China's cable sector racks up the losses

China's cable operators are wallowing in the red, with most of the biggest listed firms announcing losses in their Q3 filings. Three of them have posted net losses for the past three years, and another has been recording deficits for the past two years, according to an analysis by website DVBCN.

Among those that posted a profit, several have also experienced a decline in revenue this year. For example, Wasu Media, one of the biggest operators, recorded a 10% drop in Q3 revenue, with net profit sliding 36% to 109 million Chinese yuan (US$15 million).

Shenzhen-based Topway's quarterly earnings plunged 81% to RMB15 million ($2 million), while Jiangsu Cable’s net income declined by more than 15% to RMB222 million ($31 million).

Jishi Media, from the northern province of Jilin, posted a first-half loss of RMB227 million ($31 million), with 6% lower revenue of RMB802 million ($111 million).

Unlike the telecom sector, with three big telcos that operate nationally, China's cable operators are provincially owned and tend to run networks in just one city or province. Wasu is unusual in being one of the few to have built out an OTT business across several provinces.

5G has accelerated the trend

But the Chinese cable operators are, like legacy cable players everywhere, struggling to survive as users cut the cord in favor of mobile devices and streaming services.

"The onset of the 5G era has accelerated this trend. In the process, the scale benefits of new Internet video formats such as online live broadcast, short video, screen projection and VR/AR/MR have become more obvious," DVBCN points out.

On the upside, there has been a mild rebound in the number of cable TV households. The total fell to 199 million in 2022, down from the 2015 peak of 236 million, but is now 207 million according to the National Radio and Television Administration (NRTA).

However, hopes that 5G would bring some new revenue and impetus to the sector have so far been unrealized.

China Broadnet, the cable-industry-owned 5G entrant, reported 29.4 million 5G subscribers at the end of September but is still a minnow compared to its three huge rivals. It will be some time, if ever, before it turns a profit.

DVBCN said cable operators needed to strengthen collaboration, including in the creation of 5G applications and broadcast channels.

It also urged cable players to lobby for favorable government policies, noting that as state-owned cultural enterprises, they are entitled to tax exemptions and state subsidies.