Li Ruigang is not a household name in Hong Kong but what if he, a member of the Chinese Communist Party, calls the shots at the city’s dominant free-to-air television broadcaster?
Hong Kong audiences and TVB (00511.HK) stakeholders will hear more about him as a new episode of polemics between the monopolistic TV station and the Securities and Futures Commission has revealed that other TVB directors and executives may just be puppets when Li pulls the strings from behind the screen.
This scenario fits well into the swelling public unease about Beijing’s perceived strangling of local media and the state of Hong Kong’s press freedom.
But first and foremost, who is Li?
Before his aggressive Hong Kong inroads, Li had earned for himself the moniker “China’s Rupert Murdoch” after he built a media empire in Shanghai, leveraging a career that encompasses both business and politics.
A graduate in journalism from Shanghai’s prestigious Fudan University, Li merged a number of the city’s ailing TV and radio stations, newspapers, magazines and publishing houses under one name, Shanghai Media Group (SMG), and boosted its revenue from 1.8 billion yuan (US$260 million) in 2001, the year he parachuted in, to over 21 billion in 2015.
The mainland media behemoth now owns 30 TV channels, including the flagship Dragon TV that broadcasts nationwide, six newspapers and magazines such as the influential China Business News and CBN Weekly, a number of dance companies, theaters and orchestras, as well as the 468-meter Lujiazui landmark Oriental Pearl Radio & TV Tower and the adjacent Shanghai International Convention Center.
Li’s success in making SMG strike gold in a bleak media landscape, with an entrepreneurial mindset that also toes the party line, won him a place in the top political caucus of the mainland’s largest metropolis.
His knowhow to make the propaganda apparatus commercially lucrative has since been much emulated by other state-owned media groups as Beijing seeks to streamline its pompous, reactionary media outlets to make them savvy and profitable to suit people’s changing tastes.
Political and capital splashes
In 2011, Li was promoted to head the office of the Shanghai Municipal Party Committee, a direct deputy of the then Shanghai party chief Yu Zhengsheng, now No. 4 in the party hierarchy as the chairman of the Chinese People’s Political Consultative Conference. Li’s post back then was roughly on par with the director of the Chief Executive’s Office in Hong Kong.
But he only stayed in the party boss’s office for a year and returned to charter a new course for SMG in 2012, with his initiation into the capital market through the group’s affiliated fund, China Media Capital (CMC).
Established in 2009 as China’s first media-focused private equity fund with a 5 billion yuan injection from SMG, China Development Bank, China Merchants Group, among other heavyweights, CMC has since sought to expand its reach across the wider media and entertainment scene, with hookups with DreamWorks, Time Warner and SoftBank. Partnership with Murdoch marked another milestone for CMC following its US$150 million purchase of a controlling stake in News Corp.’s China-based channel, Star TV, and Channel V’s Mandarin content.
Li transformed the new joint venture into a cash cow with several all-the-rage variety shows that took the nation by storm, including the long-running The Voice of China franchise, which reportedly grossed over 1.7 billion in advertising revenue alone in the latest season aired in 2015 when a 15-second ad slot was auctioned for 360,000 yuan.
The rise of Chinese tycoons is normally intertwined with those of cadres or princelings and Li’s success story is no different.
There have been claims that before setting up CMC, Li Ruigang got a little tip from Li Tong — daughter of Li Changchun, the party’s fifth highest-ranking official in charge of propaganda from 2002 to 2012 — about the party’s new imperative to beef up ideological campaigns and soft-sell of Chinese culture via a commercialized platform.
It’s said that Li Tong was the clandestine operator of CMC, lubricating transactions with her political contacts, and Li Ruigang was just a front stage proxy, though the latter has vehemently disavowed all the allegations, calling them “pure tabloid nonsense”.
Li Ruigang also led CMC in the investment in Caixin Media at the end of 2013, a media firm founded by veteran journalist Hu Shuli.
Hong Kong foray
Hong Kong appeared on Li’s radar in 2015 following CMC’s purchase of an undisclosed amount of shares of Young Lion Holdings, which in turn commands the largest stake in TVB.
Hong Kong’s Broadcasting Ordinance bars any non-local, like Li, from controlling media outlets but Chief Executive Leung Chun-ying handily granted a discretionary waiver and cleared the legal obstacle in August 2016. Two months later, Li was appointed the broadcaster’s deputy chairman and non-executive director and went on to become chairman of TVB’s sister company Shaw Brothers Ltd., Hong Kong’s time-honored movie studio once owned by TVB founder Sir Run Run Shaw.
TVB noted in a filing that Li, with no voting rights, wouldn’t be involved in its day-to-day operations and it was Charles Chan, TVB chairman since 2012 after he acquired controlling shares via the Young Lion consortium, who invited Li to come on board.
But that hasn’t stopped the rumor mill as to the actual return of Li’s investment or does he have a political agenda, or an edict from Beijing, to execute when sitting on the board of Hong Kong’s largest broadcasting company.
The plot takes a new turn this month when the Securities and Futures Commission made disclosing all details of TVB’s shareholding structure, in particular shares owned by Young Lion and Li, a prerequisite for approving its HK$4.2 billion share buyback plan. The broadcaster is said to have applied for a judicial review to overturn the watchdog’s request.
The Hong Kong Economic Journal has also revealed that Li’s CMC may have indeed obtained 79.01 percent of Young Lion’s voting and non-voting shares, and subsequently in possession of 20.5 percent of TVB shares, making the mainland media baron the No. 1 shareholder. Chan, a Hong Kong permanent resident and the broadcaster’s chairman, has in truth some negligible 1.56 percent of TVB shares.
Alarmists again have cautioned the partnership could further encroach on Hong Kong’s already precarious media autonomy.
But the changes are already obvious.
Likely prodded by Li, TVB surrendered its pay TV license last month, a move that flagged the shift of its focus to the growing over-the-top business.
Li noted in a rare interview following his share purchase that “TVB has to evolve” when set-top box and OTT streaming are debasing its monopoly, and when its retro-chic TV dramas and films are losing resonance with local audiences and those north of the border.
“Young people and the middle class in Beijing and Shanghai have little appetite for Hong Kong productions when the plot is weak and the storytelling stereotyped… Hong Kong dramas and movies can only generate most of the box office in lower-tier cities nowadays, but audiences there are fast raising their bar of appreciation,” he was quoted as saying.
Shooting and post-production have also been revved up after the 2016 foundation of Flagship Entertainment, a jointed venture among CMC, TVB, Shaw Bros and Warner Bros Entertainment. Twelve Chinese and English sci-fi and adventure movies are in the pipeline to hit the screen before 2018.
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