BesTV, a Shanghai Media Group subsidiary, announced that it will be acquiring Shanghai Oriental Pearl Group Co., a Chinese firm that focuses on entertainment and leisure ventures.
The move is the first phase of BesTV's parent firm SMG's plan to restructure to become an Internet TV giant.
When BesTV acquires Shanghai Oriental Pearl, its name would be changed to Shanghai Oriental Pearl New Media Co. According to a filing by BesTV on the Shanghai Stock Exchange, SMG will hold 45.07 percent worth of shares.
BesTV is also planning to raise 10 billion yuan by selling its shares to private investors in order to purchase other SMG assets, according to the filing.
During a conference for investors, SMG senior official Ling Gang said that the new company will be an Internet media company that will be aiming to be the top Internet TV terminal in China.
According to Li Ruigang, the president of SMG, his company has already deployed numerous operational assets into firms listed in Shanghai's stock market. SMG is also planning to launch its IPO soon, which will indicate that the group of companies is finally adapting to the Internet trend.
After SMG's restructuring plan, the firm will put more investments in digital avenues and will focus on channel building and content production, according to LI.
Wei Wuhui, an expert in new media from Shanghai Jiao Tong University, said that Internet firms exceeded the capabilities of print media with regard to information dissemination.
As a result, the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) is keeping the television market, both online and traditional, for state-owned enterprises such as SMG.
Under the No.181 document from SAPPRFT, both set-top boxes and Internet TVs should only get content from the seven of the State's licensed firms, including Wasu Media, BesTV New Media Co. and China Network Television.
The state's media regulator recently launched a campaign to implement regulations on Internet TV firms, which resulted in the removal of the firms' TV apps.
According to Zhang, the SAPPRFT is damaging the industry by favoring state-owned firms via its administrative powers.
SMG is also planning an overseas expansion.
"SMG will have a series of global cooperation and exploration ventures. Our ambition is not limited to the group's restructuring but also about building a new image for Chinese media," said Li.
Li added that SMG will be establishing a base in the Silicon Valley for research and development on Internet technology.