SUPPLEMENT: WORLDWIDE ADVERTISING; The explosion of Asian satellite TV

Broadcasters are banking on an explosion in satellite and cable channels

in Asia, but strict regimes could slow the process.

New satellite TV channels have been springing up in Asia in recent

years. The number of satellite/cable channels rose by a hefty 1,500

across the continent in the two years to the end of last year, according

to Leo Burnett Media (excluding India, which now has more than 20

satellite channels).

International channels such as Star TV, Asia Business News (ABN), NBC,

CNN International, TNT/Cartoon Network, ESPN, MTV and the Discovery

Channel are all there in force. What has lured broadcasters to the Asia

Pacific region is the impressive size of the TV audience. According to

Kagan World Media, Asia had 367.5 million TV households in 1994 - a

figure which is forecast to grow to 484 million by 2003 - three times

the number in western Europe. The footprint of AsiaSat-2, one of the

latest satellites to join the crowded skies above the Far East in

November last year, covers two thirds of the world’s population.

‘What we’re seeing is a penetration of satellite and cable channels

which took from the 70s to the 90s in the US taking five years here,’

Alan Fairnington, the Asia Pacific president of J. Walter Thompson,

says.

The rapid proliferation of satellite TV channels has been the catalyst

of some dramatic changes to the media scene. Over the past two years,

the number of terrestrial channels has grown by 430 and terrestrial

broadcasters have been forced to get their act together. ‘The explosion

of cable channels has caused a sea-change in the attitudes and opinions

of state broadcasters. These monopolistic dinosaurs are becoming a good

deal more commercially minded,’ Gary Brown, the regional media director

at Leo Burnett, says.

Although airtime sales practices in countries like South Korea and China

are still rather archaic compared with the West, state broadcasters are

becoming more accustomed to the free market and the rules of supply and

demand. The Taiwanese state broadcasters are more open to negotiating ad

deals now that they are competing with around 70 cable channels, and

India’s state broadcaster, Doordarshan, has made its ad rates more

competitive than before.

Doordarshan has also invested in programming, launched new channels -

DD2 for the big cities and an upmarket, cultural DD3 - and is beginning

to claw back audiences lost to satellite channels, notably Zee TV and

the Star stations.

A more momentous change has been the way authoritarian governments, such

as in Singapore, Malaysia and Thailand, have had to revise their

approach to satellite television. When Star TV first started

broadcasting in 1991, Singapore and Malaysia banned satellite dishes.

Now both countries are setting up their own cable networks and allowing

satellite TV to operate, subject to controls and censorship. Both

governments realised that with the arrival of digital compression and

small satellite dishes, a ban could be ignored anyway. With cable, they

can control what their populations see by blocking retransmissions.

Governments in the region are keeping tight controls on the media in

other ways. For instance, private terrestrial broadcasters operate in

only a couple of countries - Hong Kong and the Philippines - all the

rest are government-controlled.

While satellite TV channels have given government officials and

programming executives at the state broadcasters a few grey hairs, their

impact on advertising spend has been marginal, to say the least. Spend

on pan-Asian satellite TV is estimated at dollars 120 million last year

- equivalent to less than 1 per cent of TV budgets. Satellite television

has done well in advertising categories like luxury goods, banking and

finance and corporate, but has not managed to pick up fmcg budgets.

Kate Stephenson, the client services director for the Asia Pacific at

the newly-established Carat Hong Kong, identifies two main reasons for

satellite TV’s failure to pull in ad budgets. ‘A lot of multinationals

are not equally distributed across all the Asian markets and they’re not

strong in every market. Often the strength of satellite TV doesn’t match

the strength of advertisers. Also, not every client has regional

headquarters and a regional media budget, so they take the satellite TV

budget out of local budgets and justify it on a cost basis, which is

difficult because the numbers are small.’

Penetration figures are tiny in percentage terms, but impressive in

absolute terms or by Western standards. Star TV is the largest satellite

network in terms of penetration, available in more than 54 million TV

households, according to Leo Burnett Media. China is one of its

strongest markets with around 30 million homes - a fraction of its

population of 1.2 billion. In all other Asian countries, Star TV reaches

fewer than one million homes.

With satellite TV taking such a small share of a highly fragmented TV

audience, it is not surprising that the terrestrial broadcasters still

dominate viewing figures and ad budgets.

Their failure to attract advertising, and the embryonic state of the pay

television market, means that the satellite TV stations are making hefty

losses. Star TV is estimated to be losing up to dollars 65 million a

year and will continue to leak money until regional adspend and the pay

TV market takes off.

It is just as well that the satellite TV channels have backers with big

pockets - with the likes of General Electric behind NBC, Dow Jones

supporting ABN and Rupert Murdoch behind Star TV.

‘They’re all born of very substantial parents who went into these

ventures with their eyes open. Will they all survive? The jury’s still

out,’ Brown says.

Agencies do expect spend on satellite TV to rise dramatically, albeit

from a small base. Growth rates of 20-25 per cent a year are forecast as

cable networks grow and broadcasters increasingly tailor programming for

specific audiences.

Digital compression will allow broadcasters to air the same programmes

in different languages and advertisers will be able to target sub-

regions.

While an English language service may be appropriate for channels like

ABN, CNBC and CNN, which are aimed at at the frequent traveller and

business people, an entertainment service like Star TV has to be

multilingual. This network is now broadcast in a number of languages,

including Japanese and Filipino. Even ABN launched a channel for India

at the end of last year and is considering starting a dedicated Japanese

service.

Satellite broadcasters have also been increasing their penetration and

potential audience though retransmission deals with terrestrial

broadcasters - ABN has programmes on Hong Kong’s private channel, TVB,

and India’s DD3.

China, because of its size, is the big attraction for international

broadcasters. Fellow Australians, Kerry Packer and Murdoch, have fired

the opening salvos in what could be a fierce battle for dominance in

this lucrative market. Packer has a valuable head-start after a few faux

pas by Murdoch.

In 1993, when Murdoch took control of Star TV, his remark that satellite

television would spell the end of totalitarian regimes everywhere did

not go down well with the Chinese Government and Murdoch has been

desperately trying to get back in favour with the authorities ever

since. He axed the BBC Service, which, as part of the Star package, was

deemed all too capable of offending the Chinese, but to little avail.

More recently, the Government has reportedly been angered by his

attempts to railroad them into a deal between Star TV and state-owned

China Central Television (CCTV). Star still does not have an official

licence to broadcast to China.

In a humiliating snub to Murdoch, CCTV signed a programme exchange deal

with Packer in February this year. Packer’s Nine Network Australia will

supply programmes to CCTV, while CCTV will provide Chinese language

programmes for his niche pay-TV channels in Australia. The deal could

provide Packer with a useful foothold in the terrestrial TV market when

it finally opens up.

Guy Forestier Walker, the regional media director of MediaCom, predicts

that despite the inroads into the Asian broadcast market made by US

media owners, the Australians are the ones to watch. ‘Murdoch and Packer

will be the first ones to buy up TV stations once they are allowed in

countries like China and Indonesia.They’ve got the technology and the

money,’ he says.

There are also a few Asian media tycoons to look out for. Robert Chua,

who launched his 24-hour Mandarin language China Entertainment

Television (CETV) last year, has pulled in three new investors, Family

Entertainment, MUI Group and Lippo Group, to boost the service, aimed at

Chinese speakers throughout South-east Asia.

Over the next two years, the Thai media magnate Sondhi Limthongkul,

plans to launch two direct-to-home satellites, L-Star 1 and L-Star 2,

with the capacity to provide 500 pay-TV digital channels.

Hong Kong’s Television Broadcasts has a three-channel service, TVB Super

Channel, TVBS Golden and TVBS Newsnet, aimed at Taiwan, Singapore,

Thailand and the Philippines. It has also been making its first forays

into mainland China.

The explosion of new channels has spurred the development of media

research, which, in many countries, is very sophisticated. People-meters

are installed in several countries, including Hong Kong, Singapore,

Malaysia, Taiwan and Korea, and there are TV ratings and optimisation

systems. TV research in Asia is dominated by SRG Nielsen, except in

countries like Japan and China, which lag behind in terms of media

research.

However, even where there are people-metres, measuring satellite TV

audiences is still difficult as penetration can be very low. As a

result, the development of satellite TV has been held back.

‘SRG Nielsen does not give a fair crack of the whip to smaller

stations. The sample sizes are too small, so cable operators can’t get

an accurate fix on who’s watching what and agencies don’t have the data

to buy cable programmes,’ Fairnington says.

Fairnington cites India as an example of where the pace of change is

frenetic. India has a highly developed cable TV network and is going

through a TV revolution. ‘Media expertise in India is the best in Asia.

It’s well monitored and you can buy TV airtime by programme, time of day

and so on. But it’s a chaotic marketplace - a wild, anything goes, free-

for-all.’

A big advantage of the media revolution coming late to Asia is that the

technology is advanced - digital compression, fibre-optic cable and

encryption are all being put to good use.

The Singapore Government is particularly keen to exploit the latest

technology, but one agency executive reads sinister undertones into

their eagerness. ‘When you think of Singapore you can’t help thinking of

Big Brother. They’ll have people-meters monitoring what every home is

watching and the Government will be able to communicate with every home

through cable,’ he warns.

This Orwellian nightmare may still be some way off - only 15 per cent of

Singapore is cabled - but it does highlight the one big obstacle facing

broadcasters in Asia: the opposition of totalitarian regimes. The BBC

has only just resumed broadcasts to Asia after a two-year break. While

governments have finally accepted that they can’t completely prevent

their populations from watching programmes beamed in from outside, they

are doing their damnedest to keep a tight rein on what does and doesn’t

get through.

MTV

Unlike Europe, where young people share broadly the same tastes,

lifestyles and aspirations, Asia is a disparate mix of cultures which

has put paid to the notion that the youth could easily be united by one

music channel - MTV Networks now has three channels in Asia.

MTV’s first Asian venture was the English language MTV Asia, which was

launched as part of the Star TV package in 1991. MTV Japan followed in

December 1992. It features a mix of regional bands and international

artists and news segments, interviews and rockumentaries in Japanese and

English.

MTV Mandarin, which was launched in April 1995, completes the music

channel line-up. Broadcast from Singapore, MTV Mandarin is tailored to

the musical tastes, lifestyles and sensibilities of 12- to 34-year-old

Chinese speakers in China, Taiwan, Hong Kong and Singapore. Carried on

the Apstar 1 and PanAm Sat 2 satellites, MTV Mandarin is available in

more than 20 countries throughout Asia.

One of its key markets is the heavily cabled Taiwan, where it is

distributed to a claimed 2.5 million households.

MTV Asia is still trying re-establish itself after coming off the Star

TV package in May 1994. A joint venture with Polygram, MTV Asia is aimed

at audiences in South- east Asia and India. It is carried on the Palapa

C1 and PanAm Sat 4 satellites, which gives it access to a potential 18

million homes in 39 countries. Some of the programming is in Hindi.

In an effort to get more people to sample its musical fare, MTV has

completed a number of terrestrial rebroadcast deals with state

broadcasters. Leo Burnett puts MTV’s penetration in Asia at 2.2 million

homes.

Star TV

Satellite Television Asian Region (Star TV) broke the mould of Asian

broadcasting when it launched in 1991, but it has essentially failed in

its original incarnation. The dream of an entertainment service

capturing the hearts and minds of the region’s English-speaking elite

was found to be deeply flawed.

Although English is a common language throughout Asia, it is only spoken

by a limited number of people and is mainly the language of business.

Viewers prefer entertainment to be in their own language.

The network has changed significantly since Rupert Murdoch took control

in 1993. Star TV’s beam has now been split between north and south. The

southern beam includes five free-to-air channels - Star Plus, Star

Sports, Channel V, Zee TV and EL TV - and two encrypted channels, Star

Movies and Zee Movies. The northern beam includes three free Star

channels, the Chinese Channel and the pay channel, Star Movies.

Star TV broadcasts primarily in Hindi, English and Mandarin, so it is

not surprising that it performs strongest in China, Taiwan and India.

However, it launched a 24-hour Japanese language channel in April this

year and plans six more dedicated channels over the next two years.

Murdoch’s most ambitious venture is the launch of a pay TV service,

called Phoenix, targeted at China.

With the highest penetration of any satellite network by far and as the

first satellite broadcaster in the market, Star TV’s chances of success

are considered good - but in the long term. In the short term, it still

has to build up its reach in more markets.

CNN International and TNT/Cartoon Network

Turner Broadcasting Systems was one of the first foreign broadcasters to

enter the Asian market after the launch of Star TV in 1991. CNN

International has been on air in Asia since 1992, which gave it a

comfortable headstart over rival news channels, NBC Asia and the more

business-oriented Asia Business News.

The 24-hour news channel claimed to reach 16 million households as of

the end of last year, which gives it the second highest penetration of

satellite TV channels behind Star TV. It is ideally suited to the

corporate, banking and financial advertisers which are geared up to use

satellite TV in the region.

TNT/Cartoon Network faces a rougher ride in Asia. The 24-hour cartoon

and film channel is available on the Palapa C1, PAS2 and PAS4, Apstar

and Intelsat satellites, whose footprints take in more than 40 countries

from Central Europe to Australia. However, Leo Burnett Media estimates

its reach at under two million homes.

Kate Stephenson, the client services director at Carat Hong Kong,

believes the channel will have its work cut out attracting ad budgets.

‘There is not much pan-regional toy advertising and children’s

advertising as a whole is not a highly developed category in Asia,’ she

says.

This article was first published on Campaign