Media Prima takes a hit from restructuring and decline in traditional media ad sales

 MediaPrimaChangingTimes

(marketingmagazine.com.my)– By: Malati Siniah

One of Malaysia’s largest integrated media group, Media Prima, has taken a hit with a recorded 10% decline in revenue in its latest financial report.

The company reported a loss of RM59.2 million this year against its earnings of RM138.7 million in 2015.

Keeping up with challenging times

While the company did register a revenue of RM1.29 billion and registered normalised Profit After Tax (PAT) of 71.5 million for the financial year ending 31 Dec 2016, additional expenses reported to be incurred by the company includes:

  • The restructuring of its printing manufacturing operations and one-off restructuring expenses of RM97.9 million for New Straits Times Press (M) Berhad
  • Media Prima implemented new business initiatives (“New Initiatives”) which incurred start-up costs of 43.4 million.
  • Incorporating the one-off Restructuring Expenses and also the start-up costs of the New Initiatives, Media Prima recorded Loss after Tax (LAT) of RM69.8 million.

Datuk Seri FD Iskandar, Group Chairman of Media Prima said, “The Group had anticipated 2016 would be another challenging year given the intense competition, market uncertainties, weaker consumer sentiments and digital disruptions all impacted advertisement spending and newspaper sales throughout the year resulting in a 10 percent decline in revenue compared to previous financial year. Given the circumstances faced, the Group had aggressively embarked on a Group-wide review of our business and executed key strategies to realise opportunities for new revenue sources while managing costs prudently,”.

Diversifying revenue streams

Strategic initiatives by the group such as its investment in digital and new business initiatives have helped cushioned the impact of declining traditional revenue.

Revenue contributions from the Group’s home shopping venture, CJ Wow shop has surpassed RM60 million having been in operations for only 9 months. This has helped the group mitigated the decline in Free-To-Air (FTA) television advertising revenue for Media Prima Television Network (MPTN).

The Group’s television platform registered an overall PAT of RM5.2 million for FY 2016. The group stated that this resulted in a 93% reduction year-on-year due to the lacklustre FTA adex whilst operating costs of new business initiatives which are still in a period of gestation contributed to lower earnings for the year.

Media Prima Radio Network (MPRN) and Big Tree Outdoor (BTO), both recorded a 1% growth in revenue year-on-year. MPRN recorded RM68.4 million in revenue for FY 2016 against RM67.7million last year, while BTO secured RM158.7 million in revenue against RM157.6 million recorded within the same corresponding period last year.

The Group’s digital media business, led by Media Prima Digital (MPD), had also recorded an increase in revenue by 20% against comparative year, chalking up RM32.5 million in revenue for FY 2016 as compared to RM27.1 million in FY 2015.

The Group’s print and content creation, led by The New Straits Times Press (M) Berhad (NSTP) and Primeworks Studios (PWS), was impacted by the challenging operating environment when they posted a lower revenue of RM415.5 million and RM115.3 million respectively for FY 2016, a decline of 23% and 4% year-on-year in FY 2015 respectively.

Outlook for 2017

On the prospects for 2017, Dato’ Sri Amrin Awaluddin shared, “The Group will continue to face a challenging period moving in 2017 due to economic uncertainties, consumer consumption fragmentation, a shift in adex to digital platforms and increasing competition in the media landscape.”

He added that the group will continue to grow and strive forward by focusing on quality content delivery and improve cost efficiencies.

Some of the group’s other plans for the New Year include:

  • Investment in its linear TV offerings whilst improving the digital content experience on its online video streaming service, tonton
  • Expanding the group’s consumer business through its home shopping network CJ WOW SHOP.
  • Primeworks Studios will continue to develop and own hit intellectual properties, as a way to grow external revenue and distribution business and venture into international markets through various co-productions and expanding animation investment.
  • Positive on the Group’s Radio Network via MPRN continuous efforts to strengthen its content quality across multiple platforms. The introduction of Radio Plus serves to offer clients with integrated solutions and innovative ideas.
  • Big Tree Outdoor to bank on growth opportunities from their expansion into rapid transit advertising concessions secured in 2016. These include the new MRT line and LRT line extensions.
  • For Print Media, despite the challenging outlook for the traditional newspaper business, the Group remains committed to preserving its print business. Its diversification into digital initiatives will pave its way to enable future growth.
 

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