Asia-Pac Ad Spend Growth Expected to Slow in '09

HONG KONG, November 13:
While ad revenues in the Asia Pacific are forecast to rise by 5.6 percent to
$91.1 billion this year, the rate of growth will drop to 2.5 percent in 2009,
according to Media Partners Asia (MPA), rising back up to 6.4 percent in 2010.

The 2.5-percent growth
rate for 2009, when adspend will reach $93.4 billion, is the lowest growth rate
since 2002, MPA says. "Global contagion has clearly hit Asia," said
Vivek Couto, the executive director at MPA. "We expect advertising to
decline in Japan, Hong Kong and Singapore, as well as in Australasia, next
year. There will be a slowdown in China, India and Indonesia, though growth in
these markets will remain relatively robust. In other markets, including Korea,
Taiwan and much of ASEAN, there will be little growth next year."

A decline in adspend in
the region's biggest ad markets, Japan and Australia, are the primary factors
behind the slowdown, but contractions are also expected in Hong Kong and
Singapore.

As such, MPA anticipates
that 2009 will be a year for cost-control in the region. In addition, risk
aversion, tightening credit, the rising cost of capital and currency volatility
will adversely impact the growth and funding of media distribution and content
in markets such as India and China.

However, double-digit
growth is still forecast for China and India: 10.9 percent in China (versus
21.8 percent in 2008); and 12.1 percent in India (17.6 percent in 2008).
Indonesia's ad market will grow by 8.4 percent, versus 12.3 percent this
year.

"Visibility at this
stage is unclear but broadly, we see a rebound in 2010 for both advertising and
media profitability," added Couto. "Additionally, new M&A and
consolidation opportunities are emerging for strategic investors ready to take
a call in the coming months with many assets needing to source capital to fund
future growth in both developing and mature markets. Valuations and capital
inflows are likely to fall further while credit continues to tighten and
financial investors become increasingly risk averse."

A recovery is expected in
2010 with a 6.4-percent growth rate. Excluding Australia and Japan, that
forecast rises to 9.7 percent.

MPA also provided research
on the expected EBITDA for more than 100 media companies in the region, which
is pegged to grow by 7 percent in 2009, versus 17 percent this year. In the
medium term, new-media distribution platforms will power growth in the region.
Online revenues in Asia are expected to grow at a compound annual growth rate
of 15 percent over the next two years. In that period, Asian broadcasters will
see sales and profits rise by an average of 3 percent and 4 percent,
respectively. Declines are forecast in Japan, Korea and Australia, and profit growth
will be limited in China, India and ASEAN markets.

—By Mansha Daswani