Free dailies poised to spark ad wars

With an all-out turf war looming among free Chinese-language daily newspapers, analysts say traditional broadsheets such as Oriental Daily News may suffer collateral damage.

Sing Tao Holdings' Headline Daily and property agent Shih Wing-ching's am730 have announced print ad rates at a steep discount to incumbent Metro's, and analysts believe that advertising revenues at traditional paid dailies are bound to fall.

Shares in Hong Kong's largest Chinese newspaper publisher, Oriental Press Group, fell 4.4 per cent yesterday, to end at $2.175.

'The competition of free dailies will not prompt another price war in the paid daily market,' one analyst said, referring to the newsstand price war that ensued when Jimmy Lai Chi-ying launched Apple Daily in 1995.

But advertising rates could suffer as the market is flooded with new print space. Mass circulation newspapers such as Oriental Daily News and The Sun were particularly vulnerable because their readership was similar to that targeted by the free dailies, he said. Another analyst said it would be newspapers with a lower circulation, such as Sing Pao Daily News, that would suffer the most.

'An advertising price war between the free papers over the next few months would primarily hurt the revenues at second-tier paid dailies,' he said.

Although Sing Tao chairman Charles Ho Tsu-kwok said on Monday that there would be no price war among the free newspapers, most observers believe otherwise.

A source at am730 said yesterday that the paper planned to undercut Metro's rates by at least a third. Meanwhile, advertising agents said that Headline Daily's rate card, published yesterday, quoted prices up to 20 per cent lower than Metro's.

But media agents are sceptical about how effective advertising in the new free dailies will be, and many are not keen to redirect their advertising budgets in the short term.

'We need time to observe the effectiveness of new free dailies, so we are not in a hurry to sign any deals,' one media manager said.

Still, aggressive discounting by the newcomers could sway a few advertisers. 'Metro's rate is firm, and it only gives a 50 per cent discount to clients. The new entries may offer discounts up to 80 per cent,' he said.

Headline Daily circulated its inaugural print run of 400,000 copies yesterday, while am730 will launch with 200,000 copies on July 30.

Meanwhile, Metro plans to boost its print run to 387,000 copies from 327,000.