Viacom to Debut Nickelodeon in China on May 1

Viacom Inc. signed a landmark deal this week to launch Nickelodeon in 40 million Chinese households May 1, marking the second time the entertainment company has been allowed by the Beijing government to take its U.S. brands into Chinese homes.

Under a 3-year-old pact, Viacom is already bringing MTV to 54 million households in China, the world’s largest television market based on the 300 million homes with TV sets. That is three times as many television households as in the U.S.

Though China may be a money-losing proposition for Viacom and other media companies at the moment, analysts expect a growing middle class to become a thriving market down the road, particularly with the country’s pending entry into the World Trade Organization.

“Viacom is building a base, recognizing that in the next 10 years, 65% of the people under the age of 35 will be living in Asia,” said Christopher Dixon, an analyst at UBS Warburg.

The Chinese television advertising market is expected to grow to $4 billion in 2004, more than double what it was in 1999, according to PricewaterhouseCoopers. But that is still less than a quarter of the size of the Japanese television market.

“Right now only 4% of the world’s population is in the U.S.,” said Viacom Chairman Sumner Redstone in an interview Thursday from Beijing, where he spent the last four days meeting with Chinese ministers, culminating in half an hour session with President Jiang Zemin. “This is the best trip we’ve had to enhance Viacom’s position around the world. We expect to break even in China within two years.”

This week, Viacom got the government’s approval to sign an agreement with Tang Long, a Chinese production company, to co-produce local Chinese Nickelodeon children’s programming for 100 cable and television distributors in the country. Viacom said Nickelodeon will grow from an initial half an hour of programming.

Most U.S. programming is available only in hotels and embassies in China, and the selection is at the discretion of government officials. Time Warner’s Cartoon Network was thrown out of China last year. The company speculated that it was in retaliation for sister company CNN’s unfavorable coverage of China’s crackdown on the Falun Gong spiritual movement.

Even U.S. programming that makes it into Chinese homes via cable or satellite often isn’t allowed to carry the American name, making its origins unclear.

“You will not see the name ESPN or Disney on channels here, only generic names like sports programming,” Redstone said.

Encore International is one of the only other U.S. brands besides MTV and Nickelodeon that has received the Chinese government’s seal of approval for household consumption. Encore Chairman John Sie, who is considered the American pioneer of the Chinese market, brokered a deal for his movie channel five years ago that was renewed for another five-year period last month.

The key to the Sie deal was an offer of reciprocity to the Chinese government. Encore’s International Channel, which reaches nearly 10 million homes in the U.S., has been carrying a block of news programming produced by China Central Television, the country’s only national broadcasting network.

Redstone, who has been working on the Chinese project for five years, said such reciprocity also factored into the Viacom deal. “We are not importing U.S. music into China, we are developing their music and exporting it out, serving as an ambassador of goodwill and a cultural exchange. That’s why we are so welcome here,” Redstone said.

MTV now co-produces four programs in China with local partners and will produce its third annual Mandarin Music Honours this year in partnership with CCTV. The award program has been available not only to the 300 million television households within China, but to about 300 million other homes that MTV reaches elsewhere around the globe.

Viacom said that three times as many people watched the Mandarin awards show in China on CCTV as tuned into the SuperBowl on Viacom’s CBS network.

Viacom is considering bringing the Mandarin programming to the U.S., to reach some of the 50 million Chinese living outside of China.