Asia steady after storm

No big media-stock downturn seen

Asian media companies are watching cautiously for aftershocks from last week's plunge in global markets, but most executives and analysts are maintaining a positive outlook for regional growth.

In fact, Tokyo's Nikkei share average edged up 0.6% in morning trading as investors bought back shares of Sony Corp. and others that had booked steeped declines during the recent market sell-off.

Media companies listed in Shanghai, where the index tumbled nearly 9% on Feb. 27 — its sharpest drop in a decade — had begun rebounding, but a negative ripple continued in the region's big three markets of Tokyo, Taipei and Hong Kong. The global slide was triggered by a Shanghai sell-off on fears that Beijing might crack down on rampant speculation in China's booming economy.

Shanghai shares of media firms Gehua Entertainment of Beijing and Dianguang Chuangmei of Changsha have fared no worse in the past week than mainland companies in such sectors as energy or banking, which analysts called overvalued.

"Since the gloss came off Shanghai's market last week, I've seen nothing that marks the start of a long media downturn," Sydney-based Richard Samuels, 20th Century Fox Television Distribution senior vp, said during a visit to Beijing. "The portents for growth are still here."

Shanghai's index remains up 121% on the year — the best rally since 1990 — and the Chinese advertising market is projected to overtake Japan's as the world's No. 2 by 2010, according to A.C. Nielsen.

"Shanghai's was stirred up by speculation, so this was a natural downturn after a long run-up, but Asian media fundamentals are still strong," Deutsche Bank equity analyst William Bao Bean said from Hong Kong, where he covers China's U.S.-listed companies such as Web portal Sina.com.

Companies in Japan expressed concern but said it was too early to factor market fallout into future plans.

"At the moment, we have not felt anything," said Kyoko Sekine, a director at the Japanese unit of FremantleMedia. "Japan's television market is tough at the best of times. This is only likely to make things tougher."

In Taipei, Joseph Liao, production manager at CMC, the two-year-old entertainment company that is backing director John Woo's shooting of "The Battle of Red Cliff" on the mainland, said, "There's no plan to put our current and future projects on hold."

In South Korea last week, the main stock index saw its biggest drop in about three years, but there, too, media weathered the storm.

"We're just keeping our eyes on the situation," said Jim Park, head of international business at MK Pictures, a partner in a Chinese multiplex venture. "We don't have offices or multiplexes in Shanghai yet, and we don't have any film productions in China now."

India's leading stock index, which gained about 30% during the past year, fell 8% after Shanghai's drop. Ronnie Screwvala, CEO of leading Mumbai-based entertainment conglomerate UTV Communications, called the drop "nothing but the self-correction of an otherwise booming market."

Sanjay Durgan, director of the New Delhi-based financial advisory firm Abundanze Financial Services, said India remains insulated from major international trends and that Shanghai had only a marginal impact on the country.

The market drop is expected to have little effect on 18 upcoming Indian media industry initial public offerings, expected to raise 30 billion rupees ($678.7 million) collectively in the coming year.

In a case of bad timing for one IPO in China, the downturn threatened the planned Wall Street offering of Shanghai-based news and information service Xinhua Finance Media Ltd.

"If investors think that the drop in Shanghai is the result of an economic slowdown, then it might have an adverse affect on IPOs," said Ran Wang, CEO of Beijing-based consultancy China eCapital.

Xinhua Finance spokeswoman Joy Tsang declined comment. Underwriter JPMorgan proposes that 23 million shares of Xinhua Finance begin trading this week in New York at about $13 each.

Shanghai-listed Oriental Pearl, whose stock followed the broader slide, is a subsidiary of the private Shanghai Media & Entertainment Group, which, through another subsidiary, the Shanghai Media Group, owns several television and radio stations and numerous newspapers and magazines. SMEG and SMG were unaffected by the tumble of Oriental Pearl, which now is a tourism company, SMEG director of international affairs Catherine Wang said. "Our outlook for the China media market is positive."

Executives at SMG — which has agreements with MTV Networks, CNBC, Universal Music Group, Sony, Discovery Communications, the NBA and the Hollywood Reporter parent company the Nielsen Co. — declined comment.

In Chinese gaming, Nasdaq-listed Shanda Interactive Entertainment was not affected directly by Shanghai despite being headquartered there, investor relations director Frank Liang said. A game that Shanda will develop with the Walt Disney Co. was on track for release this year.

Chinese media stocks traded in New York also fell, but Deutsche Bank's Bao Bean said, "Overall, China's U.S.-listed media and Internet names had not gone up as high as companies in other sectors, and though they were in the mid- to upper-level of their valuation, none was above fair market value."

Nyay Bushan in New Delhi, Andrew Huang in Taipei, Mark Russell in Seoul, Julian Ryall in Tokyo, Janine Stein in Singapore and Reuters contributed to this report.
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