ASIA: WEST GOES EAST - There are still vast ad revenues to be had in Asia, but only if you can understand the individual markets. Richard Cook reports

The small screen

The small screen

It wasn’t supposed to be like this. Six years ago, India had just four

TV channels and a total TV audience of 300 million. Now it has ten times

that number of stations and more than 20 million cable homes. China has

40 million cable homes and there have been similar stories of growth and

opportunity from across the region.

Asia was supposed to be the land of plenty for international TV


But that wasn’t what it seemed like last year when, excluding for the

moment a still relatively buoyant India, TV ad revenue fell by a fifth

in the region. And for the first time since Asian TV investment began,

major western TV companies were forced to consolidate and close their

regional interests.

’The problems of the region seemed to come to a head,’ Chris Walton, a

media director at MindShare in Hong Kong, explains. ’Private satellite

dish ownership in China is still, strictly speaking, illegal. Cable

penetration levels in other markets like Hong Kong and the Philippines,

are not especially high. And then the output is mainly in English, which

is severely limiting in markets like Japan.

’Economic circumstances are still weak. Advertising budgets are still

well down from before the crisis. For the moment, in line with the

economic projections, people are still guessing when things will start

to improve.’

In fact, if there is a consensus across the region, it’s merely that

things have perhaps now got as bad as they are going to get. But there

are not many analysts prepared to stick their necks out and forecast

when things will actually start to get better.

Zenith Media Worldwide is one that is. It reckons the relative youth of

the Asian markets will work in their favour. By virtue of the fact that

they are not burdened by sophisticated economic and industrial

infrastructures, it says, they should bounce back from recession far

quicker than any Western behemoth ever could. Zenith has accordingly

pencilled in a 4.1 per cent real ad revenue increase for Asia in 1999,

reversing last year’s 3 per cent decline.

But that kind of top-line analysis can disguise a multitude of sins, not

least, for the western media, fighting with local rivals for a share of

this diminished ad cake.

According to MindShare, international press ad revenue fell by 10.8 per

cent last year to dollars 293.6 million, following a 0.9 per cent

decline the previous year, and international TV channels fared even

worse. Revenue, which improved by 12 per cent in 1997 to dollars 322.2

million, fell back by 20 per cent last year to dollars 256.9


Even a station owner like Star TV, which has been largely inured from

the Asian crisis in the recent past, was not exempt this time round.

While it’s true that its two biggest markets - India and China - have

been far less affected by the upheavals than the rest of Asia, outside

of these the story has been one of increasing competition and volatile

ad spending.

Star World saw ad revenues decline by 46 per cent last year, while Star

Sports suffered a 44 per cent decline and Star Plus fell back by 33 per

cent. But it could have been a lot worse. The tough economic conditions

claimed more than their fair share of casualties. MGM Gold and NBC went

off air last year, while former rivals CNBC and the Dow Jones

subsidiary, Asia Business News, merged as CNBC Asia. It didn’t do the

new service much good - its ad revenue fell by a fifth.

’It’s partly because of a general uncertainty on the client side that

this is now happening,’ Walton explains. ’Rather than looking to plan

regionally to maximise efficiencies, many clients are now going the

other way - whole regional departments in both clients and agencies are

disappearing. Many clients are now thinking on a more local level than

in the past. And that hurts the western media.’

Mike Cooper, chief executive officer of the Hong Kong-based Optimum

Media Direction Asia, paints an equally unappealing picture of the

problems faced by the western TV giants in the orient.

’Pan-regional TV has been exposed as one of the biggest hoaxes around,’

he says. ’What has happened is that a succession of US operations have

spent millions opening up over here only to discover that there really

isn’t the revenue to support that kind of operation. It’s interesting

that the company which spent the longest and invested the most in

Nielsen research before moving to the area, The Sci Fi Channel, then

decided not to come.’

In fact, a recent survey by Nielsen identified TV spending as one of the

most vulnerable to recession in the area, and predicted a slowdown in

revenue, not least because ratecards which are published in US dollars

start to look increasingly expensive as local currencies weaken.

But the disappointing revenue figures do mask a series of impressive

returns. CNN improved by 22 per cent over the year after a disappointing

1997, while the relaunched Phoenix TV improved by 39 per cent to become

the region’s market leader in ad revenue terms.

Increasingly, the People’s Republic of China is being seen as the next

great hope for western media investment in Asia.

’There is no doubt that China is not as problematic as it was for

western media owners,’ says David Wolf, managing director and chief

operating officer at the oldest established China media consultancy,

Claydon Gescher.

’What usually happens is that new technologies are trialled in a

particular province before any legislation is formulated.

The indications are that they will start trialling digital terrestrial

TV this year, and start experimenting with pay-TV a little later on. The

plus side of doing it this way is that once the legislative decision is

made to go ahead, roll-out can happen much quicker.’

It also helps that this is the 50th anniversary of the founding of the

PRC, and the country is keener than ever to publicise its

forward-looking and flexible nature. Time Warner is one of the media

owners now leaving little to chance in its attempts to make a mark in

the world’s most populous country. It has created a multi-media

marketing programme for advertisers which will offer a selection of Time

and Turner products to reach the region’s most influential consumers

through a range of media - television, magazine and online. The

programme, called China Now, was launched to advertisers in London,

Tokyo and New York earlier this year . It represented the clearest

example to date of the integrated programming and marketing between Time

and CNN. More than that, though, it summed up the importance of this

market to a region that has long promised much to the West, without ever

really delivering.

TV ADVERTISING REVENUE IN ASIA 1996-1998 (USdollars ’000)

Channel           1998      % change       1997      % change       1996

                         (1998v1997)              (1997v1996)

CNBC/ABN        35,848          -20%     44,562           -4%     46,518

CNN             37,472           22%     30,803          -32%     45,415

MTV Asia        12,899          -11%     14,443          123%      6,488

TNT              5,259           70%      3,092           66%      1,857

Phoenix         57,172           39%     41,148           -3%     42,346

Star World      12,108          -46%     22,453           21%     18,520

Channel (V)     47,692          -45%     86,221           43%     60,342

Star Sports     19,692          -44%     35,404           -6%     37,687

Star Plus       28,378          -33%     42,371           53%     27,690

TOTAL          256,914          -20%    322,212           12%    286,864

Source: Asia Pacific Adex. Compiled by MindShare Hong Kong.


Asia is, the travel cliches suggest, a continent of contrasts. But the

magazines that propagate such cliches also know that Asia is a whole lot

more complicated than that.

Asia is a collection of highly diverse, individual markets . If one

thing has united them in recent years, though, it has been a rather

flighty fiscal temperament. But then even this apparent point of

similarity flatters to deceive. The truth is that their individual tales

of economic woe have all differed in extent, in cause, and even in


’People talk of the Asian crisis, but the reality has been far, far more

complicated than that,’ Jean Paul Denfert Rochereau, Hachette

Filipacchi’s international manager, says. ’The truth is that there has

been a certain natural slowness in Hong Kong, while Thailand and South

Korea have suffered alarmingly on the back of their currency woes. But

they also have some positive indicators. The three countries that have

suffered the most extreme financial problems - Indonesia, Malaysia and

the Philippines - have also been the countries shunned by the western


’China, on the other hand, now represents a considerable opportunity and

the crisis in Japan is of a different order to the rest of south-east

Asia. The difficulties that it is experiencing are really of a

structural nature, and structural problems can be built into the

business plan.’

Japan now forms the focus of Hachette’s extravagant expansion plans in

the region. Last December, the French publishing giant took a majority

shareholding in Fujingaho, one of the oldest magazine publishers in


It is responsible for nine titles, including seven women’s


But then Hachette had already shown its intentions in Japan by

establishing a subsidiary to publish its fashion title, Elle, its Elle

Deco sister offering and the movie magazine, Premiere.

’Japan is the second largest ad revenue market in the world and the

fourth largest magazine market - behind the UK, but ahead of Italy and


It’s an essential destination for any publisher with global ambition,’

Rochereau says.

Japan is also now the focus for Conde Nast’s development plans in the

region, although they are of a more modest nature. The publisher of

titles from GQ to Vogue plans to launch the joint venture title, Vogue

Nippon, later this year. However, this particular project has already

suffered one postponement after spend on advertising dropped by almost 6

per cent in the country in the first half of last year, even as the yen

started its slide against the dollar.

In fact, the former powerhouse Asian currency lost more than 10 per cent

of its value against the dollar over the full year.

That such volatility was going to be the state of affairs for the

foreseeable future became quite clear when Thailand devalued the baht in

June 1997.

This, at a stroke, dismissed the idea of the Asian economic tiger and

triggered widespread economic crises throughout the region. Media owners

who had spent months on joint-venture discussions in Thailand and Korea

saw these swiftly derailed by the ever-widening crisis.

The first step back has been simple enough. With Taiwan and China still

showing some resilience in the midst of the region’s slump, the likes of

Time, Hachette and Hearst have refocused their efforts there.

Specifically, while China has been a regulated market for publishers in

the past, increasing government flexibility is starting to release the

huge pent-up demand for quality magazines in a market that has

historically not had a true publishing industry.

Unfortunately, the development strategies of most western magazine

giants grew out of reviews they conducted into the markets before the

economic and currency crises. Time Warner, for instance, originally took

the decision to concentrate its efforts on five key markets: Japan,

China, Korea, Taiwan and Thailand. But even within that regional aspect

it chose to focus on the individual market conditions.

’We recognised early on that our approach to development among these

five markets would not necessarily be the same, since the print markets

in Asia vary dramatically by locale,’ Ronnie Planalp, vice-president of

development at Time Asia, explains. ’The demographics, politics, legal

requirements, readers’ interests, language and economic environment are

all influencing factors.

Licensing our titles to publishers with options to purchase them in the

future has been a key part of our approach to magazine development in


For Time, as for other publishers with multiple international brands,

the struggle has also been to choose the appropriate magazines to launch

in each market. ’We tend to look at ways in which we can extend and

enhance our core brands and leverage our existing editorial wherever

possible,’ Planalp says. ’This has been central to two of our key

successes with Fortune China Magazine in the PRC and Time Express in

Taiwan. We have similar plans for two more magazine launches in the same

markets, with the same publishers, later in 1999.’

Hearst has adopted a similarly bullish attitude to the PRC. Its joint

venture title, Cosmopolitan, has been an early success, putting on 35

per cent in sales since its launch last April. Current sales of a

quarter of a million are just the tip of the iceberg. It plans to launch

a Chinese edition of Esquire in the summer, as a joint venture with its

established China partners, IDG and Times Trends Advertising. Titles

under consideration for launch in the future include Good Housekeeping

and Harper’s Bazaar.

’We work closely with our advertisers in each market,’ Rochereau


’L’Oreal is our biggest advertiser, for example, and we wouldn’t dream

of starting out somewhere if they didn’t also have plans there. But the

success of your magazine is down to understanding the individual market

conditions, not to the ease of regional advertising.’


Title              Jan-Dec     % change   Jan-Dec     % change   Jan-Dec

                      1998  (1998v1997)      1997  (1997v1996)      1996

Time                49,412      -11.1%     55,568       -0.8%     56,031

AWSJ                39,157      -12.4%     44,701        9.8%     40,702

Newsweek            36,427      -14.8%     42,749       -9.3%     47,155

Asiaweek            28,770       -4.2%     30,043       12.7%     26,655

IHT                 20,563       -3.0%     21,207      -11.4%     23,942

FEER                20,047      -19.7%     24,967        0.8%     24,771

Reader’s Digest     15,917       -6.7%     17,055       18.8%     14,357

BusinessWeek        15,759       17.0%     13,475       14.8%     11,739

Economist           12,795       -4.8%     13,435       37.5%      9,772

Fortune             12,785       -8.0%     13,897       14.5%     12,135

Yazhou Zhoukan      11,059      -15.8%     13,137       -0.5%     13,332

Financial Times      4,785       24.4%      3,845       -0.1%      3,850

Asiamoney            4,616       -5.8%      4,902      -31.1%      7,119

USA Today            4,136      103.4%      2,033      -56.9%      4,718

Asia Magazine        3,331      -56.3%      7,617      -15.0%      8.960

Asian Business       2,724      -41.4%      4,651        0.7%      4,619

Business Traveller   2,398       -1.8%      2,442       -4.8%      2,564

Chief Executive Asia 2,294      -53.2%      4,898        4.4%      4,690

Forbes Global        1,893      n/a             0      n/a             0

Asia Inc               460      -80.1%      2,308      -48.8%      4,508

Scientific America      93      -52.4%        195       83.3%        106

Harvard Business Review 89      -23.2%        116       -2.5%        119

Asia Times               0     -100.0%      1,387      n/a             0

TOTAL              293,616      -10.8%    329,342        0.9%    326,502

Source: CMR. Compiled by MindShare Hong Kong.


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