GROWTH A CHALLENGE FOR TV IN ASIA: BUT BEVERAGE GIANTS, TELCO AND COMPUTERS KEEP EXPANSION GOING

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[hong kong] Turning a U.S. TV network or cable channel into a global media brand isn't as simple as dubbing American programming into local languages. And that's particularly true in Asia, where a disastrous recession has added greatly to the challenge.

Although Asia is a relatively untapped media market and still underdeveloped as a cable TV environment, U.S. networks are having a tough time gaining a firm foothold or expanding. Asian marketers have fewer ad dollars now, and cable TV is becoming an unaffordable luxury for many consumers.

Of the many U.S. networks operating in Asia -- including Cartoon Network, CNBC, CNN International, Discovery Channel, Disney, ESPN, Home Box Office, MTV, Nickelodeon and TNT -- none has recouped its initial investment.

One of the most established regional TV networks in Asia, Rupert Murdoch's 7-year-old Star TV, is still struggling to make money. Star had expected to break even last year, but now hopes to climb out of the red late this year or early in 2000.

`WON'T STOP GROWING'

"Asia's not going to go away and won't stop growing," said Kevin-john McIntyre, the Singapore-based senior VP-general manager of Discovery Channel in Asia and the Middle East. But "not like it's on steroids anymore, as in the 1980s and [early] 1990s" when the global media first came in.

Many of the heavy regional advertisers in the area are Korean and Japanese carmakers and consumer electronics marketers, and they have slashed ad budgets as their export markets in Asia dry up. U.S. and European multinationals such as Coca-Cola Co., Pepsi-Cola Co., Iridium, Nokia, Hewlett-Packard Co., Philips Electronics and Intel Corp. are keeping the TV networks going.

But the regional ad expenditure in Asia is small. Total annual ad revenue for cable and satellite TV is estimated at just $250 million to $300 million. And $90 million of that is in sophisticated Taiwan, where 75% of the homes are wired for cable.

NEW SUBSCRIBERS SCARCE

In the tough economic climate, it's getting harder for channels to add new subscribers. Growth slowed last year, according to Robert Wilson, ACNielsen's Singapore-based director of regional media.

"We've had to work hard with our affiliates to keep them from going out of business," said Jim Marturano, HBO's senior VP of sales and marketing, Singapore. "A lot of the smaller cable operators are gone now."

To add to their woes, massive devaluation of many national currencies, such as the Thai baht, Malaysian ringgit and Korean won, has hit them hard. Ad revenues and subscription fees are collected in sharply devalued local currencies, while programming is paid for in dollars.

CHINA, INIDA TAIWAN GAIN

The forecast is not all gloom and doom. The regional TV networks note that growth is continuing in China, India, and Taiwan. And research indicates viewership of regional media among existing subscribers is rising.

CNNI, for example, said Asian ad sales "grew by 35%, making 1998 our biggest year ever," said Steve Marcopoto, president of Turner International Asia Pacific.

CNNI's subscription revenue was up only 11% last year, however, less than had been forecast. Still, Mr. Marcopoto claimed Turner is one of the few regional broadcasters making money in Asia.

Frank Brown, president of MTV Networks Asia, said the Viacom channel's viewership and distribution grew enough last year to justify a rate-card hike of as high as 35%.

Dominic Ng, an account director at international media buyer CIA in Hong Kong, is a fan of regional TV. He buys time on CNNI, CNBC and BBC Worldwide for client DHL Worldwide Express, and puts Carlsberg beer advertising on MTV and ESPN. He warned, however, `'channels have to be localized, no matter what."

LOCALIZED PROGRAMMING

Networks have heeded the call for increasingly localized programming and ad opportunities to appeal to advertisers that prefer to target national markets.

Mr. McIntyre noted that Discovery Channel now airs in nine languages in Asia, with programs tailored for each market. In Malaysia, for example, a cooking show would never demonstrate a recipe that used pork, a taboo for most Muslims.

MTV Networks Asia has three separate feeds, not including Australia, in 10 languages. Last month, it announced plans to buy a stake in m.net, a cable-delivered music service available in 1 million South Korean homes, enabling it

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