Advertising Exodus: The Crippling Blow to Legacy Media
Traditional media giants Astro and Media Prima are grappling with a tough 2024 as escalating costs and dwindling advertising expenditure (Adex) weigh heavily on their performance, according to Kenanga Research’s latest Sector Update report.
Astro faces a dual blow of weaker adex and a declining subscriber base, while Media Prima’s profitability remains under siege from stubbornly high costs.
Winners and Survivors: STAR and MEDIAC Shine Through
In stark contrast, STAR Media Group and MEDIAC managed to outperform, thanks to diversified revenue streams.
STAR’s resilience stems from robust unit sales and steady property development progress billings, while MEDIAC’s premium CEO-led luxury tour offerings and reduced costs in newsprint and depreciation bolstered its bottom line.
Adex Decline: The Numbers Don’t Lie
Kenanga’s Report highlights a broad-based decline in adex across Astro, Media Prima, and MEDIAC in the first nine months of 2024 (9MCY24).
Nielsen data revealed a 4% year-on-year (YoY) drop in adex for STAR’s daily newspaper publications, signalling a larger industry trend.
This decline is partly attributed to consumer boycotts of major international brands linked to the Gaza conflict, further dampening an already struggling sector.
Digital Disruption: A Shift in Consumer Behaviour
The advertising landscape is undergoing a seismic shift.
Traditional media outlets face fierce competition from digital platforms, where key opinion leaders (KOLs), short-form videos, and interactive features are driving consumer engagement.
Advertisers are flocking to digital media for its lower cost-per-impression, AI-driven personalisation, and ability to funnel traffic directly to online stores.
Brands are also leveraging direct KOL sponsorships and partnerships to create buzz and increase ROI.
Festive Hope: Year-End Boost on the Horizon
Despite these challenges, Kenanga predicts a potential uptick in 4QCY24 adex as the holiday season approaches.
With year-end festivities like Christmas and New Year’s, coupled with the school holiday break, advertisers may ramp up spending to capitalise on heightened consumer activity.
Additionally, easing consumer boycotts related to Gaza could gradually revive adex performance.
Legacy Costs: The Achilles Heel of Traditional Media
While print publishers might gain marginally from a stronger Malaysian Ringgit (MYR) against the US Dollar (USD), which reduces costs for newsprint and licensed content, the larger picture remains bleak.
Kenanga maintains its “underweight” stance on traditional media, citing entrenched legacy costs and persistent revenue headwinds.
A Shaky Future: Survival of the Fittest
The report underscores the precarious position of smaller media players struggling to achieve profitability, while even larger firms face fluctuating quarterly performance.
As the industry continues its digital transformation, only those willing to innovate and diversify will weather the storm.
