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Media Convergence Asia-Pacific is happy to send you this CONFIDENTIAL newsletter about recent developments in the region. This regular newsletter will be sent to media companies' CEO's and senior executives.

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Didier Guérin
President

Inside this issue:

• IMF Predicts Sustained Growth in Asia Pacific This Year
• New Magazine Launches
• Australians and Japanese Among the Top Ten E-consumers
• Wireless Access is the Way for Japan to Lead the World Into the Next Internet Wave
• Internet Downunder
• Telstra: Kerry Packer or Richard Li
• Advertising Spending in Asia Pacific Will Reach An All Time High

The International Monetary Fund just released its "World Economic Outlook" for this year. Here are its conclusions for the region: "The momentum of economic recovery in Asia (…) is projected to continue in 2000 and to become more evenly balanced across most of the advanced and developing countries of the region."

IMF - Year 2000 Real GDP Projections (%)

In Australia, the launch of InStyle in March by the local subsidiary of Time Inc., has gathered all the objective elements to reach a major success. The initial print order of 200,000 copies appears to have been well absorbed by the consumers (and also by the distribution industry known for its "premature returns" practice). The publisher keeps reassuring advertisers the pre-launch promise of 60,000 average copies sold will be met. It will not be surprising if this figure is substantially exceeded at least for the first issue.

Harper's Bazaar will launch several local editions in the region in the next few months. First, in Indonesia, on May 31. The local Hearst licensee is a newly established company, PT Media Insani Abadi, which is related to the publisher of KOSMOPOLITAN. Next, in Japan, where the local licensee will also be a newly created company: HB Japan. The owners are Kenji Ono, President of Kenji Communications and Tadahiko Kirihata, President of Kiri Communications, publisher of the American Express card owners magazine. Kirihata is the former president of Hachette Filipacchi Japan and publisher of ELLE Japon. Hearst is also negotiating actively a joint venture to publish in the fall a local edition of COSMOPOLITAN in South Korea (where Madame Figaro was launched last March by Woong Jin).

In China, Hearst, IDG and a local Chinese partner launched POPULAR MECHANICS last week, under a new joint venture agreement (different from the partnership which has been publishing the local editions of COSMOPOLITAN and ESQUIRE since 1998). Meantime, Hearst is also looking to license some of its magazines in Singapore.

Despite a substantial TV promotion, Emap Australia closed its local edition of MINX after three issues. This was the first time the magazine, whose concept is the equivalent of FHM for young women, was launched outside of the UK. Emap is now concentrating on its recent purchase of NEW WOMAN from Matt Handbury's Murdoch Magazines and is aiming to reach a 10% market share in Australia.

Burda-Rizzoli Thailand Ltd launched successfully its local edition of LISA, the young women magazine which sells 620,000 copies a week in Germany. LISA Thailand quickly sold out its 100,000 copy print order. It is published every other week, with a cover price of 30 Baht (about US$0.80) and it plans to become weekly by the fourth quarter this year. The joint venture between Burda Gmbh and Rizzoli-Corriere della Sera is following the successful model of their Vietnamese edition of PHU NU, the bi-weekly which is already the largest selling women's magazine in Vietnam. Thailand is the sixth local edition of LISA in the world.

A survey among 34 countries by the US research firm, Angus Reid, ranked Australia and Japan in the fifth and seven positions among the ten largest countries for shopping on-line. The ranking is based on the percentage of adults who have purchased products or services over the internet. Ahead of Australia are the US, Sweden, Switzerland and Canada. Germany is slightly ahead of Japan.

In a recent analysis, Nikko Salomon Smith Barney forecasts that by 2003, Japan will have a B-to-B Internet market of ¥67 trilion (US$641 billion) and a B-to-C market of ¥27 trillion (US$258 billion), which represent a market opportunity potentially larger than the U.S. NSSB thinks that mobile phone Web access will be the major driver of Internet access, reaching into a segment of the population outside of customary PC users. This analysis is based on a thorough analysis (and good understanding) of the current consumption trends in Japan and the assumption consumers may be willing to allocate more of their disposable income to ensure high speed access. Finally, NSSB offers three new valuation methodologies for Internet companies and points out current accounting methods actually punish creativity.

"The technical software talent in Australia is as good as anywhere in the world" said Lee Cole, Vice-Chairman of Ci4net.com, the US$1.3 billion company, which has become the largest Nasdaq incubator.

Australian media owner, Kerry Packer, who controls 37% of Publishing and Broadcasting Ltd (PBL), offered to sell his group to Telstra for A$10 billion (US$5.9 billion). Australia's government-controlled telecommunication carrier's Board of Directors turned down the PBL offer and decided instead to make an alliance with Richard Li's Pacific Century CyberWorks. PBL is the owner of Channel 9, the largest TV network in Australia, along with Australian Consolidated Press which has the largest advertising market share (47.5%) among any magazine publishers in the world. PBL earned A$162.8 million (US$96 million) after tax in the last six months ending last December on revenues of A$1.17 billion (US$690 million). PBL's market capitalization, which was A$9 billion (US$5.3 billion) at the time, closed yesterday at A$8.2 billion (US$4.8 billion).

AC Nielsen Market International which tracks advertising spending in the region (except Japan), says advertising spending increased 15% overall in 1999. The pattern appears to continue this year. Hence, advertising investment should be in excess of the spending prior to the 1997 crash and the 1998 recession. These figures are somewhat different from those of Zenith Media (which have not been published yet). AC Nielsen's methodology is based on advertising volume multiplied by advertising rates. Separately, Dentsu reports Japan 1999 advertising spending last year reached ¥5,699.6 billion (US$54.5 billion).

1999 Advertising Spending in Asia Pacific

Source: AC Nielsen