Media Prima profits up thanks to asset disposal and digital focus

Media Prima posts first half profit of RM8.7 million

Media Prima Bhd announced that its improved financial performance for the six months ended June 30 2018 was due to the on going business transformation initiatives to become Malaysia’s leading digital-first content and commerce company.

The Group recorded a profit after tax of RM8.7 million for 1HFY18, sharply reversing a loss after tax  of RM179.7 million in the comparative period.

The turnaround was achieved on the back of a 3.7% increase in 1HFY18 revenue to RM623.0 million from RM601.0 million in 1HFY17, attributed to higher contributions from the Group’s digital and commerce segments.

The key catalysts include investing in more digital content, growing commerce revenue through integrated media and maximising the value of its existing assets.

Digital revenue increased to RM44.8 million for 1HFY18 against RM14.9 million in 1HFY17, driven by higher digital advertising revenue across all platforms.

Media Prima currently ranks third in the country in terms of digital reach and aims to increase digital revenue contribution to 8% by year-end, compared to the Group’s 3% target for 2017.

Commerce revenue from Media Prima’s home shopping business surged by 60.8% to RM96.0 million from RM59.7 million in 1HFY17. This segment continues to gain traction with a customer base of 941,000 shoppers in 1HFY18 from 771,300 in the first three months this year.

The Group recently partnered with Telekom Malaysia to launch a dedicated 24-hour home shopping channel on TM’s television and video streaming platform unifi TV. This will enable Media Prima to reach more than one million unifi subscribers and generate more sales around the clock.

The period under review also saw the New Straits Times Press (Malaysia) Berhad dispose its 21.36% interest in Malaysian Newsprint Industries Sdn Bhd for a cash consideration of RM45.4 million as it continues to focus on digital content delivery. The move enabled the Group to recoup part of its investment in MNI which had been fully written down last year.

Media Prima continued to embark on strategic initiatives to generate commerce and digital revenue across the Group. Media Prima Radio Networks ventured into building consumer revenue by launching its first e-commerce site, SuperDeals, in June this year.

In its first month since going live, SuperDeals secured over 100 deals with over 40 merchants. MPRN hopes to replicate the success of CJ WOW SHOP by combining the popularity of radio and e-commerce for consumers.

In digital, NSTP’s new lifestyle portal for women, Hijab & Heels, reached over 560,000 unique visitors since its launch in June 2018 while its education portal, FullAMark, grew its unique paid subscribers to over 5,500 users.

NSTP’s digital publications, namely myMetro, BH Online and New Straits Times, remain the primary source for news among consumers with an average monthly unique visitors of 8.6 million, 6.7 million and 4.1 million respectively.

The Group expanded its gaming capabilities through Media Prima Labs’ mobile game, Mak Cun’s Adventure, based on the popular TV3 series Mak Cun, which recorded over 300,000 downloads to date since launching in May this year. Media Prima Labs – which recorded over 6.8 million downloads of its mobile applications to date – will monetise more Group intellectual properties on digital platforms.

Subsequent to the period under review, the Group announced its collaboration with video hosting and streaming platform, YouTube, to reach more viewers and access greater monetisation opportunities by consolidating all Media Prima online video content through YouTube’s video service. This move would allow the Group to generate revenue through programmatic advertising, one of the fastest growing digital revenue segments.

The Group’s digital revenue has grown at a double-digit rate over the last year and we are confident that the various initiatives we have taken over these six months will strengthen our position, said Media Prima group managing director, Datuk Kamal Khalid.

In view of maximising the value of its existing assets, the Group also announced today that it entered into a sale and leaseback exercise of its properties for a total cash consideration of RM280.0 million, transforming the company into an asset-light Group, better positioned for new revenue opportunities and expansion in the digital and commerce segments.

The sale and purchase agreements with PNB Development Sdn Bhd (“PNBD”) involve properties owned by NSTP which include Balai Berita Shah Alam and Balai Berita Bangsar. Upon completion of the proposed sale, the Group will realise an estimated gain of RM127.7 million. Operations would continue as usual as Media Prima entered into tenancy agreements with PNBD for Balai Berita Shah Alam and Balai Berita Bangsar.

This exercise will generate total savings of RM10.0 million per annum, and allow the Group to preserve its cash reserves for its business transformation efforts.

The proposed sale and proposed tenancy is expected to be completed by the fourth quarter of 2018.