Taiwan's Media Shake-up
China Times Joins a Snack-food Empire
A month after Want Want Holdings chairman Tsai Eng-meng bought the financially troubled China Times Group, he reported the completion of the deal to a top Chinese official. What is this new media mogul up to?
China Times Joins a Snack-food EmpireBy Rebecca Lin
From CommonWealth Magazine (vol. 416 )
On Nov. 3, 2008, Want Want Holdings chairman Tsai Eng-meng wrested ownership of the China Times Group, in his own name, from its main suitor at the time, Hong Kong-based Next Media Limited. The maneuverings behind the murky deal in which the head of a food processing conglomerate acquired one of Taiwan's biggest media groups have never been fully disclosed.
Shortly before the Lunar New Year, Tsai appeared at the year-end banquet for the China Times Group, picked up the microphone and explained how the deal transpired. Tsai told the group's gathered employees that former China Times Group chairman Albert Yu offered him a friendly reminder that the media business was a money pit and urged him to consider his intended purchase "thoroughly," using the Chinese phrase zaisan, which literally means "three times." Tilting his head to the side, Tsai pondered the question while counting off "one, two, three," and then told Yu, "Okay, I'm buying it." A deal involving up to NT$10 billion had been consummated in a mere three seconds.
Then, on Jan. 30, Tsai reportedly bought a stake in Hong-Kong based Asia Television Co., again in his own name. In just three short months, the Taiwanese entrepreneur whose enterprise is now one of China's biggest snack food companies had apparently become Greater China's newest media mogul.
"It's still unclear if after buying the China Times Group he can expand it beyond Taiwan. But Asia Television can definitely enter the mainland and serve as the touchstone for his incursion into China's media market," observes a China Times Group executive.
The China Times Group, comprised of the daily newspapers China Times and Commercial Times, television stations CTiTV Inc. and China Television Co., and the magazine China Times Weekly, had been hemorrhaging money in Taiwan's harsh media environment and was forced to lay off employees at its flagship newspaper in June.
So why did a prominent businessman invest a hefty sum in a money-losing business with which he was unfamiliar? How did Tsai, whose road to success started by selling rice crackers, think he was going to make money selling news? A picture in a Want Want Group internal magazine provides some insight into Tsai's strategy.
In the December edition of the monthly magazine circulated by the Want Want Group in China, there is an eye-catching photo that has all the trappings of an official visit with an important government official. Tsai, his back ramrod straight and hands firmly planted on his thighs, is sitting on the edge of a sofa. At the other end is Wang Yi, director of the Taiwan Affairs Office under China's State Council.
The brief article of less than 200 Chinese characters describes the visit that took place on Dec. 5, 2008, at 6 p.m.
"During the meeting, the chairman (Tsai) first briefly introduced the group's recent acquisition of Taiwan's China Times media group to Director Wang. The chairman explained that one of the goals of the acquisition was the hope that the power of the media could be used to advance the development of cross-strait relations," the article reads.
Buying a Newspaper to Sell Rice Crackers
According to the article, Wang replied, "If the group has the need in the future, the Taiwan Affairs Council will provide its full support. We not only are willing to support the strengthening of its food business, but in terms of future mutual exchanges of cross-strait television programs, the Taiwan Affairs Office is also willing to help as an intermediary."
A senior media professional, who spoke on condition of anonymity, suggests that the Want Want Group's influence in China had previously only extended to the ranks of local officials. But Tsai's new status as a "media mogul" has given him access to officials at the central government level.
Another goal driving Tsai is to turn his media influence into cash. With China's domestic market as the Want Want Group's main target, "the pledge from the government to support the strengthening of the group's food business is a guarantee that it will make money," and will solidify Want Want's position in China, the source said.
The first step in Tsai's media strategy is to create a media platform for cross-strait "exchanges." His most obvious move in that direction is his plan to launch a new newspaper from scratch – tentatively named the Want Bao – at a time when Taiwan's print media faces an unprecedented crisis.
The new venture will be positioned as a medium to present complete information on China to Taiwanese readers. Gen-cheng Wu, president of China Times and vice president of the China Times Group, explains that with the opening of direct transportation links, cross-strait exchanges will increase. "But is Taiwan currently providing enough information about the other side across the Taiwan Strait?" he asks.
The new newspaper, scheduled to begin publication in May, will provide practical career information on examinations, study, practicing medicine and investing in China. It will also draw content from Chinese business and political commentary magazines through a cooperative arrangement, with China Times staffers working part-time for the new newspaper to help select and edit stories. The China Times will also serve as the source for newsprint and printing.
In its initial stage, the new paper will be 12 pages long and have 40,000 copies printed per day. Each copy will sell for NT$5, and the venture's managers believe it can break even with advertising revenues of NT$50,000 a day.
To operate a "platform" requires maximizing the synergies of the group's many media businesses. The China Times Group businesses have been notorious for resisting integration, but under pressure from Want Want Group managers, the group's diverse companies have taken to working together.
Selling News on an Integrated Platform
A forum on investing in "the new China" held at the Taipei International Convention Center on Feb. 17 is one example of the new era of integration. The words "China Times-Want Want Makes the Earth Prosper, J.P. Morgan Reigns round the World" were displayed in bright red on stage, referring to the forum's organizers and exclusive sponsor, J.P. Morgan Asset Management.
"This was a successful cross-media marketing event," Gen-cheng Wu says, as even top executives from rival newspapers felt compelled to attend.
The air time given to promoting the forum over three months by CTV and CTiTV and advertising space devoted to it in the China Times and Commercial Times contributed to the forum's success and established an attractive model for advertisers.
In giving the investment firm exposure from coverage of the event on page two of China Times while mobilizing the entire group to promote the forum, China Times' message to sponsors seemed to be "work with us and you'll get value-added through exposure from our other media businesses."
Advertisers very much favor such efficient "buys."
"The methods were right and the integration was effective," says Helen Wang, secretary-general of the Taiwan Advertisers' Association, of China Times' integrated cross-media marketing gambit.
Her only criticisms were that the cross-media campaign's theme sold "China," and the sponsor was a foreign investment firm.
"This forum organized by China Times urged companies and investors to invest in China, but an enterprise's budget is limited. If it invests a lot in China, it may reduce its budget in Taiwan," Wang says.
To businesses such as the Want Want Group, whose interests stretch across borders, such fears are irrelevant. Having taken over a group that was losing nearly NT$100 million per month, Tsai is only focused on improving the bottom line.
Lin Sheng-fen, former China Times president and now chairman of CTV, attributes his failure to integrate the China Times Group to impediments formed by the Yu family's interpersonal relations and its insistence on certain values – constraints that left his hands tied in effecting change. He also admits that integration efforts at the management level were ineffective, with each subsidiary going its own way. He notes that the business-oriented Tsai is a better manager than the Yu family, but stresses that the key to success will be whether or not Tsai can implement his strategy.
Finances Dictate Editorial Decisions
To date, Tsai has, in fact, been meticulous in instilling his numbers-driven management philosophy. Since taking over the China Times Group, Tsai has held a weekly meeting at which he has the finance department report the results of each business unit and how successfully each unit has met its targets. This strict monitoring of financial performance marks a complete departure from the Yu family's style. Tsai has even frequently exhorted his editorial department to "fully cooperate with the sales department," and each employee in every department must have the ability to drum up business.
"The era of finances taking command has arrived!" suggests one executive. Employees privately take the description a step further, saying "finances are guiding both business and editorial decisions."
The tight management controls seem to have already proven effective. China Times lost NT$20 million in January, a major reduction from the NT$100 million that the paper's deficit reached at its highest point, and the smallest loss run by any of the group's four major outlets. The January number was helped by the long Lunar New Year holiday, which meant less newsprint was used, and a round of layoffs at the end of the year, but one observer says that Tsai's management strategy has also contributed to improving the bottom line.
Tsai, who treats the media as just another commercial product, has also begun to ask editors to be responsible for the product's quality and performance. China Times readers may have noticed that at the bottom left corner of each page is the name of the editor responsible for producing it. To editors whose identities were only known internally in the past, having their names in print is both an honor and a responsibility. Under the new system, somebody can be held accountable for every mistake, with editors particularly responsible for a page's layout and headlines.
Even more importantly, Tsai has made the editor-in-chief directly responsible for the newspaper's circulation.
China Times president Gen-cheng Wu confidently says that since the change in management philosophy, the "retail sales rate" – the proportion of papers supplied to newsstands that are actually sold – has grown steadily, increasing 20 percent in January compared to December, and is still rising at 2 percent to 3 percent per week. Unsold or undistributed newspaper levels have fallen, from 20 percent at their peak to inside 5 percent today.
Tsai's intervention in editorial management even extends to directing editorial content.
Tampering with the Editorial Soup
Reports emerged in January from inside the China Times Group that Tsai openly requested the editorial department not to criticize the Ma Ying-jeou administration, or if it did, to have solid evidence. He also barred using the term zhainan – a reference to an antisocial boy who spends most of his time at home in front of his computer – to describe the president. At the same time, CTV launched a new program called, "Confronting Challenges – A Prosperous New Taiwan," another effort by the China Times Group to take the lead in shunning a pessimistic view of the government.
Some have labeled Tsai as "purely a businessman," and Tsai revealed his down-to-earth personality at a recent meeting of China Times' top management.
"You (executives) have a common responsibility to minimize my losses and should even find a way to make China Times profitable. Only by making money can you stand up with pride," he said in Taiwanese. "But even if you don't make money, you have to earn distinction. If we're running a media organization without distinction, then not only do I not want China Times, I don't want the entire media group."
This is the media dream of the Chinese community's new media mogul. The Want Want Group has created a new opportunity for itself, one that ultimately will also be a new challenge for Taiwan.
Translated from the Chinese by Luke Sabatier
Chinese Version: 報告主任，我們買了《中時》