Bureaucrats or Strategists? Competitive Strategy in the Chinese State-owned Satellite Television Industry

Abstract: An important target set by the Chinese government for market reform is to promote scientific management practices among the state-owned enterprises. This paper investigates whether Chinese state-owned satellite television channels are adopting market oriented management practices by testing for competitive strategic conducts. Under the previously planned economy system, SOE bureaucrats were neither familiar with competitive strategy nor motivated to act strategically. Moreover, the selections of television programs were often politically motivated. Using a near-census panel dataset, I examine the programming portfolios of 30 province-level government-owned satellite channels before and after a central government policy change in 2003. The policy allowed the central government-owned television channel, CCTV1, to broadcast a greater proportion of commercially oriented shows. I construct a product distance metric to compare the pre- and post-policy programming portfolios. I find the satellite channels execute programming strategy towards CCTV1 that is consistent with spatial competition and dominant-firm-competitive-fringe theories.