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.

Please let us know your reaction and if you do not wish to receive it.

Didier Guérin
President

Inside this issue:

"We do not expect miracles (…) we expect at least the beginnings of advertising recovery in 2002" says Zenith Media which just issued its 2001-2004 Advertising Expenditures Forecast with a specific media break-down. Zenith Media, which is now part of The Zenith Optimedia Group, the world's fourth largest global media services agency, bases its research on its 89 offices in 45 countries around the world. The forecast implies that consumer and business confidence will improve some time next year: "when business restores its margin, it will be ready to spend on advertising again". However, the media agency predicts that compound average annual growth in worldwide advertising spend will be 1% from 1999 to 2004, compared to an actual 2.3% for the 1990-1999 decade.

Media Convergence Asia Pacific provides below an exclusive analysis of the Zenith Media forecast country-by-country of the magazine industry in the Asia Pacific region for the next two years. The research shows magazines tend to perform better than most media. Whereas mature markets are coming out of their negative growth, three young markets are rapidly developing their own magazine industry and creating a double digit growth opportunity.

For a country by country forecast of the magazine industry, click here: Japan, Honk Hong, Australia, Korea, Taiwan, China, Indonesia, Thailand, New Zealand, Malaysia, Singapore.

Following our report a few months ago (see Media Convergence e-newsletter no. 6 - July 2001), Asia's wealthiest man has increased his media expansion in China and Taiwan. In China, where magazine acquisitions are impossible, outdoor media is completely deregulated and Mr. Li's Hong Kong media vehicle, tom.com, bought four companies for a total of $97 million (one of these companies, in the Henan Province, is growing by 30% year on year with a 40% net profit margin). In the magazine business, tom.com went after all the Mandarin content it could find and bought last month for $10.9 million, Sharp Point Publishing, Taiwan's largest youth publisher (nine monthly and four bi-monthly titles). In December, tom.com bought the Business Weekly Publishing Inc. for $47 million (publisher of the largest business weekly title and partial owner of two joint-venture publishers including the local partner of marie claire and Shape). Within a few months (and $155 million), Li Ka-shing's empire has expanded to the largest outdoor-media network in China and a 40% market share of the magazine industry in Taiwan. Li Ka-shing is now in a good position to convince his good friends in Beijing (including Jiang Zemin) to let China open its borders to foreign publishers.

For the first time, Zenith Media's forecast has a projection of internet advertising around the world. With the exception of the US, where on-line advertising is predicted to take a 6.5% share of all ad spend in 2004, no other market in the world seems to attract a large amount of investment. The Asia Pacific region is no exception.

(in US$Million)	2000	2001	2002	2003	% of Total Ad Spend
USA	6000	6600	7458	8577	6.5%
Japan	547	630	755	907	2.1%
Australia	46	67	93	116	2.6%
Taiwan	28	27	31	35	1.3%
Hong Kong	14	14	16	17	0.4%
Thailand	6	9	11	13	0.8%

Unfortunately, Zenith Media's research did not include Korea which has now the largest broadband penetration for any country in Asia. According to AC Nielsen NetRatings 95% of home Internet users in South Korea, or 15.8 million people, have broadband connections. Hong Kong is the second country in Asia with at a 53% broadband penetration of home users, followed by Taiwan with 35%, Singapore with 24%, Australia with 5%, and New Zealand with 4%. Broadband Internet users in Korea tend to go online more often and for longer than their dial-up counterparts.

In Korea, VOGUE Girl will be launched next February 18 by the Doosan Group (www.doosan.com), the Condé Nast licensing partner, who already publishes the Korean editions of VOGUE and GQ, along with the Korean Reader’s Digest. The young women’s fashion magazine aims to attract a circulation of 100,000 copies purchased by women in their early 20s. Whereas young women‘s magazines in Korea have previously used the Japanese catalogue-type model, VOGUE Girl’s editorial concept will be closer to the western style, with editorial lifts from European editions of Glamour, Jane and the bi-annual American Teen-VOGUE. The cover price and the advertising rates are about 20% lower than VOGUE Korea. Still in Korea, Hachette-Next Media, the 50-50 joint-venture between Hachette Filipacchi Medias and Next, will launch on February 15 – three days before VOGUE Girl - a local edition of 25 ans. This is the first international edition of the highly successful Japanese magazine which is the flagship of the former Fujingaho, now called Hachette-Funjingaho after the company was acquired by the French group three years ago. The Korean edition will follow the broad concept of the image driven and luxurious but practical Japanese magazine.

In Taiwan, SHAPE was launched last month under a joint venture agreement between its US parent Weider Publications and the Taipei based Nong Nong Intermedia Group, publisher of marie claire, Citta Bella and MomBaby. The first issue had an attractive cover price of NT$99 ($2.90) before the standard price of $NT160 ($4.65). This is the first Asian edition of the 20 year-old fitness, beauty and health women's magazine, which is now published in nine countries.

In Australia, donna hay holiday is the new bi-monthly cooking magazine launched last November by News Ltd. in a similar approach to the Martha Stewart Living model. The local gourmet celebrity, Ms. Donna Hay, became well-known in the Australian food industry after editing and styling four successful marie claire cookbooks. The group controlled by Mr. Rupert Murdoch is putting its weight behind this new multimedia concept with a Donna Hay book ("off the shelf: cooking from the pantry" published by News Ltd.'s Harper Collins) and a Donna Hay column published in the Sunday editions of the five largest Australian metropolitan newspapers (owned by News Ltd.). Despite its high cover price of A$7.95 ($4.00) and modest level of advertising (39 pages), the 196-page first issue is expected to sell 70 to 80,000 copies, or close to the market leader: ACP's Gourmet Traveller (ABC: 87,269 copies). The next strategy level is to develop a merchandising program supported by a website (www.donnahay.com.au) and to expand the brand in the UK and the US with the support of the News Ltd. vehicles (and without the broadcasting restrictions currently experienced by the group in Australia).

In Taiwan, a local edition of Popular Science was launched in by Classic Communications Co. (www.ccw.com.tw) under a license agreement with Time Inc.'s wholly owned subsidiary, Time4 Media. The new Chinese monthly magazine is the seventh international edition of the former Times Mirror's flagship. In the Asia region, Popular Science is already published in Japan, China, Korea and Malaysia.

In New Zealand, Australian Consolidated Press (ACP) has purchased the Liberty Press Group, publisher of nine real estate and six motoring classified advertising titles, with a combined weekly circulation in excess of 700,000 copies (www.acp.com.au). With titles like Property Press, Motor Buyer's Guide and Motor Press, ACP not only becomes a major local player in the classified advertising business, but it expands its dominance of the New Zealand market with its largest selling magazines like Woman's Day, Women's Weekly, and Next.

In Indonesia, Men's Health was launched under a license agreement between Rodale and PT Media Favorit International, a subsidiary of the Femina Group, which publishes six women's magazines like Femina and Dewi (www.femina-online.com/fg/). The group also has some interests in the local publishing companies of Primedia's Seventeen and Burda-Rizzoli's Lisa. The new monthly men's magazine is expected to reach a circulation of 30,000 copies.

In Korea, Travel+Leisure was launched this month by a new company Travel+Leisure Co. Ltd. Korea which obtained a license from the American Express Publishing Corporation. The 130-page local edition of the travel and leisure magazine includes a fashion section and its first issue carried 57 advertising pages. The monthly magazine expects to deliver a circulation of 45,000 copies (www.travelandleisure.co.kr).

"Magazines have not yet reached a mature stage: they have a great future ahead of them if they want to provide the key to the growing complexities of our modern societies to our readers. Gérald de Roquemaurel Chairman and CEO Hachette Filipacchi Medias FIPP Conference, London, November 2001

In its November 12 issue, Forbes Global published its list of the 100 "most successful and dynamic entrepreneurs in the world's fastest growing economy". The requirement to make the list is a personal wealth of $60 million or more. Wealth creation is developing fast in China. As the editors point out: "last year, the last name on our list weighed in with $42 million (now the 50th-richest person in China is worth $110 million). In 1999 No. 50 had $6 million to his name".

The International Monetary Fund just released its December 2001 World Economic Outlook with its global and regional prospects for 2002. This is the first time the IMF is able to combine the effects of the global 2001 economic slowdown with the impact of the September 11th attacks. For each market, real GDP growth has been revised downward. However, most countries in the Asia Pacific region (except Japan) will again perform better than other Western nations. Says the IMF: “with still large current account surpluses and reserves, however, together with flexible exchange rate in many countries, Asia is relatively well placed to withstand external shocks”.