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Asian investors search for Internet content kings

HONG KONG: Investors scrambled for stocks they could crown the kings of internet content on Tuesday in the wake of the America Online and Time Warner megamerger, but found mainly pretenders to the throne.

In the end investors settled for well-known media companies - with the one exception of Australian-listed News Corp Ltd - which have mostly small-scale media and entertainment businesses.

The new enthusiasm for media and entertainment stocks followed news of the $160 billion merger between America Online and Time Warner announced on Monday.

"The AOL-Time Warner merger has started to focus people really on content," said Steven Brown, head of Hong Kong research at Kim Eng Securities.

Brown singled out companies in the territory like Television Broadcasts Ltd (TVB), SCMP Holdings Ltd, and Paramount Publishing Group Ltd, as candidates in the lookalike stakes.

"These types of quasi-content companies are reining forward. But I don't think these content companies can be in any way compared to Time Warner, Disney or the BBC," he said.

ASIA'S HISTORY OF MEDIA CONTROL A HINDRANCE

Brown said a key reason for the lack of major content providers in the region is the controls many Asian governments have sought to impose on the media in the past.

"I think because of the political and media controls that have been exercised since the Second World War, content and creativity in this time zone has been stifled," Brown said.

"I think you'd have to look to Japan for some of the better content providers in this time zone," Brown said.

But some analysts believe the lack of major Asian content providers simply reflects the difference in economic development between this region and the U.S. - a gap many expect Asia will quickly close.

"The Asian markets are behind the U.S. but they are catching up quite fast," said Robert Owen, chairman of techpacific.com in Hong Kong.

NEW CONTENT PROVIDERS SEEN ON THE WAY

"There are a great many content providers at early stages of development. It's just that they haven't surfaced yet. They are not all household names which are listed on Nasdaq and which you've heard of," he said.

"I believe in a year or two year's time some of them will be household names. And I think the content is building at a very fast pace," Owen said.

But in Asia's stock markets on Tuesday investors weren't thinking of the future, just looking for anything which would parallel either AOL or Time Warner.

ASIAN DEMAND FOCUSED ON BIG MEDIA NAMES

In Tokyo, where the market was returning after a long weekend holiday, buyers chased Fuji Television Network, up 15.5 percent, Tokyo Broadcasting System (up 15.4 percent) along with regulars like Softbank Corp and Sony Corp.

In Hong Kong, in addition to TVB, SCMP and Paramount, attention was on film producers Shaw Brothers and the Orient Press Group.

Taiwan opened strongly higher on news of the merger, but faded as the day wore on. Pacific Wire and Cable which has a cellular phone subsidiary outperformed the market, ending up T$0.40 at T$24.90. while in the over-the-counter market, newspaper publisher China Times was bid up.

In Korea it was stocks like Cheil Jedang, a sugar and flour maker with a 25 percent stake in Internet networking company Dreamline Corp. Cheil Jedang rose 3.8 percent on the day.

Cheil Communications 30000.KS, a film production company, Hansung Entertainment and Global Entertainment also gained sharply.

"Yesterday's blockbuster deal put media and entertainment stocks in the spotlight," said Shin Hee-young, an analyst at Hyundai Securities in Seoul.

In India, media and television company Zee Telefilms which has television channels which reach over 140 million people in India and another 70 million overseas, rose sharply.

In Malaysia it was another media group: the New Straits Times Press (Malaysia) Bhd which saw bidding.

For Thailand investors focused on Nation Multimedia Plc which has interests in areas such as printing and publishing, television, radio, the Internet and property.

OTHER SECTORS MAY BE NEXT

In the coming trading sessions analysts say investor focus could start to widen to include many other sectors of the economy.

"It's not just the media sector which has synergies with technology. Retailers and banks are in a sense all high tech companies," said David Rees, head of research at Commonwealth Securities in Australia.

"The synergies between media and internet is easily transferable to the banking sector or to the retail sector or to many other sectors of the economy," Rees said.-Reuters