Special Report: Asian TV


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You know times are tough when Asian television programmers are attempting to emulate a campy Japanese game show in which spandex-clad contestants contort their bodies into hilarious -- albeit humiliating -- positions for fun and profit.

While quirky Japanese game shows that traffic in embarrassment have been cult hits since "Takeshi's Castle" debuted more than 20 years ago, it wasn't until 2008, when distributor Fremantle Media sold Fuji Television's "human Tetris" show "Hole in the Wall" to 23 territories worldwide, including the U.S. and most of Japan's near neighbors, that one of those crazy Japanese shows became a true global hit.

Now "raking in the cash" for Fuji Television, according to Fremantle executives, its success has led other Japanese broadcasters to dust off their archives in search of another hit that could provide them with a financial buffer as ad revenue declines dramatically during the recession.

Those moves are just one response to an economic downturn that's starting to bite around the edges of the TV business in the 14 key territories across Asia.

But in the world's most populous region, there is plenty of debate as to the length, depth and severity of the global financial crisis and the effect it will have on the TV sector. Indeed, from cable operators delaying plans to launch digital channels, to distributors eyeing their archives in an effort to provide broadcasters with cheaper programming alternatives, no one knows what state the industry will be in once the dust settles.

The consensus, surprisingly, is that it's not as hopeless as it sounds. In fact, most analysts and industry pundits agree that the Asian markets are not feeling the brunt of the crisis as badly as Europe and America.

"We can feel the cold breezes coming to Asia, but they're not yet a gale force and not freezing," says Simon Twiston Davies, CEO of the Cable and Satellite Broadcasters Association of Asia.

Certainly growth forecasts have all been lowered to single digits in most markets and there are some trouble spots. The Korean won, for instance, has been devalued by about 30% against the U.S. dollar and ad revenue in Singapore has slipped by 8.5%. Japan, meanwhile, slid into recession fairly quickly.

Elsewhere, Hong Kong-based analysts Media Partners Asia have tipped ad revenue in the region to fall by 1.1% this year, the first time it has gone into negative territory since 1998. That forecast was revised down from the 1.35% ad revenue growth that the firm forecast late last year. While Media Partners Asia is flagging a rebound in 2010 to the upward ad revenue trend of 5.3% seen in 2008, others say caution is the watchword.

Nevertheless, Davies says the outlook for his organization's part of the sector is strong, with solid growth in pay TV subscribers and digital rollouts set to continue across all key markets this year.

"Asia is holding up relatively well in a global context," he says -- noting, however, that "business growth is not as fast and furious as it has been in recent years and there is a wary approach to the future."

Fremantle Media Asia CEO Patrick Schult adds that broadcasters and programmers are doing all they can to be self sufficient to avoid the pain of the late 1990s again. "Budgets were cut in half then, and they haven't asked that of us (program suppliers) yet," he says. "The squeeze has started but it's not overt."

But a tightening overall also means a shift in focus for many operators. Cable and satellite TV operators and programmers believe they are in a much better position than free-to-air broadcasters, as they're able to rely on dual- and triple-revenue streams from advertising, subscription revenue and additional services including PPV, IPTV and other broadband services. Laureen Ong, COO at pay TV giant Star TV, says that while business is still solid, Star TV is approaching the coming year with caution.

"We are being very, very judicious about the markets and types of channels we launch," Ong says. "Various platforms are tightening budgets tremendously and being very particular and strategic in what they launch and why, looking particularly at how channels and programming benefit the platforms and the consumer."

While that might be true, expansion is still occurring. For example, in March Discovery Networks and its Korean channel partner, SkyLife HD, launched Discovery's flagship Discovery HD channel as a 24-hour service despite difficulties in that market.

The move was part of a repositioning of SkyLife as a "luxury product in a market that is rapidly growing in HD take-up," according to Mong-ryong Lee, CEO and president of SkyLife. "Global networks like Discovery will definitely help build such a competitive brand" she notes.

Ong, however, argues that could be the exception rather than the rule. "Things like HD that were on the front burner are now taking a back seat," she says. "Platforms are working with programmers to ensure full value for subscribers."

Nevertheless, L.K. Tham, president of Taiwan Broadband Communications, the third-ranked cable operator in that market, says that the company is moving ahead with a comprehensive digital platform upgrade that will provide subscribers with a raft of new digital features, including the launch of a personal video recorder this year, as well as simulcasting in analog and digital.

However, where she was planning to launch up to five HD channels on the platform in the coming months, she's now scaling that back to just two or three initially. "It's a short-term impact," Tham notes. "Any investor in a platform is taking a long-term view and strategies like digitization and platform upgrades are just that. Programming decisions won't make a difference to the strategic importance of upgrading the platform."

Broadcasters, meanwhile, already are feeling the pinch with falling ad revenue, giving rise to changes in production and program acquisition strategies.

Fremantle's Schult says many of his customers have started asking for price reductions and also are looking at ways they can cut production costs, either by making fewer episodes of commissioned programs or buying shows where five episodes can be recorded in one day to fill slots.

Ian Hogg, managing director of MGM for Asia-Pacific, says as programming budgets tighten it's the more expensive local content that will suffer, and programmers will look more for recognizable brands they can push out to the market quickly.

Korea and Hong Kong in particular are, Hogg says, "buying less and you have to be careful on price. Programmers are being more selective and more prudent and they're not buying as much volume. Nevertheless, they're still in the mix."

Additionally, the U.S. dollar effect and the depreciation of local currencies is being mirrored everywhere. "As a variable cost line it's hard to manage," Hogg notes.

Ong says that while "American Idol" is still as popular as ever, Star TV's suite of movie channels is building share rapidly across the region.

Hogg says it will be movies like MGM's James Bond franchise, that will sell the best. and it will be movies like MGM's James Bond franchise, that will sell the best.

"Generally in market downturns good libraries benefit," he observes. "Broadcasters will still have to do local content as it's so popular, but they seem to be doing a bit less."

Tom Keaveny, managing director of Discovery Networks Asia-Pacific, says that he's seeing "caution rather than suppression," adding that "there are more short term decisions being made. All we can do is offer the value."

To that end Discovery has been investing substantially in local content, at both the programming and operational level. "We have to be relevant to local markets and tastes," Keaveny says, citing the company's move to put in local decisionmakers in India, South East Asia, China and Japan.

Keaveny also points to a number of co-productions in those markets that will feed Discovery's global networks, including several episodes of its "Man Made Marvels" franchise, "Eye On China" and "Eye On Malaysia," "Culinary Asia" and its "Hip Korea" series featuring young Korean stars Rain and Bung Hun Lee.

And while no one knows just how well the Asian markets will ride out the economic storm, a strong bellwether will occur in July when bidding starts for the new three-year rights package for the English Premier League soccer. While interest is expected to be high -- as it's the most widely distributed sports event in the region, particularly in Thailand, Singapore, Malaysia and Hong Kong -- TBC's Tham doubts that the "astronomical" prices that were paid three years ago will be repeated this time out, calling them "unsustainable in this climate."

Those rights, he says, will be "an indicator of just how far operators are willing to push on their program costs, while providing value to their customers."