2nd Ld: Former Chinese media executive jailed 4 years for extortion

Shen Hao, former president of the 21st Century Media Co. Ltd., was sentenced to four years in prison on Thursday for blackmailing companies by threatening negative coverage.

Shen was convicted of extortion and forced transactions, among other crimes, the People's Court of Shanghai's Pudong New District said in a statement.

According to the verdict, Shen was fined 60,000 yuan (9,266 U.S. dollars) and all his illegal gains will be confiscated. The media group was fined 9.485 million yuan.

Shen said he would not appeal.

From Oct. 13 to Nov. 30, 30 people with 15 organizations including Shen, were tried in public in separate cases by the People's Court of Shanghai's Pudong New District.

Other media executives including Liu Dong, former president of 21cbh.com; Liu Hui, former editor-in-chief of 21st Century Business Herald; and Xia Ri, former publisher of Money Week, were sentenced up to nearly 11 years in prison, said the court.

They were arrested in September 2014.

The court determined that 21st Century Media and Shen Hao, from Aug. 2009 to Sept. 2014, coerced nine companies and organizations, including Sichuan Langjiu Group Co., LTD., into paying more than 7.28 million yuan to avoid negative coverage.

The company capitalized on the fear of negative publicity for companies poised for IPOs or restructuring their assets. A network of media, advertisement and operation companies controlled by 21st Century Media participated in the scheme, the court said. Shen designed the performance evaluation methods.

It also determined 21st Century Media and Shen Hao, together with their controlled companies, via several financial public relations (PR) companies, coerced 70 companies and organizations into signing advertisement contracts worth a total of 18.97 million yuan, by threat of negative coverage or hinting that no advertisement on their media platform could lead to failed IPOs.

The court said, Shen and the 21st Century Media, knowing that negative news reports may cost victim companies stock price falls, and setbacks in IPOs or mergers & acquisitions, extracted money from the companies by offering deletion or abortion of negative news coverage, cashing in on their special position as a news outlet.

Such conduct of the 21st Century Media qualified as the crime of extortion. Shen, playing an organizing role in the scheme and executing parts of the scheme himself, should be punished for extortion.

Moreover, 21st Century Media and financial PR companies jointly conducted the crime of forced transactions, the court deemed.

These PR companies threatened victims into buying advertising services from the media group, leveraging any negative reports involved, or showing victims examples of disastrous outcomes, such as failed IPOs, as a result of negative news reports.

The defendants violated market rules, disrupted market order, and harmed the interests of the victim companies, the court ruled.

21st Century Media, knowing that the financial PR companies used their news stories to force deals, cooperated with the PR companies in the form of deleting or calling off reports.

21st Century Media and financial PR companies utilized each other and shared interests, so they jointly conducted the crime, the court ruled

The accused individuals and companies in the case were also convicted of a number of crimes, including bribery, embezzlement, and illegal invoice.

Website 21cbh.com is run by Guangdong-based 21st Century Media Co. Ltd. The company's publications include 21st Century Business Herald, Money Week and 21st Century Business Review. Endi