HONG KONG -- The publisher of the pro-democracy Apple Daily newspaper in Hong Kong and Taiwan, plagued by worsening business and political strains, reported a net loss for a fifth straight year on Monday night.
Next Digital, the Hong Kong-listed media group led by prominent pro-democracy advocate Jimmy Lai Chee-ying, posted a loss of 415.2 million Hong Kong dollars ($53.6 million) for the financial year ended in March, or HK$77 million worse than the prior year. Revenue dropped 11% to HK$1.15 billion.
Financial woes for media companies in Hong Kong are not unique to Next Digital. But the anti-Beijing publisher -- arguably the loudest voice for democracy and civil liberties in the territory -- likely faces the most stressful conditions among its local peers.
Royston Chow Tat-kuen, Next Digital's executive director, attributed the slide mainly "to a steep decline in both print and digital advertising revenues." In the earnings statement, he noted the "perfect storm" of U.S.-China trade tensions, social unrest in Hong Kong and the coronavirus pandemic, "all of which led advertisers to delay promotional projects and cancel campaigns."
Revenue from newspaper ads fell by one-third to HK$163 million. The company blamed a low-growth environment on the Taiwan side, which now accounts for less than 30% of total revenue.
But the drop in its core Hong Kong market resulted partly from "local social unrest combined with Apple Daily's political stance," Chow said.
More businesses are distancing themselves from advertising in Apple Daily to avoid being seen by Beijing as supporting the media outlet's pro-democratic stance.
"In previous advertising blockades, we still had some slight survival space," Lai, the founding chairman, wrote in the introduction to a 25th anniversary special edition of the newspaper that was published Saturday.
But "since Xi Jinping's rise to power in 2012, things went from bad to worse," said Lai, referring to the Chinese president and alleging that some ad clients have been harassed or threatened.
Beijing's anticipated national security law covering Hong Kong will push "media that dares to speak out to an even more critical situation," he warned.
Lai himself was arrested this month, accused of "unlawfully inciting others" to take part in Hong Kong's annual candlelight vigil commemorating the deadly 1989 crackdown on pro-democracy activists in Beijing's Tiananmen Square. This year's vigil was banned for the first time in three decades, as local authorities cited "health concerns."
Lai and more than a dozen other democracy activists also were charged in April for their involvement in unauthorized protests last year.
Amid rising political pressure, the company's strategic pivot to start a paid subscription service for its digital content has drawn a positive response from readers. With most news content circulated for free, especially in Chinese-language cyberspace, Next Digital's HK$277 million in online subscription revenue since the program's full launch in September was seen as "promising" by the company.
"For Apple Daily, subscription is the only way of survival, and not through advertisements," said Clement Y.K. So, professor of journalism at the Chinese University of Hong Kong.
"People are more willing to pay for news and good information," he added. "They (have) started to realize that for good things they have to pay. It is not free, and this change of attitude is good."
The Hong Kong publisher launched an English language online news service earlier this month. Lai said in his Saturday article that this reflected his worries about the local English-language media landscape, which is dominated by the South China Morning Post, now owned by China's Alibaba Group Holding.
While Lai acknowledged he had "some reservations in the past" on expanding into English publishing, he noted "there are demands from foreign readers who care about and support Hong Kong" for accessible news on the city that they could subscribe to.
Though subscription payments are far from enough to cover the media company's expenses, So considers the situation "much better than two to three years ago," as the online subscription model has started to accrue income.
Many of Next Digital's peers are struggling, too. Oriental Press Group, publisher of Oriental Daily News, the highest circulation paid newspaper in Hong Kong, said Friday that it had recorded a net loss of HK$10.98 million for the year ended in March, slipping from a net profit of HK$81.38 million a year before.
Oriental mainly faulted "the decline in the revenue from printed media," along with a drop in the value of investment properties in Hong Kong and Australia and an exchange loss on Australian dollars.
Revenue from newspaper publishing and ad sales dropped 10% to HK$659.7 million. The company's digital media business was "unsatisfactory," Chairman Ching-fat Ma said in a statement, citing declines in revenue from news content licensing to live sports broadcasts, as well as mobile app advertising.
Hong Kong Economic Times Holdings said Monday night that its revenue decreased 12% to HK$1.13 billion for the year ended in March while net profit dipped 85% to HK$10.57 million. Advertising revenue for the business-focused daily publisher dropped 17% to HK$592.7 million.
But So, the professor at Chinese University, said "the survival of Apple Daily is the big test" for Hong Kong's press freedom, which has deteriorated in recent years.
"The existence of certain media will serve as an indicator," he said.