China Said to Explore Taking Stakes in Some News Websites
China Said to Explore Taking Stakes in Some News Websites
By Bloomberg News
May 2, 2016 — 11:30 PM PDT Updated on May 3, 2016 — 12:25
AM PDT
Stakes would be in exchange for providing `news' licenses
Government would hold board seats, could block content
China is considering taking board seats and stakes of at
least 1 percent in operators of some Internet portals and mobile apps in
exchange for granting news licenses, according to people familiar with the
plan.
The government would issue the licenses in exchange for
stock and a board seat, according to the people, who asked to not be identified
because the details haven’t been made public. Government representatives could
monitor and block content distributed by Internet providers, although they
wouldn’t be involved in other day-to-day business decisions, according to the
people.
The proposal would give authorities the ability to block
news from reaching the Web and coincides with a broad government clampdown on
information distributed online. The move could affect operators of major
Internet portals such as Tencent Holdings Ltd. and NetEase Inc. along with
mobile apps that provide current affairs and news on a daily basis.
News portals in China have been working in a regulatory
gray area. They’re not authorized to provide original content and aren’t
allowed to hire reporters or editors, however, some outlets have recently
distributed investigative stories related to official corruption.
The government has been consulting with online news
providers for the project since late last year, the people said, as part of a
broader plan to amend the country’s online information law. The amended draft
of the regulation is currently seeking public opinions on the official Website
of the Cyberspace Administration of China. The draft didn’t mention anything
about the share exchange project.
There was no immediate reply to faxes seeking comment
from the Cyberspace Administration as well as the State Administration of
Press, Publication, Radio, Film and Television. The Wall Street Journal first
reported on discussions about possible government stakes in Internet companies.
Representatives of Tencent and Netease didn’t immediately respond to e-mailed
requests for comment.
Licenses would be required for providers of “current
affairs news”, which means all news and commentary related to politics,
economics, military, foreign affairs and other social issues, according to the
draft of the regulation. A license would also be required to reprint news
stories or commentary via portals or mobile applications, it said.
The government may tap some state-owned enterprises that
have experience with the cultural industry to hold the shares, or it may establish
a new asset management firm to control the shares, the people said.
Under the pilot program, the government representative
and shareholders will not receive dividend returns or any other form of bonus
and will not interfere in the companies’ business decisions outside of control
over content distribution, according to the people.
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