Rankled by federal funding to National Public Radio and the Public Broadcasting Service? Check out the People’s Daily, owned by China’s Communist Party, which hopes to raise $245 million in a public offering of shares in its online news business.
People’s Daily, which also publishes in English, wants “to maintain and enhance the company’s competitive position in the industry, thus further improving the company’s profitability and social impact.”
The irony of communists striving to improve profitability aside, the People’s Daily offering is instructive. Defenders of public subsidies for media organizations cite the need for editorial independence and wonder who would support serious journalists–“boring vegetables,” according to Gawker founder Nick Denton–absent federal funding.
But the People’s Daily offering suggests private capital markets are up to the task:
The price range, which represents 34.60-38.92 times the company’s earnings per share, is a sign of strong investor demand and bodes well for other upcoming state-controlled media IPOs.
So long as there is robust demand for a high-quality product–in this case, propaganda for a totalitarian regime–investors will eagerly back it. For this reason, fluid capital markets are essential to social welfare. As American lawmakers debate new tax legislation, they should consider the efficacy of private lending in the Chinese city of Wenzhou:
Official statistics show that the private capital in Wenzhou amounted to 600 billion yuan ($95.2 billion) last year. Small and medium-sized enterprises accounted for 99 percent of the city’s total.
Private capital, if the state permits it to flow freely, finances goods and services of social value, thereby strengthening a free society.
The People’s Daily offering expands on the lesson of successful Chinese media explained by James Bond. Metro-Goldwyn-Mayer underwrote that film production because movie goers would happily watch it. Likewise, capitalists and communists are coming together in this instance because it is mutually advantageous. Capital markets, the media industry and society will be better of on the whole.