Changing channel

Phoenix TV’s founder Liu Changle

When the international arm of state broadcaster CCTV was rebranded into CGTN in 2016, Chinese President Xi Jinping urged in his congratulatory message that the country’s media outlets “tell China’s stories well”.

That phrase has been a recurring slogan in the state media ever since as it sets out on its ‘soft power’ mission. It is no easy task. CGTN, for one, has just been banned in the UK for breaching impartiality rules (see this week’s “China and the World”).

Before CGTN, Phoenix Satellite TV was the pioneer in raising China’s voice overseas. Founded in 1996, it attracted strategic investment from Rupert Murdoch and its news channel was dubbed the “Chinese CNN”. Yet in recent years, like many of the more established broadcasters, Phoenix suffered declines in income as advertisers moved their spending to new platforms online.

Its attempts to reposition its business became more apparent in early 2018 when the Hong Kong-listed firm changed its holding company name from Phoenix Satellite TV to Phoenix Media Investment. At the time the TV firm was also betting that its name-recognition among Chinese audiences would support a sideline in peer-to-peer lending, making itself an ‘information medium’ for matching up individual lenders and borrowers. The attempt at business diversification proved ill-fated, however: financial regulators cracked down heavily on the P2P sector after a number of high-profile failures and scandals.

China’s central bank announced that the number of P2P lenders had fallen to zero by November last year (from a peak of 5,000), although tens of thousand of investors are still suffering from up to Rmb800 billion ($115 billion) in unreturned capital.

Phoenix’s P2P unit, Phoenix Finance, also failed and local media outlets have been picking on reports about individual investors demanding their money back for months.

According to Hong Kong-based news portal HK01, the platform’s collapse has saddled more than 70,000 lenders with billions of yuan in losses.

Of course, individual investors should have realised that they were bearing the credit risk when they lent to others online, not the P2P platforms such as Phoenix Finance. However, as WiC has reported from as far back as 2016, many people put money into the platforms after watching advertisements on state broadcaster CCTV. Promotion with the state media’s imprint of authority bestowed a sense of security on their investment that was often undeserved (see WiC313).

It’s not immediately clear how much damage Phoenix Finance’s demise has done to Phoenix Media Investment, the holding firm. It reported a deficit of HK$713 million ($91 million) in the first half of last year, on top of a HK$1.2 billion loss in 2019. But HK01 is reporting that the Chinese government is now considering a managerial reshuffle at the Hong Kong-based broadcaster. The speculation is that the chairman’s role will be assumed by Xu Wei, the Party boss of the Shanghai branch of the Academy of Social Sciences, while a senior executive from CCTV will be airdropped in as the new CEO.

Phoenix TV was founded by Liu Changle. He claims a previous career as a journalist although one of his former roles has also been described in the international media as a propaganda official for the People’s Liberation Army.

Liu is currently the chairman and chief executive officer of Phoenix, positions that seem to be threatened by the potential managerial changes.

In a stock exchange announcement last week, Phoenix chose not to rebuff the speculation directly, although the company did confirm that it is considering splitting the role of chairman and CEO by appointing a new executive to take up the latter post.

Investors seem to sense that a more radical reshuffle could be on the way – and that it may be no bad thing judging by the stock’s trajectory. Phoenix’s share price has spiked nearly five times so far in 2021. As of this week, its market value was about HK$9 billion.

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