Dentsu: Spending on Newspaper Ads Dives 12.5% in 2008
Dentsu Inc., Japan¡Çs largest advertising agency, on Feb. 23 released its annual ad sales report for 2008. It said that owing to the global economic crisis, total ad spending in all sectors marked its first year-on-year decline in five years, declining 4.7 percent from 2007 to 6.6926 trillion yen.
Broken down by category, ad spending in the four major media sectors of newspapers, magazines, radio and television plunged 7.6 percent from 2007 to 3.2995 trillion yen, with their combined share in total ad spending falling below 50 percent for the first time ever. In particular, ad spending on newspapers plummeted 12.5 percent to 827.6 billion yen.
The report said that total ad spending in 2008 posted a year-on-year decrease, due to the global financial crisis and the domestic economic setback. It said the decline was also a result of the steep appreciation of the exchange value of the yen, which effectively negated the uplifting effect of the Beijing Olympic Games and other factors.
The margin of the year-on-year decline in total ad spending was the third largest on record, exceeded only by the 6.1 percent drop in 1993 due to the collapse of the ¡Èbubble economy¡É and the 5.9 percent decline in 2002 linked to the bursting of the IT bubble in the United States.
The fall in ad spending in the four major media sectors was the fourth straight annual decline, with the major media¡Çs combined share in total ad spending dropping 1.6 percentage points to 49.3 percent.
By sector, ad spending on newspapers fell 12.5 percent to 827.6 billion yen, television fell 4.4 percent to 1.9092 trillion yen, magazines plunged 11.1 percent to 407.8 billion yen, and radio ad spending dropped 7.3 percent to 154.9 billion yen.
Advertising in newspapers fell for a fourth consecutive year in its second double-digit decline following that of 2002. As a result, the share of ad spending in newspapers out of overall ad spending decreased by 1.1 percentage point to 12.4 percent. The total value of advertising in newspapers, at 827.6 billion yen, was close to the level recorded in 1983.
Spending on ads in newspapers surged during the Beijing Summer Olympic Games and the G8 Toyako Summit in Hokkaido, linked with an increase in corporate advertising on the theme of the environment. However, the downtrend in advertising in newspapers in recent years was aggravated by the economic slowdown, generating a substantial drop in newspaper advertising. In particular, major Tokyo-based corporate advertisers in the finance/insurance, automobile and some other industries cut back on ad spending, causing a large drop in ad revenues for national newspapers and sports dailies.
However, advertising on the Internet soared an impressive 16.3 percent to 698.3 billion yen, with its share in total ad spending climbing from 8.4 percent to 10.4 percent.
By type of advertising, search-related ads for Internet sites on personal computers rose by 22.9 percent year-on-year and aggregate mobile advertising grew a hefty 47.0 percent. A Dentsu official commented that despite the ups-and-downs of the business climate, the placement of ads on the Internet stayed solid as advertisers quickly recognized the effects of their advertising. However, the growth of advertising on the Internet slowed in the latter half of 2008 due to the economic setback, resulting in a slowdown of yearly growth for 2008 by 8.1 percentage points from 2007.
As part of its annual reports, Dentsu has since 2004 been incorporating annual advertising figures in its forecasts of aggregate ad spending for the coming year. However, in its latest report, Dentsu did not make any such forecast due to the ¡Èhigh probability¡É that the key elements of any economic forecast will be subject to changes due to a deterioration in the economic climate.
Nikkei Wins Court Battle Over Internal Rule Limiting Sales of Shares
The Supreme Court on Feb. 17 ruled in favor of Nikkei Inc. in rejecting an appeal by two former employees who objected to the company¡Çs internal rule limiting sales of its shares.
Presiding Justice Yukio Horigome of the top court's No. 3 Petty Bench said in the ruling that the company¡Çs internal rule is ¡Èreasonable and effective.¡É The decision finalized a string of victories for the Nikkei, which publishes the major business daily the Nihon Keizai Shimbun. The Nikkei had earlier won at the district court and high court.
According to the ruling, the newspaper company adopted an employee-based ownership system under the Daily Newspaper Law. The Nikkei¡Çs internal rules stipulate that Nikkei Inc. shares can be sold only to ¡Èemployees and those concerned¡É and that sales of its shares must be conducted through the Nihon Keizai Shimbun Kyoei-kai, an internal association of employees that holds the company's shares, at a face value of \100 per share.
However, Kentaro Yamamoto, a former Nikkei employee, agreed with Takahiro Wasa, another ex-employee, in September 2005, to sell 400 shares at \1,000 per share to the latter, and sought the company¡Çs approval. The Nikkei did not permit the sales due to the internal rule. The former employees and the company then went to court.
In October 2007, the Tokyo District Court refused to approve of the sale of Nikkei shares between the two former employees, citing the internal rule banning such transactions as being established around 1959 and saying the rule was widely recognized among the shareholders. In April 2008, the Tokyo High Court also found the internal rule to be ¡Èreasonable,¡É noting that the employee shareholding system could not be maintained if shares could be sold for floating prices set only at the moment of sale.
All five participating Supreme Court justices unanimously supported the ruling. Presiding Justice Horigome said that Nikkei shares are not listed on any stock exchange market and are not marketable. ¡ÈNikkei employees who hold Nikkei shares are not exposed to any risk of suffering losses, just as they cannot expect to benefit from any gains from sales of their shares in the future,¡É he said.
He also said in the ruling that the plaintiffs purchased Nikkei shares from the internal association freely and agreed to abide by the Nikkei rule. He dismissed the plaintiffs¡Ç argument that the company internally retained earnings without paying any dividends at all, despite posting sizable profits.
¡ÈNikkei¡Çs internal rule in question is neither violating the Corporate Law nor is it offensive to public order and morals. Therefore, it remains effective,¡É the justice concluded.
Pending the top court ruling, Nikkei published a statement in its Feb. 18 issue, saying that the Supreme Court recognized the rationality of the company¡Çs employee-ownership system. ¡ÈWe understand that the top court endorsed our position that the employee-shareholding system is vital to the protection of press freedom and to the maintenance of neutral and fair news reporting,¡É the statement said.