DAILIES IN DO OR DIE CRUNCH

With economic recovery far from certain and media discounts growing deeper by the day, Hong Kong's Chinese dailies are in a do or die situation.

As a small and saturated market, the downturn has hit the dailies' ad revenues and readership numbers hard, although the second-ranked Apple Daily and the fourth-placed Ming Pao managed to grow their readership base for the year to June. For the majority, including market leader Oriental Daily News, readership numbers have tumbled or, at best, have stayed static this year.

With little relief likely on the discounting front, papers like Ming Pao and Sing Tao Daily have been revamping both editorial and positioning.

Others have invested in marketing initiatives and giveaways to keep readers picking up their morning copy. "Only Apple Daily and Oriental are making money, says DDB Vickers Securities senior media analyst, Tommy Ho. "If newspapers are not able to find a way to break through the gloomy situation, they may have to face closure or consolidation."

The battle for readers has never been as fiercely fought as it is today.

Uncertain economic prospects and rising unemployment have soured consumers' buying mood, hitting purchases both large and small, including the HK$6 they shell out for a morning paper. "In the past, people used to buy more than one paper in order to keep a closer watch on the market, notes Equinox Zenith Communication managing director, Steven Chang. "It was a common habit for people to buy a financial paper and a general paper. These days, they prefer reading newspapers in the office as they are reluctant to purchase them. Those who are willing to buy a paper look for those titles that offer value-added services such as free coupons and giveaways."

Sing Pao has been particularly generous with giveaways since it sold a stake in the paper to the celebrity-studded entertainment group Star East. During the last summer holidays, its Sunday edition came with a free CD of stories for children. It has since replaced the CD promotion with a coupon redemption plan. Industry watchers believe the giveaways have been instrumental in Sing Pao boosting its circulation from 72,489 in December 2000 to a little more than 90,000 at last year end.

Sing Pao's sales and marketing director, Jeannette Cheung, says the paper has also introduced seven tabloid-sized supplements each week on property, fashion and finance, which allow the company to better target specific demographic groups. "The supplements allow us to expand our readership base particularly among young adults, executives, young working women and young parents, says Cheung.

Other players have instead chosen to refresh their editorial and image in the battle for survival. The latest to do so is Sing Tao Daily, which reformatted its editorial to appeal to and champion the middle class, focussing on issues such as the slumping property and stock markets. The paper had previously positioned itself as a "comprehensive read", with general interest news.

Supporting the editorial change, Sing Tao has poured money into phone-in TV advertising cum survey campaign as well as print and outdoor activities.

The TVC featured a different question each night, questions that touched on middle class concerns from having a baby to making major investments in the current economic climate. Survey results were then used as the basis for news stories the next day. On top of the campaign, Sing Tao is also planning to extend its distribution to taxis as well as link up with Caltex and Ikea in promotional alliances, says marketing director, Gladys Cheng.

The spate of revamps coincide with the arrival of a player with its eye on a market largely overlooked by other publications - the young, well-educated commuter travelling to work. Metro, which made its debut in April 2002, is a 24-page Chinese language "news summary that is distributed freely at all 48 MTR stations in Hong Kong, as well as other central locations above ground with a high traffic flow of morning commuters.

"We see ourselves as a complement to the more traditional newspaper, rather than a direct competitor, says Michael Denmark, commercial director for Metro. The paper is designed to provide readers with a chance to catch up on local, regional and international news, sports, cultural events and entertainment in an uncluttered environment within a 20-minute commuter ride.

"Fifty-seven per cent of our readers are between 20 to 39 years old, of which almost half are female. We have the highest percentage of female readers of all the leading Hong Kong newspapers, which makes us very attractive to advertisers, says Denmark. But Equinox's Chang thinks that Metro's appeal is limited to certain types of advertisers. "It can only attract FMCG advertisers and cannot provide value-added services to advertisers at this moment, Chang says.

Johan Hansson, managing director of Metro, counters that the paper has a maximum editorial policy of 50 per cent, which means that for 24 pages, 12 pages can be advertising. "We can always print more pages and therefore put in more ad pages, he says. But that would defeat the goal of making Metro a paper that can be finished in 20 minutes.

Denmark adds that Metro attracts the lifestyle-oriented advertisers who want to reach the target group, including HSBC, Nokia, Dell, ParkNShop, Schweppes, local cosmetics firm Fancl House, as well as many smaller local businesses, and travel and educational clients.

A survey conducted by GallupTNS in May revealed that Metro had 627,000 daily readers. Adds Denmark: "However, this survey was conducted only four weeks after our launch, so one would be forgiven for assuming that the number is now much higher."

CHINESE LANGUAGE READERSHIP/ADEX: WINNERS & LOSERS
                                        Readership                  Adex
                                    Jul        Jul      Jan -      Jan -
                                 '01 -      '00 -     Jun '02    Jun '01
Newspaper                       Jun '02     Jun 01     HKdlrs     HKdlrs
                                                        000's      000's
Oriental Daily News                 33%        34%  1,425,731  1,290,280
Apple Daily                         23%        25%  1,105,361  1,031,158
The Sun                              9%        10%    418,098    455,726
Ming Pao                             5%         4%    438,055    367,512
Sing Pao                             3%         3%    352,741    129,878
Sing Tao Daily                       2%         3%    380,417    268,759
Hong Kong Daily News                 2%         2%    104,570     59,724
Hong Kong Economic Times             1%         2%    709,281    691,183
Source: Nielsen Media Research