e-newsletter

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:

In its latest Advertising Expenditure Forecasts, Zenith Optimedia says the Asia-Pacific region will continue to experience growth in advertising magazine spending in 2003 and 2004. In the meantime, the US and Europe will have a negative or flat growth next year and will not begin to expand again before 2004. The following graph points out the trend in the US and in the largest markets in Europe (Germany, France, UK, Italy), and Asia-Pacific excluding Japan (China, Australia, Korea, Hong Kong and Taiwan).

A subsidiary of Publicis Group SA, Zenith Optimedia is a major global media communications agency with 154 offices in 61 countries.

It will take several years before the current advertising revenue level of the US or European markets can be reached by magazines in Asia Pacific. In the meantime, these young markets will continue to enjoy steady value creation, while magazines in the mature countries will fight for market share or survival.

The following reports detail Zenith Optimedia's Magazine Advertising Spending growth forecasts in the 11 largest markets of the Asia-Pacific region. Click on each flag to be transferred to each market summary report.

JAPAN +0.5%	HONK HONG 0%	AUSTRALIA +4%
KOREA +2%	TAIWAN +5%	CHINA +15%
INDONESIA +20%	THAILAND +5%	NEW ZEALAND +3.7%
MALAYSIA +5%	SINGAPORE +2.1%

The 2002 September issues of magazines in Asia-Pacific have gone on sale with a significantly larger number of pages compared with the same issue in 2001 (except for news and business magazines). Media Convergence Asia Pacific performed a random check in five countries in the region among women's magazines and recorded page increases from a low 5% to a maximum of 38% with an average of 19% across these markets. Some magazines even experienced a historical level of pages, such as the two-year old Cosmopolitan Korea (+ 28% with 258 pages) or Elle Korea, which will have its 10-year anniversary in November (+17% with 329 pages). The various editions of Vogue performed far better in growth percentage than their US sister, which saw its September issue grow by only 1.6%. However, the US edition (with 574 pages in its September issue) remains the leader in volume.

It started with the announcement of the launch of marie-claire (see Magazine Developments section below), which has been allowed to use its original foreign name and logo to appear on the cover of its new Chinese edition. For the last two years, Chinese authorities have forced new magazines to carry only a Chinese name on their cover. Then, Good Housekeeping and Harper's Bazaar - which were launched with just a local Chinese name - received the authorization as well and will feature their original logo on the cover of their October issues. National Geographic Traveler has also been allowed to launch with its English name and logo. Other magazines, such as Seventeen (which was launched earlier this year), hope to soon receive the authorization. The timing of the new regulation was most surprising, as it came only a few weeks before the 16th National Congress of the Communist Party at a time when no changes in the Chinese media industry were expected to happen. Foreign publishers are confident other current restrictions on foreign magazines could start being lifted in the near future.

In their recently published World Wealth Report, Merrill Lynch and Cap Gemini Ernst & Young point out the number of wealthy people in Asia grew by 7.1% last year, or more than twice as fast as the rest of the world. The High Net Worth Individuals (HNWIs) are people with more than $1 million in financial asset wealth (excluding real estate). This group amounts to seven million people in the world, including 1.7 million in Asia. Despite the year's general economic malaise in Asia, this group - which has been monitored by the World Wealth Report for five years - "fared well buoyed up by the impressive performance of several local stock markets" (Korea: +31%, Thailand: +23% and Taiwan: +18%). As a consequence of economic growth, more disposable income - and wealth - keeps being created in this region than in the rest of the world.

Media Convergence's October 2001 e-Newsletter came shortly after the tragic events of September 11 in the US. Witnessing the tragedy, we quoted Steve Florio (Condé Nast), George Green (Hearst), Terry Adamson (National Geographic), Michael Miller (Ziff Davis Media) and a few other friends showing their courage and desire to fight back. It was also a tough time for the US magazine industry, with even tougher times to come. According to Publishers Information Bureau, by that time (Q3 2001) the industry was already in its fourth consecutive quarter of negative advertising growth. The worst was yet to come with -10.7% in Q4 2001, -12.4 % in Q1 2002 and -3.5% in Q2 2002. Finally the third quarter this year is showing the first positive figure (+3.5%) after seven consecutive negative quarters, hopefully ending the most difficult time in the US magazine industry since World War II.

In Korea, Forbes announced it signed an alliance with the newspaper JoongAng Ilbo, to launch a monthly Korean-language edition of Forbes. The first issue will be published in the first quarter of 2003 with an initial circulation of 50,000. Also in Korea, which remains the market in vogue in the region, Seventeen will be launched in December in a license agreement with Seoul Cultural Publishers, one of the oldest privately owned local companies with interests in magazines and books for women, along with mangas (comics). Seventeen (expected Korean circulation: 50,000 copies) which was recently launched in Singapore and Malaysia by MPH, will be the sixth Asian edition of the 12-24 women’s magazine. Several other international magazines are also rumored to be preparing a launch for early 2003 in the Korean market as well. Although Media Convergence was not able to receive a direct confirmation, these projects are: Time Inc’s In-Style with JoongAng M&B (the publication arm of JoongAng Ilbo and publisher of Ceci and Cosmopolitan), Shape (with Kaya Media) and Elle-Girl (by Hachette NextMedia).

In China, National Geographic Traveler will be launched before the end of the year by China Travel - a division of the Trends/IDG group - following the conclusion of a license agreement with the National Geographic Society. Also, marie-claire will be launched in December by a partnership between Hachette Filipacchi Medias, Groupe Marie-Claire and the local China Sports Publication Corporation. With a cover price of 20 RMB ($2.50), the initial print order is expected to be 250,000 copies. With a Chinese name translated as "Sophisticated Fashion", the local marie-claire will be under the supervision of the Beijing office of Hachette Filipacchi (which parent company purchased a 42% interest in Groupe Marie-Claire early last year).

In Malaysia and Singapore, local publisher Knowledge Media launched last June a local monthly edition of K-Zone, the successful Australian juvenile magazine (ABC: 125,000 copies, June 2002), under a licensing agreement with Sydney-based Pacific Publications. The magazine retails for 7.00 Ringgit ($1.85). In the Philippines, another license agreement for K-Zone was also concluded with Summit Media, which will launch the magazine in October. About 25,000 copies will be circulated with a cover price of 75 Pesos or $1.45. In the meantime, Summit Media consolidated its presence in the juvenile field following the launch last July of W.I.T.C.H. (cover price of 60 Pesos or $1.16), targeted to teen girls, under a license from Walt Disney.

In Indonesia, Business Week was launched in June. The Bahasa Indonesian language weekly magazine is published by Indomedia Dinamika which distributes about 30,000 copies of the magazine, a translation from the English language Asian edition. The cover price is 13,750 Rupiah ($1.55). The Indonesian publisher is also in conversation with Newsweek to publish a local language edition of the weekly news magazine. In Thailand, UK-based Future Publishing launched last March its monthly technology magazine T3 under a licensing agreement with Pen Publishing, publisher of Penthouse (cover price of 150 Baht or $3.60).

New deadline: October 15th, 2002

”Magazine launches add more value for shareholders than acquisitions.” Ann Moore Chairman & CEO Time Inc. (Newsday, July 29 2002)