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To: DiViT who wrote (26525)	12/11/1997 4:29:00 PM
From: John Rieman	Respond to of 50808

Why pay for TV when you can buy a pirated movie for $1????????? FOCUS-Asian pay-TV market to be a long, hard road 11:23 a.m. Dec 10, 1997 Eastern By Jennifer Genevieve HONG KONG, Dec 10 (Reuters) - Cable and satellite companies offering business news to cartoons have jumped into Asia's fledgling market on hopes of huge growth, but as two rivals admitted this week, the road to success is long and hard. General Electric Co's NBC Inc unit and Dow Jones & Co Inc announced a global alliance on Tuesday that includes a merger of their CNBC Asia and Asia Business News into a new service. Like other cable companies the two, who were keen competitors, had been losing money. ''There was not enough revenue to support two players offering a very similar product,'' said Cassindy Chao, an analyst at Goldman Sachs. ''I think a lot of this consolidation is inevitable in the near term.'' Breakeven points have been drifting further as over-optimistic players grapple with high start-up and programming costs while fighting for advertising revenues. Hong Kong's sole pay-TV provider Wharf Cable Ltd, a unit of Wharf (Holdings) Ltd, has said it would miss its target of operating breakeven this year, deferring it to 1998. ''Cable and satellite is still a very much fledgling business in Asia compared to the U.S. market and Europe and they should have been looking at it from that point of view,'' Steven Thompson, chief analyst at Nikko Research Centre (HK), said of Asia's cable and satellite players. ''There is an acceptance phase that is really a big unknown. Look at ATMs (automated teller machines) and how long it took people to come to terms with that.'' A study by ACNielsen.SRG showed that without the distribution and history to challenge dominant terrestrial channels, cable and satellite players in Asia have been unsuccessful in stealing the advertising dollar. Only about US$295 million in advertising revenues were captured by most major satellite broadcasters in 1996, said the firm that offers market research services in over 90 countries. Analysts said that was only one percent of total television advertising revenues. ''They are all competing for a limited pot of advertising revenue and there is a lot of competition out there,'' said Alex Abplanalp, regional director at media specialist Zenith Media. ''There is probably room for one or two key players at most in each of the key segments.'' Last year the sports sector, one of the most lucrative areas, saw Walt Disney Co's sports cable channel ESPN and News Corp Ltd's satellite broadcaster STAR TV joining the resources of STAR Sports and ESPN Asia to form an Asian sports programming venture. Analysts said with the market still underdeveloped, the timing is just right for players to make a grab for share. But Asia's economic crisis is likely to trip up a few players. ''Given the recent currency and economic crisis, the likelihood of profitable business may be delayed,'' said Merrill Lynch analyst Cara Eio. Chao of Goldman Sachs said it was time for operators to realistically reassess the costs they were willing to incur and rationalise their business. ''They need to be ready for the long haul. Investment returns are going to be dragged out because whether it is with advertising revenue or with subscriber payments, it will all slow down,'' Chao said. ''But as soon as they start breaking even the profits are very nice.'' Longer term, the growth potential is still huge with no other region seeing such a fast pace of population growth. While economic growth in the region is due to slow, analysts said it will recover over the next couple of years. ''Clearly there are huge populations, huge middle class populations, wealthy populations within the region -- basically an advertiser's dream,'' Thompson said. -- Hong Kong Newsroom (852) 2843 6345; Fax (852) 2845 0636 -- Email: hongkong.newsroom+reuters.com ^REUTERS@ Copyright 1997 Reuters Limited. All rights reserved. Republication and redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.