Would Media Prima’s new business initiative save the company?

Share This:

Generic picture of Media Prima subsidiaries – Times are getting harder for Media Prima mainly with a dip in its viewership-readership forcing Advert networks to give it a miss!

With the Media world in tatters, and the firing squad readying its line-up of who to fire and who not to hire, some in the industry in Malaysia is still hopeful.

Take Media Prime for example. It is called Malaysia’s leading fully-integrated media Group. Why? Because it has a TV channel that is widely viewed – though viewership has definitely declined over the past few years – and it has some print arm (that are not doing well at all).

But, let’s admit it, it is still the country’s ‘leading’ and ‘fully-integrated’ media Group.

Nevertheless, in its recent report on its performances, it said it is optimistic that the business initiatives launched under the Group’s business transformation plan in 2016 will be the catalyst for future growth.

While we want to believe in that statement – we are an online media and we support all initiatives in this day and age that would ‘save’ the print and audio-visual traditional media – we think it is short of a few damn key elements.

Under the plan, the Group’s revenue contributions from digital, non-traditional advertising and commerce have doubled for the first nine months of 2017 (9MFY17 or YTD17) compared to the corresponding period of 2016.

Combined revenues from digital advertising, home shopping, e-commerce and subscription-based OTT service grew from RM50 million to RM123 million for YTD17.

As part of its new business initiatives, the group made key structural changes within the organisation. These include organisational restructuring, manpower rightsizing, reducing print manufacturing facilities while strategically investing in digital publishing capabilities through the strategic acquisition of Rev Asia in August this year.

“We have also ventured into new markets abroad, which is another important component of our transformation plan,” said Datuk Kamal Khalid, Group Managing Director.

However, amid all the enthusiasm spread to reassure the shareholders and the consumers, the dark clouds are still looming over the horizon for such traditional media companies.

These companies banish the majority of the country that voted for the opposition while it is struggling to portray the current regime as the only option for the country.

But analysts are not sure the plan will work for Media Prima.

Some are saying the 9M17 results are actually below expectations.

Take Hong Leong research. It said Media Prima charted a core loss after tax and minority interest of RM77.8m (-24.6 sen/share), below our expectation of a full-year profit of RM43.3m (consensus: +RM13.9m).

Translated into plain English it simply means the company did not perform as it projected, and that is not good news as things are bound to get nastier in the long run for media companies.

Hong Leong said Media Prima 3Q17 dived into core loss after tax and minority interest of RM48.8m from a core profit of RM9.5m in 2Q17 mainly attributed to higher advertising revenue in 2Q17 (Hari Raya in June) amid a decline in core advertising revenue from traditional platforms.

And the loss of advertising revenue from traditional platforms is of great concern to all in the media industry, to the point they business planners and media owners are pulling their hair off their skull to try fix the problem.

On top of that, Media Prima’s 9M17 turned into red, recorded a loss of RM77.8m on the back of lower revenue contributions from traditional platforms such as TV networks (-17.8%), print media (-19.4%), and radio network (-5.3%).

3Q17 losses widened to RM48.8m dragged by lower advertising revenue and newspaper sales.

Post Author: admin

Leave a Reply

Your email address will not be published. Required fields are marked *