Free paper market poised for shake-up



Victor Fung interviewed by the SCMP on June 29


Observers expect consolidation after publisher Sing Tao said it had talks with Swedish owner of Metro Daily about purchasing the newspaper

Hong Kong’s free newspaper market is bracing for consolidation. An announcement by Sing Tao News last week that it might buy Metro Daily has sparked expectations for other acquisitions and the closure of some free papers.

Sing Tao said it had been in talks as part of a syndicate to acquire the Hong Kong business of Swedish free paper publisher Metro International but that negotiations ended in mid-May. The publisher said in the statement to the Hong Kong stock exchange that it was possible the syndicate would restart negotiations.

“Consolidation is now the buzzword for this market,” said Clement So York-kee, professor at the School of Journalism and Communication at the Chinese University of Hong Kong.

“The proposed Sing Tao deal reflects the situation.”

The city’s free paper market is crowded with six publications. Five are in Chinese. One is in English, The Standard, which is published by Sing Tao. They all fight for advertising dollars. Sing Tao also publishes Sing Tao Daily and the free paper Headline Daily.

So said the free newspaper market in Hong Kong can be expected to change given the saturated nature of the sector.

“The free newspaper market in Hong Kong has reached a plateau after impressive development over the last decade,” he said.

“Not all of the operators are making money, and it is natural for some of them to consider making changes, like leaving the market, focusing on certain segments of the market, or possibly co-operating with other companies.”

A Sing Tao spokeswoman declined to comment.

Victor Fung, a lecturer in journalism at Hong Kong Baptist University, said if Metro Daily was bought, other free papers, including Next Media’s Sharp Daily and HKET Holdings’ Sky Post, would be put into more difficult situations.

Headline Daily, launched in 2005, leads the sector with an average daily circulation of 880,000, exceeding its nearest rival by about 50 per cent. Launched in 2002, Metro Daily, the city’s first free paper, has a daily circulation of 400,000. It is the only paper distributed in MTR stations.

“I don’t think it will be easy to buy Metro Daily, unless Sing Tao’s offer is really high,” said Fung.

He said although the paper may not be making much profit its position as the sole free paper at MTR stations had intangible value. “If Sing Tao buys it, it can, in addition to Metro Daily, distribute Headline Daily and The Standard in the subway.”

He said Sing Tao’s inability to use the MTR network to reach commuters was a “big setback”. “The readership represents quality. They are the middle-class people with consumption power on their way to work,” he said.

If the deal is realised, the other players including AM730, Sharp Daily and Sky Post will lose their competitiveness, according to Fung. “If so, there is big chance they will be closed,” he said.

HKET, the publisher of Hong Kong Economic Times, remains confident about the operation of its free daily. The company said in its latest financial report that advertising income from paid publications decreased but that income from Sky Post offset the drop. The company said its net profit in the year to March 31 fell 19 per cent year on year to HK$62.0 million as revenue increased 3 per cent to HK$1.03 billion.

HKET said it had invested more in Sky Post, which will affect its income performance in the near term, adding that its entry into the free daily market was necessary to broaden its advertising income base.