LI RUIGANG IS one of those particular Chinese combinations of government official, Party insider and entrepreneur — and perhaps a proto manifestation of the statist-corporatist economy that President Xi Jinping sees as China’s future.
In the 2000s, a 30s-something Li, though a state official who had started out with a degree in journalism and a job as a reporter on a local Shanghai TV station, was a pioneer in China’s fledgling media market. Rising rapidly through the programming ranks, he brought foreign programming and popular international TV formats to the staid, insular world of state broadcasting. He also married TV and radio with online and mobile media, riding the emerging wave of young newly affluent Chinese going online.
As president of Shanghai Media Corp., a state broadcaster formed in 2002 when the city’s television and radio stations merged, he turned a municipal broadcaster into a national media powerhouse. His vision of popular programming allied to mastery of the crease where global popular culture meets Chinese mass propaganda meant that even staid national state broadcaster CCTV could not ignore SMC’s transforming influence.
In western media terms, he was a meld of such media moguls as News Corps’ Rupert Murdoch and Viacom’s Sumner Redstone, both of whom Li numbers as friends. As the photo above indicates, he now moves in that world of the global great, good and successful.
By 2009, Li had overseen a fourfold increase in SMC’s revenue to $1.2 billion. That year, he founded China Media Capital Holdings (CMC), a state-backed Shanghai-based private equity and venture capital firm specializing in cultural, media and entertainment investments inside and outside China. At the same time, he started to scale back his work at SMC, though he would not finally cut formal ties until this year.
Li’s motives for switching from state official to state-backed venture capitalist are complex. Not all his programming deals with foreign media companies panned out. A public sale of SMC shares planned for 2009 was put on ice following the 2008 global financial crisis. Other political constraints on SMC’s freedom to do deals with foreign partners started to chafe.
But Li was not railing against the system. In 2011, when he stepped down from full-time management at SMC, he would become deputy Party chief in Shanghai. He retained the confidence of his political superiors that he could be trusted in the fast evolving world of media, even as the soft power of cultural assets became more of a national concern.
Among some of CMC’s recent investments are:
- a deal to develop a Legoland amusement park outside Shanghai;
- a joint venture with Warner Bros to co-produce Chinese-language films (DreamWorks Animation is already a JV partner. Kung Fu Panda 3 is the result of that); and
- with Jack Ma’s Alibaba and Tencent, a company to develop InternetTV.
CMC’s latest deal, announced this week, is a $400 million 13% stake in City Football Group. CFG is the holding company owned by Sheihk Mansour from the United Arab Emirates for English professional football club, Manchester City FC, its U.S. sibling, New York City FC, its Australian cousin Melbourne City FC and a stake in Japan’s Yokohama F. Marinos.
Li is following another Chinese entrepreneur, Wang Jianlin, founder of the property group Dalian Wanda, in investing in European professional sports. Both men have an eye to exploiting the Chinese TV market for watching the teams’ games, buying their merchandise and learning the ropes of what is becoming an increasingly lucrative part of the media business.
Even back in his SMC days, Li understood the importance for broadcaster of both creating and owning content and having the means to distribute it.
CMC already owns a slate of sports media rights, including those for Chinese Super League. It blew away CCTV for those with a spectacular five-year 8 billion yuan ($1.3 billion) bid in October; previously the rights had sold for 50 million yuan a year.
The Manchester City deal might also prove an avenue for improving the woeful standard of the game within China. President Xi would love for the country to hold its head high as a world footballing power. China ranks 84th in Fifa’s global rankings for national teams and is not even number one in Asia. South Korea is 48th and Japan 50th.
Xi would also like China to host a World Cup, as South Korea and Japan have already done. A World Cup final in Beijing would, like the 2008 Beijing Olympics, be another sign of China’s emergence on the world stage.
Li’s deal, reportedly two years in the making, now seems it make it clear why Xi chose to visit the Manchester City club during his recent state visit to England.