Chinese state-owned news website Xinhuanet.com filed for an IPO in Shanghai over the weekend. Though some 800 companies are in line before it, Xinhua’s prominence as the portal of the official Chinese Communist Party (CCP) news wire suggests it will probably have no problem jumping the queue.
There may be another reason: As Bloomberg reports, the central government is looking to offload the costly operations of its extensive state-run media business. And with more than 10 other state-run websites reportedly being groomed for IPOs, the government was likely relieved by the success of its first such offering: People.cn, which raised $222 million on the Shanghai exchange last April. The online version of the CCP’s official newspaper, the People’s Daily, People.cn is currently valued at $1.7 billion. (For a sense of perspective, the market capitalization of the The New York Times is $1.3 billion.)
Xinuanet.com could use that kind of capital—a glance at China Websites Ranking show that its two biggest non-state competitors in the portal business, Sina and Sohu, rank fourth and eighth, respectively, in terms of pageviews, while Xinhuanet.com’s properties don’t even break the top 15.
But at just the moment that Xinhuanet.com is planning a listing, Sina and Sohu are diversifying away from their portal businesses. Sina’s Weibo microblogging service has helped it achieve that, though monetization has been tricky. Sohu, meanwhile, has focused more on online television and games. Their push away from portal-bound revenue streams is a move to protect against China’s rapidly declining PC use and the attendant rise of mobile internet. For instance, Tech in Asia reports that PC-based Weibo use has fallen 13% year-on-year, while mobile-based usage has risen 14%. Now more than half of Weibo’s traffic is on mobile phones. Unlike traditional web usage, the diverse and customizable range of mobile apps makes portals largely unnecessary, as a Sina executive told Tech in Asia.
If mobile is killing portals, why is Xinhuanet.com so keen to get in on the action? Perhaps because its value proposition has little to do with being a portal. It lies instead in the claim to a monopoly on China’s official news. Call it the propaganda play—and if the Xinhuanet.com IPO goes as well as the People.cn listing, you can bet there will soon be more of it to go around.