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| Digital News Update
Breaking News No longer fragmented and driven mostly by local factors, the television industries of the Asia-Pacific region are set to become increasingly valuable. This is not just attributable to rising wealth, but also to revolutionary changes in technology and regulation. To value all this properly, investors must consider the big picture.
Some of the key markets in the region, including Japan, are likely to see consumption rise faster than income during the next business cycle. This bodes well for the advertising and subscription revenue streams at the core of the free and pay-TV industries.
We expect the regional television revenue stream to experience an average 13% annual growth rate between 1998-2005. Excluding Japan, Australia and New Zealand, the emerging television markets should experience 19% annual growth during the same period. The effect of high operating leverage in the network industries means that the impact of revenue growth on earnings could be great.
The most valuable markets are not just the ones that are going to grow quickly. The fortunes of the television industry are closely linked to the economic development of a country. Markets in the most valuable stage are Taiwan, Malaysia and Korea. Players in mature markets are still valuable because of the greater likelihood of developing convergence revenue streams.
Developments in digital technology mean that television infrastructure, even free-to-air, can be used for greater effectiveness. Video can be mixed with other information. Investment in networks by TV players could be used to tap into the pre-existing and growing voice and data revenue streams.
Throughout the world, telephone, satellite, broadcast, cable and even power companies have announced convergence-related projects. Investors should, however, consider the abilities of each to support long-term growth in services and users. We believe that developed-market experience, combined with the geographic layout of Asia-Pacific income, point to the cost effectiveness and appeal of wireline cable and terrestrial television infrastructures.
Technological change will push regional governments further away from "control" mode toward "develop" mode. Viewing "national information infrastructures" as critical to long-term economic security, regulators will look to opening up their telecommunication (and television) markets as incentives for capital. This will mean greater opportunities for portfolio investment. Source: Salomon Smith Barney |
       
DAEDALUS MEDIA
Bob Oehler MMCP |
