In Asia, online is going to be increasingly important

Vivek Couto is executive director of Media Partners Asia Ltd.

IFRA: How do you see the financial outcome of 2008 for newspaper publishers in Asia?

Couto: Print remains important in Asia. Obviously there are a lot of macro economic concerns in the world at the moment that are affecting Asia, even though Asia’s economy is proving fairly resilient this year. As a result, China and India are heading towards something of a slowdown. Still, more than any other place in the world, Asia will probably be the first one that comes back up. However, there is indeed a period of softness, though ad spend in most countries of the region is still fairly strong.

IFRA: In these circumstances, how did print advertising behave?

Couto: To be absolutely fair, print advertising has been somewhat soft in China, but fairly robust in India. Print advertising has definitely been soft in most parts of South East Asia.

I think it is safe to say that in Malaysia, Singapore, Hong Kong and in India, the reading of newspapers in English and vernacular languages is still pretty healthy. Newspapers in Malaysia still have 55 percent of the market. They are getting more competition now, but Star Publications, The New Straits Times or Sin Chew are still very strong players on this market.

Free newspapers have been popular in Hong Kong… although there might be too many of them right now. More and more English language newspapers are finding it difficult in Hong Kong, mostly since the IPO notices have been delisted. The circulation is flat, and these newspapers suffer from this significant loss in advertising. Even local media groups such as Apple Daily and the Oriental Press haven’t done too well. Even though they still hold a good share of ad spend in Hong Kong it seems that, going forward, Hong Kong newspapers are going in for a rough ride, whether they are paid-for or free. Free sheets might be healthier but, because of Hong Kong economic environment, it’s going to be tough for the next one to two years.

IFRA: Could the economic crisis hit Asian newspapers as strong as in North America?

Couto: I think that a lot of the issues that you’ve seen affecting the print market in North America and in Europe are going to become more prominent in South East Asia in the first place, and in Australia and Greater China going forward… and maybe, later on, in India as well.

This was not so much foreseeable a year ago. Print still had a dominant share, the economies were growing then, and there was no real pressure from online.

In China the economic environment is still robust and will still be robust. The World Expo will take place in Shanghai in 2010. This year’s Olympics benefited TV and online quite significantly. Online will continue to grow. TV will suffer a bit, but these three media will continue to grow. For some reason, newspapers have just not been able to maintain their ad spend share, and their growth rate has been fairly modest versus online or even TV.

I think print is still very strong in India, nationally, regionally and locally. Next year might see a little bit of an ad spend contraction. India macro issues are slightly more visible these days and they will be next year. The key is whether newspapers can maintain their share of ad spend. The leaders, such as HT Media, Bennett & Coleman or Jagran Group have diversified to other assets such as new media. Broad band penetration is still very low. But the online audience is growing, even if it’s through dial up. People are getting more interested. Still, 80 percent of newspapers’ revenues in India are funded by print advertising. The key will be to see whether these major players will maintain their progress and go forward. But, fundamentally, you have to be positive with India. It will remain a big market for print. There will be more launches, more regionalisation…

It will also be interesting to see if foreigners will get more involved in the Indian magazine business. There have been some regulations changes recently to allow foreigners a broader access to both news and non-news magazines. Foreign investment in newspapers remains limited. While magazines are only fairly healthy in China, they are becoming incredibly healthy in India thanks to the growing middle class.

IFRA: With a traditionally low cover price, advertising slowing down and the printing materials costs going up, Indian newspapers might face harder times…

Couto: Yes, the cost of paper is very tough now. But my point is that in India print consumption is still robust, and you can’t really knock off such a healthy market.

Things are going to be a lot tougher in south East Asia for sure. Even in Singapore where there’s a press monopoly and Singapore Press Holdings (SPH) still does OK, they are facing more difficult times next year. The same happens in Australia, whether it is with Fairfax or the regional titles. Fairfax and SPH have been pretty healthy so far because they are interesting players, trying interesting things, and also dominating various markets, but they will come under pressure.

IFRA: Speaking of Singapore, how to you value SPH’s recent cover price increase?

Couto: SPH is still somewhat growing. While Singapore is currently in a technical recession they managed to grow their print revenues (newspapers and magazines combined) by 6 percent. On an annual basis SPH’s newspaper division is realising over a billion SGD of revenue. And that growth is coming from print advertising which has been growing by 8 percent. I don’t think they are going to be able to maintain that. I would say they will probably go up 2 to 3 percent next year on advertising. Newsprint cost is an issue. SPH also has a propriety segment. They have to try to increase circulation. It is an interesting situation. But I think SPH will be fine.

IFRA: Definitely, the rest of South East Asia will probably know tougher times…

Couto: Absolutely! And India will as well. India is not immune from this. It’s a strong market. There has been a lot of recent launches: HT Media has launched a new paper in a tabloid format targeting middle class and business class, they’ve got a tabloid called Metro Now in Delhi (in a joint venture with Bennett and Coleman), Times of India launched Economic Times in new regions, Jagran has launched City Plus in Delhi and Bangalore, a free English entertainment daily, Business Times has launched an edition in Hindi in Delhi and Mumbai,… And the economy will be soft next year. But overall the ad spend is still fairly healthy. Print advertising has been growing around 20 percent plus. It will probably calm down a bit – 10, to 12, 13 percent - next year. So it’s still a robust market. And I guess they should try to get people to pay more for some of their contents.

IFRA: How to you value the online presence of Asian newspapers? How do they manage their transition from print to online?

Couto: I think that newspaper’s transition to online is going to be increasingly important. This is already happening in North Asia in countries like Japan and Korea where broad band penetration is high and printed newspapers continue to lose shares. But I think this is going to happen in South East Asia as well. Hong Kong is an environment of high broadband and people will get there. In Singapore… definitely! In Australia it’s already happening with Fairfax Digital Media for example. In India, people are already investing in that for the future. Although broadband penetration is still low, there’s a growing online audience.

IFRA: Indonesia seems to be quite dynamic, with several launches announced in the past months. What is your view on this market?

Couto: Yes, it’s really interesting because Indonesia is really a TV / print market. TV has about 65 percent share. Newspapers about 30 percent. There are two or three big media groups publishing print newspapers. There are some investors trying with introducing quite a few free newspapers, tabloid newspapers… Indonesia is a buoyant market right now, and it is really worth pointing that out.

This interview was conducted by Gilles Demptos

Page first published: 10.11.2008