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:

• Sustained Growth Averages 6.5% in Main Markets
• Spending Expected To Be Twice Faster than Europe/US
• Indonesia and Thailand Become The Growth Champions
• China and South Korea Are Still Robust

In its recently released Advertising Expenditure Forecasts, ZenithOptimedia looks at the Asia-Pacific region again for sustained growth in magazine advertising spending for 2004 and 2005. While the US and the major European economies will have to wait for 2005 for a palatable growth of about 4% (next year will remain at 3% and 2.7%), the four largest magazine markets in Asia Pacific (excluding Japan) are predicted to grow globally by 6.5% next year followed by a steady 6.1% in 2005 (in current prices).

In 2004, the magazine industry is again expected to be flourishing in the region with the following performances among the four largest markets (after Japan): China: +15%, South Korea: + 7.8%, Taiwan: + 5% and Australia: + 2.3%. Meantime, the mature magazine markets are expected to receive advertising expenditure in 2004 as follows (in current prices):

2004 Magazine Advertising Growth
	Growth	Advertising Spend
US Germany France UK Italy Greece Spain	2.9% 3.1% 2.8% 0.6% 2.1% 12.3% 2.8%	$16.56 billion  € 4.27 billion  € 3.26 billion  £ 1.57 billion  € 1.07 billion  € 745 million  € 676 million

The absolute growth record for 2004 will go to Indonesia with a spectacular +17.6% followed by Thailand at +14.9%. While the worst performance is registered by Japan +0.5%, none of the countries in the region is expected to have negative growth (even if Hong Kong and Japan are forecast to end 2003 with -6.4% and -0.8%).

Click on the flags below to be transferred directly to the country of your choice.

0.5%	8.1%	2.3%	7.8%
5.0%	14.8%	17.6%	14.9%
2.8%	5.1 %	0.5%

VISA - which has a 59% market share of the credit card business in Asia Pacific – enjoyed a 25% growth in 2002 with US$235 billion in retail sales volume in the region. Japan and Korea are VISA’s best countries with respectively 69 and 39 million cards. The two markets grew in retail sales last year by 13% and 59%. Australia is VISA’s third largest market in Asia-Pacific, while Thailand and Malaysia have experienced growth of 40% and 28% in 2002.

 

According to eMarketer and Point Topic, the Asia-Pacific region has the highest level of DSL subscriptions in the world with a 48.5% share of the estimated penetration worldwide. The region is well ahead of Western Europe (27.6%) and North America (20.2%), while Eastern Europe and the Middle East and Africa have less than 1% each. In terms of countries with the greatest DSL subscriber growth, Japan has recently taken the lead with 2.6 million new subscribers added in the first six months this year (vs. 1.1 million in the US). However, South Korea remains the worldwide household broadband champion with 70% market penetration.

In Korea, Doosan Corporation Magazine BU launched the local edition of ALLURE, under a license agreement with Condé Nast. This is the first edition of the beauty magazine published outside the US. ALLURE Korea’s first issue (dated August 2003) carried 120 advertising pages out of a total package of 330 pages with a cover price of Won 6,500 (about US$5.50). In view of the current economic recession, Doosan – the Korean publisher of VOGUE, GQ and VOGUE Girl – was expected to postpone its launch, but it decided to carry on with its plan. Actually, several other magazine launches were postponed and for the first time since 1998, most Korean magazines are experiencing a serious reduction in advertising revenue (from 20 to 40%) while single copy sales are also soft. Also in Korea, Hachette Filipacchi is rumoured to be looking for a new local partner to replace Next Media, the company which holds 51% of the joint venture Hachette-Next Media, publisher of ELLE Korea, Premiere, Elle Girl and 25 Ans.

In China, OK! Magazine is expected to launch a local edition next January, following the announcement by Northern & Shell of a 10-year agreement with Cinezoic Media, based in Shanghai. This is the first time the British publisher’s flagship magazine has ventured outside its domestic market. Content, based on flattering interviews of movie and pop stars, is supposed to include the coverage of local Chinese celebrities. The magazine will start as a monthly but is expected to move to weekly frequency after a few months.

Still in China, Rodale has concluded an agreement to publish Men's Health in 2004, with the Trends Group, publisher of several local magazines along with the Chinese editions of Cosmopolitan, Cosmo-Girl and Esquire. Also in China, Figaro-Girl was launched by Opus, the publisher of Madame Figaro China since 1999. The new young women’s magazine offers an original two-product package each month with a magazine on fashion and beauty and a second magazine dealing with living and entertainment. The 220 page Figaro-Girl retails for RMB 15 (about US$1.80) and is aiming for a circulation of 240,000 copies.

In Singapore, CR Media Ltd. launched PC Magazine, under a license agreement with Ziff Davis Media. The first issue dated August, carried 32 ad pages with a cover price of Sin$6.80 (about US$3.90) and was heavily promoted locally with a bus advertising campaign. PC Magazine was also launched in Malaysia the same month by CR Media SDN BHD (cover price of Ringgit 11 or US$2.90). After the recently launched edition in Indonesia, PC Magazine extends its penetration in the South-East Asia market with a comprehensive four country network (including Thailand).

Still in Singapore, Blu Inc Media launched a local edition of Men’s Health last June, followed by a Malaysian edition which appeared in August. The two editions which have a cover price of Sin$6.00 (US$3.40) and Ringgit 10 (US$2.70) are published under a license agreement with Rodale. Under its new name of Blu Inc Media, the former MPH Magazines also publishes the local edition of Seventeen in Singapore, along with Female, a leading women’s magazine.

In Taiwan, Madame Figaro was relaunched by Stone Media, a joint venture between the publisher of Madame Figaro China and Chic Publishing, the publisher of Men’s Uno, a local men’s fashion magazine. Previously published by the China Times Daily, the French fashion magazine assigned a new license to Stone Media, who produced a 230-page format with a larger size and a reduced attractive cover price of NT$100 (about US$2.90) for the relaunch issue (instead of the regular NT$180).

In Japan, Hankyu Corporation, the operator of railway transportation and developer of housing estates and recreational and commercial facilities bought the business of TBS Britannica, the licensor of Newsweek and Figaro Japon. The previous owner of the local magazine publisher, Suntory Whiskey, had been looking for a buyer for some time and was reported to collect a purchase price of ¥2 billion (US$ 17 million) in the transaction which excludes the encyclopedia.

In India, Pearson PLC is about to buy 13.85% of the equity of the Business Standard, the country’s second largest economic daily for 141 million rupees (about US$3 million). The move by the publisher of the Financial Times represents the first media acquisition in the country, since the Indian Government recently decided to allow foreign equity participation of up to 26% in newspapers (and 74% for magazines). Meantime, the BBC is rumored to be negotiating a purchase of up to 51% of the magazine division of Bennett Coleman, the publisher of the largest local daily, the Times of India, with a circulation of two million copies a day. The price of the transaction is reported to be around the one billion rupee mark (about $US21.8 million).

Other launches: In Australia, GQ was relaunched by FPC Magazines, Condé Nast’s local licensee, as a quarterly against ACP’s new title men’s style. Two Australian magazine publishers have licensed their local title to a UK publisher: Pacific Publications’ juvenile title K-Zone made an agreement with The Redan Company while FPC Magazines has licensed its food magazine Delicious to Redwood. In Thailand FHM was launched under a license from EMAP to Inspire Entertainment Company. Still in Thailand, Madame Figaro was launched by GMM Inter Publishing, the magazine company of GMM Grammy Public Company Limited, the leading local music company, with interests in radio and television production.

“A magazine focused on spiritual and emotional themes can connect with the reader in very profound ways.” Cathleen P. Black President Hearst Magazines In Paris, May 28th 2003

Edited by Peter Church “A Short History of South-East Asia” (John Wiley & Sons Asia Pte Ltd, Singapore) condenses thousands of years of history into a few pages and represents a valuable first tool to understand the background for doing business in this important part of the world. “The Terracotta Warriors: The Secret Codes of the Emperor’s Army” (Headline Book Publishing, London) relates the fascinating story of Han Dynasty Emperor Shi Huangdi, who was buried in 210 BC with an army of 8,000 life-size soldiers, each weighing half a ton, near Xian. The author, Maurice Cotterell, unfolds the mythological beliefs, codes and symbols to show how rich and powerful Chinese civilization already was more than 2000 years ago.