MPA Forecasts Growth in Asian Media Profits

HONG KONG: Profits at Asia’s leading media companies are expected to return to double-digit growth after next year, according to new research from Media Partners Asia (MPA), led by online services and pay-TV platforms and channels, with China and India continuing to top growth in the region.

MPA released its latest round of research at the Asia Media Summit in Hong Kong yesterday. Looking at the results of more than 100 leading Asian media companies, MPA says that revenue growth will slow to 6.7 percent this year, compared with 11.6 percent last year, before rebounding to 9 percent in 2010. Combined EBITDA profits at these companies is forecase to rise 11 percent in 2010 and 19 percent in 2011. MPA says this will be driven by online media in China, Japan, Korea and Taiwan, as well as by pay-TV distribution platforms and broadcasters across the region. Indeed, excluding the digital media players, earnings are forecast to fall by 1.2 percent over the next three years, weakened by the free-TV and print sectors in Australia, Japan and Korea, which will offset stronger growth for traditional media in China, India, Indonesia and the Philippines. The overall revenues for the companies analyzed will reach $65 billion by 2011, with EBITDA profits at $20 billion.

MPA also forecasts that ad revenues will increase by 4.6 percent in the Asia Pacific in 2010, the lowest growth rate since 2003. By 2011, however, the rate will be up to 6.5 percent. This follows a 4.7 percent decline in 2009.

“Asian economic fundamentals have shown improvement in recent months, boosted by fiscal stimulus, domestic demand and more recently, some signs of relief in the global export environment,” said Vivek Couto, MPA’s executive director. “This is encouraging for media owners in Southeast Asia and Greater China. India has also seen renewal, certainly enough to revive ad prospects though a significant renewal may be delayed in the near term due to a disappointing monsoon.”

China, India and Indonesia are each expected to grow at around 10 percent over the next five years, with the Philippines up by 5.4 percent and Vietman, starting from a smaller base, will be up by 19.1 percent. By 2013, China will be close to toppling Japan as Asia’s largest ad market, with an estimated $31.1 billion in net advertising revenues (after discounts) versus US$36.5 billion in Japan, and India will have caught up with Korea, each generating about $8.4 billion. China is expected to surpass Japan by 2016.

From 2008 to 2013, total advertising revenues in Asia Pacific are expected to grow at an average annual rate of 3.5 percent. Excluding Japan and Australia, the rate increases to 7.2 percent. Online media and pay-TV remain the strongest sector performers in terms of growth. Over the five-year period to 2013, MPA predicts an annual 13.5 percent growth rate for online advertising and an 8.1 percent rate for pay TV, as compared with just 0.4 percent for free TV. By the end of 2013, free TV will have 21.2 percent of the Asia Pacific ad pie versus 24.6 percent in 2008; pay-TV will have grown its share from 11.3 percent to 14 percent and online media will have grown its share from 11.5 percent to 18.2 percent.