Internal separation

Similar concerns were shared by Zhang Yanping, chairman of Beijing Media Corp Ltd and president of Beijing Youth Daily.

When the corporation was founded in 2001, Zhang promised that the salaries of employees transferred from newspaper to corporation would remain roughly the same. He also allowed them to return to the newspaper for retirement, so they could resume their identities as staff members of a public institution and enjoy higher pensions.

In 2004, the corporation raised HK$1.04 billion (92.7 million euros) through an initial public offering on the Hong Kong stock exchange. That provided a solid financial basis for Beijing Youth Daily to develop into a large business group of four daily newspapers, six weekly newspapers, six magazines, two websites and 13 subordinate companies.

As a trailblazer of China's newspaper transformation, however, Zhang is allowed to put only the advertising and operation parts of the business into the market. From the beginning, Beijing Media Corp has been separated from editing and reporting.

Such a business model unavoidably leads to conflicts. Every year, the corporation contributes 16.5 percent of ad revenue as the newsroom budget. During a good year, the newspaper will publish more pages and hire more people.

When business is down, the paper can cut pages but cannot fire the extra reporters, so the newsroom budget falls short of expenses. In such cases, Zhang has to negotiate between the corporation and newsroom.

Ten years on, he believes it is time to end the transitional model of separation.

"Media should form an integral whole and turn completely into an enterprise," he said. "I hope to put the newsroom into the listed corporation and restructure the entire group. It would make the corporation healthier and more efficient."

Needed, but scarce

For many newspapers and magazines that already have converted to enterprises, lack of standard serial numbers - essentially, licenses to publish - became a major obstacle to development. Beijing Prominion has applied for many standard serial numbers since 2007, but GAPP has approved only a couple.

GAPP encourages publishers to solve the problem through mergers and acquisitions, but that is extremely difficult to practice, Beijing Prominion's Liu said. Most administration agencies that supervise a newspaper or magazine refuse to let go of them; their scarcity means they could be worth several million yuan. Some turned down offers of acquisition for fear of losing face. Liu has negotiated with more than 10 magazines and even drafted several rounds of agreements with a few, but none succeeded.

"It's a lot like falling in love with a girl and making a proposal," he said. "But after she said yes, you still have to talk to her parents and grandparents. Chances are you will be rejected."

'Long way to go'

"The transformation of newspapers and periodicals does not simply end at enterprise registration, which is only a change of identity," said Shi Feng, chairman of the China Periodicals Association and former deputy director of GAPP.

"There's still a long way to go for real changes to happen in the operation and management system, and the pace of the reform depends on whether relevant government policies are already in place."

Some experts said the government should allow various resources, including private capital, to enter the media industry.

"We can have a test on one or two types of newspapers to see what kinds of harm and benefit will be done by private capital," said Yu Guoming, associate dean of the journalism and communication school at Renmin University of China. "Newspapers and magazines will be enthusiastic to carry out reforms, but only if the government can design the system in a way that will provide more space to develop and better chances to catch market opportunities."

Qiu Bo contributed to this story.