen reported

LeTV (300104.SZ), a stock price setback due to SARFT regulatory storm, was eager to release good news.

On July 23, LeTV released a public announcement that it had signed a "strategic cooperation agreement" with Chongqing Radio and Television Group and Chongqing Cable Television Network Co., Ltd. on the same day. Its cooperation includes strategic shareholding and establishment of a joint-venture subsidiary. Of particular concern is that LeTV hopes to use this as a catalyst to apply for licenses for Internet TV in Chongqing and to grant the two parties joint ventures to use it.

Affected by this news, the music network shares rose 6.83% intraday, closing up 3.49%, reported at 36.81 yuan.

A source close to the cooperation revealed to 21st Century Business Herald reporter that LeTV and Chongqing Cable owns 40% and 60% respectively of the equity interests in the joint venture subsidiaries established by both parties, %, The stock ratio increased to 49%, but the controlling shareholder is still Chongqing cable.

"The approval of integrated broadcast control license is unlikely." One radio and television industry observers told reporters that regulators recently made it clear that no longer issue this license, the music is expected to look promising Internet TV content Service license, "the content service license to allow the provincial radio and television institutions normal application."

The source believes that for LeTV, despite the possibility of radio and television in Chongqing, the type, time is still unknown, but the rapid release of news, help to dispel the suspicion of the license plate now enveloped.

Music as the license suspected cloud

"In fact, there is no new policy out, the main is the strict implementation of Circular 181." July 23, Liu Qi, Assistant President of Alway Consulting believes that this round of the so-called regulatory storm against Internet TV, the core is in accordance with previous norms Implementation of Internet TV regulation.

Commonly known as the 181th article, that is, the former State Administration of Radio Film and Television in October 2011 issued a "hold Internet TV license agency operation and management requirements." At that time, under the background of triple play, regulators hope that the regulatory concept of the top-level design for Internet TV in the ascendant through license management will be summed up in the industry as shifting from one-size-fits-all to one-to-one.

Circular 181 requires that Internet TV integration agencies and content service agencies each assume the responsibility of reviewing duties in conducting their business. So far, SARFT issued a total of seven Internet TV integrated business licenses and 14 content service licenses. CCTV's CNTV, BesTV, Hangzhou, China Southern Media, Hunan TV, China Radio International, the Central People's Broadcasting Station and other seven were two licenses at the same time, while the other seven content service licenses are awarded the film satellite channel programming center, the city United TV station, Beijing station, Yunnan station, Shandong station, Hubei station and Jiangsu station.

"Although the number of licenses is small, there are differences in resources and capabilities among different companies and there is very fierce competition for each other to expand the market." One color TV industry insider said that licensee parties all want to attract partners, including bidding warfare tactics , While the market does not regulate the phenomenon also appears.

Since June this year, regulators to step up rectification efforts, including the name of the number of requested BesTV and rectification, interviews with the seven integrated license party.

Music Watch is one of the parties to the regulatory storm this round. On July 17, some media reported that LeTV was named after SARFT by saying that "SARFT informed seven integrated service licensees that they can no longer cooperate with LeTV, resulting in a slump in LeTV's shares. Subsequently, LeTV released a clarification announcement calling it Report does not match the fact, but at the same time admitted: music and CCTV in the Internet

Network set-top box cooperation in violation and require rectification. Then, music as the mall stopped the sale of Internet set-top boxes.

On July 18, LeTV held an investor exchange meeting to further communicate with the regulatory issues currently encountered. LeTV said it is actively working with CCTV on the cooperation of the Internet STB there are violations of the rectification, and the two sides to develop rectification programs have been completed, and is being submitted to the regulatory authorities in the process. During rectification, other licensees except CCTV suspended the cooperation with LeTV until the rectification was completed and the other licensees continued to cooperate normally with LeTV.

Strategic cooperation with Chongqing Radio and Television can be described as another diatonic move to digest the suspicion of its license. Announcement shows that Chongqing Broadcasting and Television will mobilize resources in all aspects and strive for Chongqing municipal party committee and other parties strong support and strive to SARFT as soon as possible apply for Internet TV integrated broadcast control service license or Internet TV content license.

In addition, LeTV and Chongqing Cable will jointly invest in the establishment of an independent legal person status of the company. Upon obtaining the license, Chongqing SVA will promise that during the cooperation period, the new company established jointly by Music Watch and Chongqing Cable will be entitled to exclusive and exclusive use.

According to a report by Chongqing Daily in March this year, Jia Yueting, the founder of LeTV Group, visited Chongqing and planned to cooperate with Liangjiang New District and Chongqing Broadcasting Group in the field of internet big screen to build a video industry base.

"Letv and Chongqing Broadcasting and Television should have long been cooperation intention, and the current music as the regulatory problems apparently accelerated the cooperation process." The aforementioned radio and television industry observers said.

Internet TV "bad money" phenomenon

"When the order is not working, we do not take the license seriously." One radio and television industry believes that after this round of regulatory storm, Internet TV integrated license will greatly increase the gold content.

"Since there are provisions of No. 181, we must seriously implement." Yang Dongwen, president of Skyworth Group, told reporters that from the business point of view, the hope is to have a fair competitive environment, "cottage set-top box can do things that we can not do before Now strengthening regulatory oversight of the regular business is certainly a positive impact. "

"It is the tube." Yang Dongwen said.

LeTV said that while regulators stopped issuing licenses for Internet TV broadcasts, they encouraged qualified agencies to actively apply for Internet TV content service licenses. After this supervision, first, LeTV will maintain closer ties with the regulatory authorities and actively cooperate with the regulatory authorities in its implementation of the policies. Second, it will fine-tune some of its products but will not change the profit-making model of LeTV , LeTV content pay model, advertising model will continue to promote.

"This policy will not change the four-tier structure of platform + content + terminal + application currently formed by the company, and the business model of the company has not changed," LeTV said at the investor exchange meeting.

The insiders said that the current regulatory turmoil in the short term will challenge the music, but in the long run, including music as the industry chain participants to explore business models to change the chaos in the market chaos bad drive Currency phenomenon.

According to Liu Chuang, assistant director of Alvarion Consulting, at present, the entire Internet TV industry is still in the stage of ecological construction. Although the sales volume of smart TV terminals in the market has been very large, the activation rate is not high. "The problem everyone faces is to jointly bring the cake Bigger ".

Orville Consulting statistics show that in the first half of this year, the domestic market of smart TV sales of 1.1579 million units, penetration rate of 56%. The cumulative sales of smart TVs since 2012 are 43.01 million units.

Yang Dongwen believes that the music integration model benefits, "that is, all the money earned for all aspects," but the bad thing is that if a link is in trouble, the entire industry chain will be affected, and in fact, Every aspect of the industry chain has its own threshold.

"There is no right or wrong business model, the success is right." Yang Dongwen told reporters that so far, Skyworth's position or not to do the content, nor the operation of background content, "to the partners."