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China: Ad Firm Drops CCTV’s Pay HD Service

Media services firm China Television Media will quit its arrangement to operate CCTV’s pay-HD channel on the communist nation’s government-run network. But CTM has indicated it intends to be involved wherever possible in CCTV’s free terrestrial HD channels.

The problem that led to the break-up over pay-HD was money. The agreement between both companies resulted in CMT taking a cut of as much as 70 percent in advertising revenues (once the local networks had taken their shares), with China Digital Media receiving the remaining 30 percent or less, it said in the Chinese press.

The agreement, which began more than a year ago, was to have lasted through 2011. However, CMT said it decided to pull the plug earlier, thanks to forecasts of continuing bleak revenues.

While China boasts some 1.3 billion people, only a small percentage has television services, and an even smaller slice of that group can afford HD services (although economists say the situation is changing dramatically year to year).