There is profit, it seems, in propaganda. And such is the promise, the flotation of People.cn, the online version of People’s Daily, has been accorded a value larger than The New York Times.
People.cn is still small in revenue and profit terms. The New York Times’ 2010 revenue was 45 times bigger, and net earnings eight times as large as that of People.cn. But the Chinese website is growing much more quickly. Revenue surged 75 per cent in 2010. After a 74 per cent jump in the price of its shares on debut, People.cn is valued at 73 times 2010 earnings. That gives it a market capitalisation 68 per cent bigger than that of The New York Times.
There may be some irrational exuberance in the People.cn share price. But the company has at least three key strengths. First, it has the kind of exclusive content that attracts readers and advertisers. People.cn is the preferred information disclosure site for government agencies, such as the Chinese Ministry of Education and the Office for Taiwan Affairs. It also has an online message board that allows the public to correspond with top leaders. Much of the content might look like propaganda, and it is hardly that popular. People.cn only scrapes into the top 50 in individual visits to China-based websites, according to ChinaRank. But the content has a value that attracts valuable advertisers. State-owned companies, which want to raise their profile among government officials, are especially enthusiastic.
People.cn does not just rely on advertising though, and that is its second strength. The company earns licence fees from other websites that use its material. It also builds and maintains websites for government agencies and the Communist Party. Such outsourcing services contributed to 22 per cent of its revenue in 2010. China’s Treasury has been its biggest customer since 2008.
Third, Beijing has showered People.cn with perks like tax breaks and subsidies to boost the role of state media. People’s Search, one of its subsidiaries, had no revenue in 2010 but a profit of $4.9 million. People.cn also has coveted licences, such as value-added mobile services. Western media companies can hardly ape its ways. But they are enviable.
