CCTV expects to weather downturn

Broadcaster facing lower fourth quarter after Olympics

BEIJING -- China Central Television on Tuesday hosted its annual auction for primetime advertising spots in 2009, with participants saying that the state-run broadcaster is set to weather a post-Olympics softening and the global economic downturn just fine.

On a day when Chinese markets lost as much as 7%, the nation's state-run broadcaster, coming off a record Olympic summer, welcomed a host of first-time auction participants from the digital and online sectors.

Pon de Dios, chief media buyer in China for Procter & Gamble, said the CCTV's handling of the Olympics, which drew record viewers, was helping the broadcaster as advertisers and consumers demand better value.

"People have to make smarter choices in this economy and are demanding more for their money," said de Dios, whose employer has been the biggest buyer of CCTV primetime ads for the past four years. "CCTV is improving its numbers and the quality of its dramas."

CCTV is expected to announce the amount bid in the annual auction Wednesday. The total bid for 2008 primetime ad spots on CCTV was 80 billion yuan ($10.7 billion), up 20% from the year prior.

In recent years, the CCTV auction has been considered a bellwether for China's broader economy, which has enjoyed double-digit growth for the past decade. PricewaterhouseCoopers projected last year that ad spending in China across six major media groups would rise to $22.5 billion by 2011, up from $13 billion in 2006.

Despite rosy predictions, local media reported that just 1.6 billion yuan ($234 million) in TV programming was sold at this year's annual China International Film & TV Program Exhibition, down from 2.2 billion yuan ($322 million) last year.

Still, a survey conducted by the Nielsen Co. showed that Chinese consumers remain confident the financial crisis will be resolved within 12 months.

"While other countries' consumers may be struggling to keep their heads above water, more than two-thirds (72%) of Chinese consumers -- living in one of the fastest growing economies in the world -- are optimistic that their country is not currently in a recession -- nearly twice that of the global average (37%)," Chris Morley, Nielsen's managing director in China, said in a report released Friday.

While 2009 may look strong based on Tuesday's auction, the fourth quarter may yet see a softening, according to de Dios.

In the wake of the Olympics in August, which drove ad revenue 40% past CCTV's targets for the first half of the year, de Dios said a slowdown in the last quarter would be natural.

"After such a heavy binge, there will be a softer period, but demand should surge again around Chinese New Year," de Dios said.

CCTV paid about $17 million for exclusive Olympic broadcast rights in China, against an estimated $394 million in Olympic advertising revenue, according to Group M, a media buyer that tracks television advertising revenue in China.

To continue to grow as consumers spend more time on the Internet, CCTV and its competitors, such as national satellite broadcaster Hunan TV, are investing in new and better dramas.

"Dramas allow producers and actors to highlight harmony, whether it's between the generations or between co-workers," de Dios said, which is in keeping with Beijing's desire for social stability in a country where the divide between haves and have-nots is widening.

Chinese TV drama production was up 57% year-over-year to 77 series, or about 2,700 episodes, the State Administration of Radio, Film and Television reported Oct. 31.

Hunan Satellite TV has done well in the ratings with its first two seasons of a localized version of its hit soap "Ugly Betty," the format it bought from Mexican TV conglomerate Televisa, which, since Sept. 28, has been showing twice a day.

One of four Mandarin-language shows Televisa's China operations has in the works, "Betty" drew 242 million viewers.