Chinese state firm gets a majority stake in Czech media advertising agency

Media analysts express concern over China’s growing influence over Czech media outlets

Raymond Johnston

Written by Raymond Johnston
Published on 22.04.2020 08:28 (updated on 22.04.2020)

Chinese state-run financial group CITIC has acquired a majority stake in Médea, one of the largest media agencies in the Czech Republic. Analysts say this could have a chilling effect on news that is critical of China, as news outlets may be wary of losing advertising revenue.

CITIC had held a minority 30% stake through its company Rainbow Wisdom Investment, but exercised an option to increase its share to 57%. Businessman Jaromír Soukup now has a minority stake, according to news server Hlidacipes.org. The name “hlídací pes” translates to “watchdog.”

“We can expect hard pressure on the way the Czech media will report on communist China. The obedient will get more money for advertising, the stubborn ones will be strangled,” Ondřej Neumann wrote in Hlidacipes.org, adding that the Chinese state enterprise uses advertising money to exert China’s influence over media content.

Local media are dependent on income from advertising, and Médea reportedly controls an advertising budget of some 3 billion CZK annually.

“According to information from a confidential source, a plan is being prepared [by] the new shareholders to divide the media according to their relationship with China. Those who are more accommodating will get better conditions and thus higher advertising revenues,” Hlidacipes.org stated.

The people behind the plan to divide media into pro and con groups are former Czech defense minister Jaroslav Tvrdik and Martin Nejedlý, and advisor to Czech President Miloš Zeman. In 2016, Zeman hosted Chinese president Xi Jinping on a state visit that has heavily criticized due to police crackdowns on protests and the forced removal of visible Tibetan flags from public view. Zeman visited China in 2018 to attend the China International Import Expo (CIIE).

Hlidacipes.org pointed out that the once Zeman leaves office, China will need a way to maintain its influence in the Czech Republic.

“it cannot be ruled out that the Chinese majority owner of CITIC will use this path to either directly intervene or modify the critical views that some media are now publishing,” Hlidacipes.org stated.

Soukup continues to hold a majority stake in Empresa Media, which operates Television Barrandov and publishes magazines Týden, Sedmička, Exkluziv and Interview, as well as books.

Last autumn, Rainbow Wisdom Investment obtained the anti-monopoly office’s permission to participate in the control of Empresa Media and Médea. Rainbow Wisdom Investment, founded by the Chinese state group CITIC to operate in the Czech Republic, acquired shares in both companies last June, when it took over the assets of the CEFC China Holding. It gained 49 percent in Empresa Media and 30 percent in the Médea Group at that time.

Czech Fund chief economist Lukáš Kovanda, told the Czech News Agency (ČTK) that CITIC has been gaining influence on the domestic media scene since 1993 on an unprecedented scale. “CITIC is owned by the Chinese Ministry of Finance. … It can be assumed that in a substantial part of the domestic media scene, China’s influence and the level of asserting its interests will increase,” he said.

Médea acts as a mediator for advertising between businesses and media outlets. Soukup took it over in the late 1990s and made it one of the main players on the Czech market.

According to Nielsen Admosphere, advertising in the press amounts to CZK 20 billion CZK annully, television advertising exceeds 57 billion CZK and online advertisers spent 34 billion CZK.

Relations with China have been in the news during the coronavirus crisis, with the Czech government making public relations appearances for the arrival of respirators and other medical equipment. Prague City Hall, on the other hand, recently backed out of a sister city agreement with Beijing and instead has been working closely with Taiwan to get medical supplies.