China Bans Ads in TV Drama and Films

China has banned advertisements during dramas and movies on television in the Communist party’s latest move to assert control over the country’s increasingly commercial media industry.

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The rules, which come into effect in January, ban TV stations from running ads during films and drama episodes that run for 45 minutes or more. Analysts said they could slow the world’s fastest-growing big advertising market next year, as the party’s media campaign starts to have a commercial impact, or divert TV ad budgets to other media.

The State Administration of Radio, Film and Television, an arm of the propaganda department, has over the past two years stepped up its meddling in TV networks’ operations. In 2010, it cut the amount of commercials stations could broadcast in prime time by a quarter. This year, it has pushed networks to cut entertainment programming in favour of morally edifying shows.

Earlier this year, the regulator forced Hunan TV, China’s most commercially successful provincial broadcaster, to take “Supergirl”, the nation’s first and most successful talent show, off the air. Officials told the broadcaster that entertainment should take a back seat to “values, responsibility and quality”.

In a key policy document passed last month, the Communist party pledged “cultural system reform” and said it wanted both to have market forces drive the media industry and for the party to control it.

The regulator explained its latest move with the desire to implement the leadership’s decision, and “to fully utilise the TV networks to build a public cultural service system, raise the quality of public cultural services and guarantee the people’s basic cultural rights”.

Analysts said the new rules could throw the industry into disarray. Zhao Yihe, head of research at Charm Communications, one of China’s leading advertising agencies, said they were “not going to be a lethal blow” to TV stations, but that they would hurt their ability to make money.

“I expect this to shave one or two percentage points off the growth rate of TV advertising next year, which we originally forecast to be about 15 per cent,” said Mr Zhao. GroupM, the world’s largest media investment management group, predicts that China’s television ad spending will hit Rmb201bn ($31.4bn) this year, up 13 per cent from last year.

However, Seth Grossman, managing director of Carat China, said the Aegis-owned media agency had not changed its 11.8 per cent growth forecast for the whole Chinese ad market in 2012 because advertisers were likely to move money to other Chinese media.

“The first impact will be on [TV ad] pricing. China is still a very high demand environment, and that’s a classic inflationary pressure. This doesn’t take money out of the Chinese advertising market. It will go elsewhere,” he said, predicting benefits for local television channels, online video outlets and outdoor advertising companies.

Domestic companies are the biggest spenders on Chinese TV ads, but some foreign brands like Nike, Toyota, Coca-Cola, Procter & Gamble and Sony are also present. Mr Zhao said the new regulations would create short term chaos as TV networks renegotiate advertising slots that were auctioned off as recently as this month.

“It is said that the TV networks are now considering to shorten the length of one episode from the original 60 minutes to 30 minutes, and then commercials can be broadcast between those!” wrote Bi Yantao, director of the advertising faculty at Hainan University, on his microblog.

Additional reporting by Andrew Edgecliffe-Johnson in New York