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:

• Another consecutive double-digit growth expected: + 12.8%
• China doubled in size in the last two years: +100.3%
• Taiwan and Korea are coming back

In its recently released Advertising Expenditure Forecasts, ZenithOptimedia predicts the four largest markets in the region, excluding Japan (China, Australia, South Korea and India) will experience further strong growth next year in magazine advertising spending: an average of 12.8% following the 11.2% expansion in 2005. As usual, a good portion of the growth is fuelled by China, expected to grow by 30% in 2006 (following two consecutive increases of 40% in 2004 and 60.3% in 2003).

ZenithOptimedia is one of the world’s leading global media services agencies, with 162 offices in 59 countries. The annual Forecasts report is based on the company’s tools (ZenithOptimedia Optimisation of Media) which have been designed to add value and insight. The following analysis has been prepared by Media Convergence Asia Pacific, which has isolated the magazine industry data from ZenithOptimedia's Forecasts.

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Japan +2.0%	Australia +5.9%	China +30.0%	South Korea +5.0%
Taiwan +8.1%	Hong Kong +5.0%	India +1.2%	New Zealand +1.3%
Thailand +10.3%	Indonesia +17.7%	Singapore +3.0%	Malaysia +5.1%

Media Convergence Asia Pacific projects that by 2014, China will become the second market in the world in magazine advertising spending after the US (one year sooner than previously projected).

The graph above projects until 2014 each major magazine market with the advertising growth expected by ZenithOptimedia in 2006. It shows that by 2007, China’s magazine market will be about the same size as Australia (€745 million or $905 million). By 2008, China will be bigger than Spain or the Netherlands (about €968 million or $1.1 billion). By 2009, China will have reached the size of Italy or Greece (€1.2 billion or $1.5 billion). Three years later in 2012, China’s magazine industry will have more advertising spending than the UK (€2.7 billion or $3.3 billion). By 2013, China will have reached the size of France and Japan (€3.6 billion or $4.4 billion) and finally by 2014, Germany will no longer be the second largest magazine advertising market in the world with China reaching €4.6 billion or $5.6 billion.

Following the success of its office in Beijing opened 18 months ago, Media Convergence Asia Pacific is now opening an office in India to follow the demand of its clients to expand their magazine publishing business in this market. Media Convergence is now in a position to offer all the magazine publishing expertise and all local direct connections in India. Located in Delhi, our new operation will be under the direction of Mr. Sharad Goswami, an experienced executive in the publishing and communications business, who has been appointed Country Manager.

After his graduation from the University of Delhi and a subsequent Master’s degree in Business Management and Marketing, Mr. Goswami advised several Indian consumer goods companies. He also assisted in the launch of a local women’s magazine targeted at an urban premium audience and its Hindi language version. Mr. Goswami has also been a part of the communications team which recently launched BBC’s Top Gear in India. Working with a leading chain of bookstores, Mr. Goswami also combines the experience of the publishing and retail sectors in the Indian market. He can be contacted at: sharad@mediaconv.com

In China, Condé Nast launched Vogue China last August. This much anticipated debut – which took several years of preparation – produced a high quality magazine with a (claimed) initial print run of 300,000 copies, which sold out rapidly, in advance of a reprint. Vogue China’s 127 ad pages and 300 editorial pages instantly set a new benchmark in magazine excellence in the country.

Condé Nast sent some of its photographers from New York (Peter Lindberg, Patrick Demarchelier) along with fashion stylists to assist the local Shanghai team. An expensive billboard campaign – and a free bag – completed the launch of the magazine priced at RMB20 (€2 or $2.50). Vogue China’s second issue print run of 300,000 copies also sold out quickly.

Also in China, Travel + Leisure was launched with an October issue under a license agreement from American Express Publishing Corporation with Shanghai’s United Press Group. The expected circulation is 100,000 copies a month with a cover price of RMB20 (€2.00 or $2.50).

Still in China, PC Magazine will be re-launched in November by SEEC Media, who set up a joint-venture with Ziff Davis Media to expand the IT publisher’s business model in China with conferences, seminars and other titles such as e-Week. SEEC Media also plans to launch a local edition of Better Homes & Gardens before the end of the year, following a licence agreement with Meredith Corporation.

China is on its way to become a mature publishing market. No less than eight major magazines coming from the world’s largest publishers (five American and two European companies) have an agreement to publish a local edition of their well-known titles with a local Chinese partner. Following approval from General Administration for Press and Periodicals (GAPP), official announcements should be issued between the end of the year and the beginning of 2006.

In Australia, newspaper publisher John Fairfax Holdings’ magazine division launched the local edition of Travel + Leisure again in October. The magazine expects to sell more than 80,000 copies a month (mostly by subscription ten times a year) with a cover price of A$7.95 (€5.00 or $6.00). The 164-page first issue carries 47 pages of advertising.

Meantime, the Australian market has experienced recently several major domestic launches by the largest publishers: – from ACP: Madison (an already profitable joint-venture with Hearst that is selling 90,000 copies a month) and Real Living (a monthly targeting first home-owners); – from FPC: Notebook (an elegant homemaking monthly); – from News Limited: Alpha (a men’s monthly sport title); and soon to come – from Pacific Magazines: a monthly for teenage boys. Advertising and circulation revenues – along with magazine publishers profits – have never been as strong. Australia is hot.

In Thailand, OK! is due to launch this October with a fortnightly frequency and a goal of going weekly within six months. Priced at 40 Baht (€.80 or $1.00), the magazine is published by Media Transasia and expects to reach a circulation of 80,000 copies. In 2005, OK! has already been launched by Summit Media in the Philippines with a PHP120 cover price (€1.80 or $2.00); and by Catcha Media in Singapore at $4.50 (€2.20 or $2.70) and in Malaysia at Ringit 6.00 (€1.30 or $1.6).

These three editions expect to sell about 30,000 copies a month under license from Northern & Shell. The UK publisher also recently signed an agreement in India with UB Media where it expects it will become its fifth edition of OK! to be launched in 2005 in Asia Pacific. Last year, the magazine was successfully launched in Australia and now enjoys a monthly audited paid circulation of 74,671 copies. Along with China – also launched in 2004 – OK! now has seven editions in the region, all launched within two years.

In Korea, Kaya Media launched in September a local edition of Motor Trend, under license from Primedia. The publisher of Harper’s Bazaar and Esquire supported the launch with an effective outdoor advertising campaign and an introductory price of Won 7,800 (€6.00 or $7.50). Earlier this year, Doosan launched a local edition of W, under license from Condé Nast. The monthly fashion magazine retails at Won 5,000 (€4.00 or $4.90) with a circulation of 80,000 copies.

After three years of “recession” in Korea (as locally defined by GDP growth below 5%), domestic consumer spending is showing signs of improvement.

In the Philippines, Summit Media will launch in November a local edition of marie-claire with a cover price of PHP125 (€1.85 or 2.20) and a targeted circulation of 30,000 copies. This is the ninth edition in the Asia Pacific region of the fashion magazine published (mostly) under license from Groupe Marie Claire. Still in the Philippines, the same publisher also launched in May Men’s Health, under license from Rodale. Priced at PHP120, the monthly magazine expects a 25,000 copy distribution.

In Other News: In China, One Media Group, the recently Hong-Kong listed joint venture between Ming Pao and Redgate, will launch a Chinese edition of Rolling Stone to appear early next year. Wallpaper and Harper’s Bazaar were launched in Thailand by a subsidiary of The Nation Group.  Business Week China created a new title: FashionWeek China following the success of its European edition.

In Malaysia, the joint venture between Hearst and ACP is launching a local edition of Cosmopolitan not in English but in Bahasa Melayu: this is the first time an international magazine is being launched nationally in the Malay language.In India, BBC created a joint-venture with Times of India to publish Top Gear, the car magazine, which was also launched in Thailand by Media Pulse last August.Finally in Indonesia, a local edition of eve was launched in September by Quadra Media Publika under license from Haymarket.

In Hong Kong, Swiss publisher Edipresse acquired 70% of Communication Management, the publisher of Hong Kong Tatler, Bangkok Tatler, Shanghai Tatler and six other editions of the upscale city magazine. The company remains under the leadership its founders: Dr. Boya Mohindar and his wife, Lina Ross.

In Japan, Condé Nast took full ownership of Nikkei Condé Nast, the joint-venture established with Nihon Keizai Shinbun in 1996, by purchasing the balance of the shares it did not own. The new wholly-owned subsidiary of Condé Nast Publications continues to publish Vogue Nippon and the Japanese edition of GQ.

In India, Haymarket Publishing and Sorabjee Automotive Communications (SAC) have created a 50-50 joint venture, called Haymarket SAC Publishing India. The new entity already publishes Autocar India – launched as a license six years ago – and recently launched What Car and Autocar Professional. Meantime, IDG is re-entering the market – after many attempts and four different partners over the years – with a wholly-owned subsidiary and an investment of $20 million over the next five years. IDG expects to launch two magazines, Outsourcing World and CIO, by December. Both publishers are taking advantage of the new regulation in India allowing unlimited ownership and foreign direct investment in all non-news related print media.

In Singapore, Hachette Filipacchi Media is exiting the market and sold its shares in Hachette MediaCorp to its joint-venture partner, MediaCorp Publishing. Hachette’s former partner becomes the licensee of ELLE Singapore, which was initially launched by ACP in the market ten years ago. MediaCorp earlier this year acquired from EMAP the licenses for FHM in Singapore and Malaysia.

After the shock of the terrorist attacks in London last July, Media Convergence contacted all its friends in the British capital to make sure they had not been hurt, along with their staff and families. Fortunately, nobody was. A touching message of courage and strength was received in response the next day. We highlight but a few of them:

“All the trains, tubes and buses were running as normal this morning - a remarkable feat - and people are going about the day as normally. It was a tough and traumatic day, but one which the city and its people seem to be coping fantastically with.” Ian Watson Director of Strategy & Business Development BBC Magazines

“The bus exploded literally around the corner from our corporate HQ which had to be evacuated. The mood here is strange but life, as they say, goes on and we're all getting back to being as normal as possible.” Chris Llewellyn International Managing Director EMAP

“London looked like a city at the end of the world - dazed pedestrians unused to walking trying to talk on their mobile phones. My fear is for the retribution that will be exerted against the decent Muslims in our communities. I really feel for those who are randomly selected in these brutal moments.” Piers Russell-Cobb Managing Director Media Fund

Last January, we asked you to pledge your generous donations to help the rebuilding of schools in Aceh for the children of the region devastated by the December 26th tsunami. This action initiated by the Femina Group in Indonesia generated close to €140,000 or $170,000. Two schools have been rebuilt and a third one is in the process of being completed. Thank you to everyone who has contributed to bringing many smiles to the faces of hundreds of children.

Please read here the report from Asri Aditya, from Men’s Health Indonesia:

More than 50% of the funds collected so far have been spent and we expect the balance to be totally allocated by the end of the year. For further contribution, please check our tsunami website: http://www.mediaconv.com/newsletter/issue14ts/index.htm