FEATURES: Back from the brink at last - Asia-Pacific's newspaper industry begins to shake off the economic doldrums

What a difference a year can make. Only 12 months ago, in the midst of a devastating economic crisis that gripped most Asian countries, the newspaper business must have seemed the most depressing of businesses to be in. Declining readership and slashed advertising revenues led to reductions in both staff numbers and corporate earnings. Publishers were questioning the long-term viability of their business model, and some were even considering closing-up shop. But today, a different story is rapidly unfolding and optimism reigns. In some markets, readership has returned to pre-crisis levels and, in a few, has even hit all-time highs. Advertising revenues have rebounded significantly across the region. Many publishers are aggressively exploring new frontiers in printing and distribution. And a rapid move to the Internet - seen as a complement to current business practices, rather than a threat - is in some instances re-defining the economics of the newspaper business. How did we get here, and what will the future bring? Readers retreat, then return The economic turmoil that hit most Asian countries in 1997 dramatically affected all categories of consumer spending. This included the smallest daily expenditures, including the purchase of a daily newspaper. In almost all markets across Asia, newspaper circulations took a dive in 1998, as consumers reduced - or eliminated - all 'discretionary' spending. We conducted a series of consumer focus groups across seven countries in Asia in late-1998 to explore the effects of the economic situation on people's media consumption habits. Almost without exception, people told us they had either reduced the frequency of daily newspaper purchases, or had eliminated them altogether. "I can get my news for free on TV," one Thai housewife told us resolutely. "Why should I buy a newspaper when I need money for other things?" We received similar explanations across the region. As household budgets were pinched, newspapers were often viewed as a 'luxury' purchase. But this is now changing. As economies have rebounded, purchasing power has increased. Newspapers have made a comeback in a number of markets as a result. Even in markets where daily readership was down in 1999 versus 1998, early indications in 2000 show growth to 'pre-crisis' levels. And as readers have returned, so have advertisers. Most newspapers across Asia experienced a severe downturn in advertising expenditure beginning late-1997, which continued through 1998. Markets like South Korea and Thailand suffered year-on-year decreases of more than 40 per cent in 1998. But during the second half of 1999, significant gains were realised in all markets (excluding Japan). Renewed growth was generated by the return of big-spend categories like retail services, but also by strong growth from 'new' areas such as telecoms, financial services, healthcare and pharmaceuticals, and of course, dotcom advertisers. Perhaps the greatest contributor to the resurgence, however, was classified advertising. As economies strengthened, recruitment advertising returned with a vengeance in most markets (much of it fuelled by those same dotcom companies mentioned above). Another contributing factor to the growth in ad revenues in 1999 was a greater willingness by publishers to accept more innovative uses of the newspaper medium by advertisers. Nike, as an example, moved significant budgets out of TV and other media to capitalise on creative opportunities put forward in markets like Hong Kong and Taiwan. As we continue into 2000, the basic fundamentals have returned to a reasonable state-of-health, and Asia's newspaper industry is wisely turning its attention to more significant challenges and opportunities. As a result of tumultuous technological change, and not for the first time, the future of the newspaper format is being questioned. Some say the Internet will stop the printing presses. But in speaking to publishers across Asia, one sees a strong conviction that there is a great deal of life left for well-managed newspapers. Newspapers are broadly in the business of delivering news, comment and analysis. And the best-managed newspapers in Asia have realised this means delivering their content in many forms - both printed and electronic. This is happening in every country across Asia, and perhaps the best demonstration of how this 'new thinking' is put into action is from the South China Morning Post (SCMP), Hong Kong's leading English-language daily. The SCMP has moved aggressively to the Web, building scmp.com into one of the most-visited sites in Hong Kong. Much of scmp.com's popularity is due to fresh, original news content, an innovative approach to online job recruitment (building on SCMP's dominance of printed recruitment advertising in Hong Kong) - it no doubt helps that they have a comprehensive horse racing site to satisfy Hong Kong's voracious gamblers. SCMP is also moving aggressively into new 'space', having recently launched a wireless edition of scmp.com for hand-held computing devices. It is approaches like this - using new technologies to build on established franchises, rather than hand-wringing over perceived threats - that will lead Asia-Pacific's newspapers into a secure future. One year ago, the picture for newspapers in Asia must have seemed bleak to many observers. But, in keeping with the true character of this region, publishers have adapted quickly. They have re-built the basics of the business: loyal readership and committed advertisers. And more importantly, they are quickly embracing new technologies and business models to build strong franchises for the future.

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