Newspaper sector beckons Richard Li
Print industry stirs amid reports PCCW chief close to buying Economic Journal
PCCW chairman Richard Li Tzar-kai is reported to be moving into the print world, potentially escalating the price war in the industry, especially if he links up his new acquisition with his online and television ventures.
Industry sources believe Mr Li is on the verge of buying the Hong Kong Economic Journal, whose content is expected to be delivered via a website and a broadband television channel.
The plan will likely hit the property and commercial advertising revenues of the Journal's key rival, the Hong Kong Economic Times, and titles such as Ming Pao Daily News and Sing Tao Daily, observers say.
The Journal, established by columnist Lam Shan-muk in 1973, was estimated to have a daily circulation of 30,000 copies at the end of last year. Economic Times had a daily circulation of more than 85,000 copies, according to the Hong Kong Audit Bureau of Circulations.
Mr Li is expected to pay about $200 million for the 95 per cent stake held by Mr Lam and the 5 per cent interest controlled by Journal director Cho Chi-ming.
However, a source close to the talks yesterday said the deal might be delayed as Mr Li and Mr Lam were still haggling over editorial control of the paper. He said Mr Lam wanted to keep the editorial team intact, with Mr Li's team only looking at the business side.
'Negotiations are continuing,' he said. 'We know Mr Lam wants to maintain the current editorial direction. It shouldn't be a hurdle. We will set up a committee to monitor the daily's editorial direction.'
Mr Cho has said the deal was unlikely to be sealed soon as he and Mr Lam had to consider three or four bids from other consortiums in Taiwan, the United States and Europe.
Mr Li had appointed Morris Ho Kwok-fai, a former executive director at Next Media and Sing Tao News Corp, to oversee business development at the Journal once the deal was concluded, sources said.
Mr Ho, recruited by Mr Li to set up PCCW's media service arm to explore advertising revenue for its broadband television, fixed-line and mobile service platforms in July last year, left his post in December to help Mr Li with the deal.
'With his experience setting up Hong Kong Apple Daily, the first duty for Mr Ho should be to explore more revenue streams for the Journal,' a newspaper executive said.
Advertising sales account for less than half of turnover at the Journal, which mainly relies on circulation revenue. A media buyer from a local agent believes Mr Ho will initially focus on expanding the paper's advertiser base.
'The new Journal should target the advertising revenue of its main rival, the Economic Times,' he said. The Economic Times has cornered a large part of the property and corporate-announcement advertising market by offering discounts. The new Journal could match such price cuts and even undercut the Times, the buyer said.
'The Times this year may face some challenges as it wants to become an integrated newspaper rather than just a financial daily. It also has to contend with a new Journal under Mr Li,' he said.
The stock exchange's decision to abolish by the end of this year the rule requiring listed firms to publish corporate announcements in local newspapers is also expected to squeeze the revenue stream of the two financial dailies.
Overall, the newspaper industry will continue to face a tough fight for advertising this year after the city's three free dailies took about 8 per cent of advertising budgets for newspapers last year, according to industry statistics.
But, unlike the Times, the Journal is expected - through its links with PCCW - to explore online business opportunities via the telephone firm's Netvigator and the Now Business News Channel, PCCW's television channel to be launched this month.
One newspaper executive expects the Journal to share content with the new channel and the Netvigator website to cut production costs and to ride on the online and television platforms.
However, one advertising executive did not see much synergy, saying: 'The real challenge for media owners is to get their audience to focus on the message of their advertising clients, as there are many media outlets out there pushing their own messages.'
Deal may give newspaper exposure to new media formats
The Journal purchase is likely to hit the ad revenues of rivals
Haggling over editorial control of the paper may delay the deal