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SCMP Reporter

Next Media, publisher of Apple Daily and Next Magazine, has suffered advertising losses of about HK$200 million a year due to leading Hong Kong firms being involved in 'an organised boycott' since Hu Jintao became  president in 2003, according to chairman Jimmy Lai Chee-ying.

Next Media's publications especially Next Magazine and Apple Daily, whose reporting is seen as anti-Beijing, have long been said to struggle for advertising from leading  Hong Kong companies since they were launched.

Mr Lai did not elaborate on why the boycott had become more organised in 2003, but said it was 'getting tougher to operate' in Hong Kong.

The HK$200 million loss accounted for 10 per cent of Next's Hong Kong turnover for the year  to March 2006.

'We don't see any improvement in the boycott issue in the future,' Mr Lai said.

Conglomerates and property developers such as Cheung Kong (Holdings) and Hutchison Whampoa and its subsidiaries  such as chain store ParknShop and Watson's, controlled by Asia's richest man Li Ka-shing, and New World Development and Henderson Land Development stopped placing advertisements in Next Media publications long before 2003.

'We have asked them why they don't put advertisements with us, but they just say it's for commercial reasons,' Mr Lai said.

However, PCCW, the city's largest telecommunications firm controlled by Li Ka-shing's youngest son, Richard Li Tzar-kai, and  HSBC Holdings of Britain as well as other lenders continue to place advertisements with Next publications.

Apple Daily also had a steady stable of clients from fashion and luxury brands due to its  high-spending readership profile, Mr Lai said.

Next Media's revenue was HK$1.64 billion in the  six months to September last year, down 3 per cent from a year earlier, while profit slumped almost 30 per cent to HK$157.8 million as competition intensified with new free dailies in Hong Kong.

The circulation of Apple Daily, the group's core business unit, fell by more than 10 per cent after Sing Tao's free Headline Daily and am730, owned by property agent Centaline Group, hit the market almost two years ago.

'Our circulation has been picking up more than 1,000 copies a month. Apple Daily sells around 305,000 copies on non-horseracing days and 365,500 copies on racing days,' Mr Lai said.

That compares with fewer than 300,000 copies at the end of 2005.

'The circulation will gradually reach 360,000 copies on average,' Mr Lai said.

As the Hong Kong market becomes more competitive, Next Media is looking to its Taiwan operations to account for half  its revenue for the financial year  to March next year.

The company also targeted  35 per cent advertising revenue growth in Taiwan, where it is seeking acquisitions over the next two years, Mr Lai said.

Taiwan Next Magazine launched in 2001 while Taiwan Apple Daily was set up in May 2003. Mr Lai said Next Media had  invested about NT$3.8 billion (HK$893 million) in businesses on the island so far.

'Taiwan's advertising revenue grew in the past few months, after the bad economy in the second half last year,' Mr Lai said.

'The Taiwan business will benefit as the island is expected to have direct transport, mail and trade links with the mainland after the new president is elected.

'One of the biggest advertisers will  be  the real estate sector as the island's property market will attract investors from the mainland once the three direct links are established.'

The newspaper is the island's most popular newspaper, with an average circulation of 530,000 copies, which is expected to see circulation grow 5 per cent to 8 per cent this year to an average 550,000 copies, Mr Lai said. The magazine sells about 140,000 copies per week.

Taiwan Apple Daily's free daily operation, Sharp Daily, which has been making a loss of NT$2 million per month since its launch in October last year, should break even in July, Mr Lai said.

He added that Next Media planned to launch a  magazine in Taiwan for the women's market.



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Next Media suffers from ad boycott

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