Media Prima has reported a 10% decline in revenue compared to the previous financial year. It recorded revenue of RM1.29 billion and registered normalised profit after Tax (PAT) of RM71.5 million for the financial year ending 31 December 2016.
This follows a key restructuring exercise to optimise its print manufacturing operations and unlock potential cost savings while investing in digital expansion activities and new business initiatives. According to a press statement, there were also “one-off expenses” of the restructuring exercise and start-up costs of the new business initiatives to take into account.
Declining traditional revenue
New Straits Times Press (NSTP) implemented the restructuring of its printing manufacturing operations and implemented one-off restructuring expenses of RM97.9 million referred to as “restructuring expenses”. Media Prima also implemented new business initiatives which incurred startup costs due to gestation period. Both types of cost allowed the group to record a loss after tax (LAT) amount of RM69.8 million.
The initiatives however, according to Dato’ Sri Amrin Awaluddin (pictured), group managing director of Media Prima, helped cushioned the impact of declining traditional revenue.
For example, Media Prima’s home shopping venture CJ Wow Shop surpassed RM60 million, which helped mitigate the decline in free-to-air (FTA) television advertising revenue for Media Prima Television Network (MPTN).
Its television platform registered an overall PAT of RM5.2 million for FY 2016, 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, the group said.
1% growth in radio and out-of-home platforms and hike in digital revenue
Meanwhile, Media Prima Radio Network (MPRN) and Big Tree Outdoor (BTO), the Group’s radio and outdoor platforms, 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, whereas BTO secured RM158.7 million in revenue against RM157.6 million recorded within the same corresponding period last year.
MPRN’s lower operating expenses incurred during the year improved the PAT to post a 40% increase against comparative period.
Media Prima’s digital media business led by Media Prima Digital (MPD), saw 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. This is despite PAT for the current financial year was seen as considerably lower for MPD, as deferred tax assets were recognised in FY 2015.
Media Prima’s print and content creation, led by NSTP and Primeworks Studios (PWS), was also impacted by the challenging operating environment. Both divisions posted 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.
Prospects for 2017
On prospects for 2017, Dato’ Sri Amrin Awaluddin said that 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.
“Furthermore, new business initiatives implemented by the Group in 2016 to diversify its revenue portfolio is expected to remain in gestation for 2017,” he added.
For the television network, the group will continue to hinge on the investment in its linear TV offerings while improving the digital content experience on tonton and expanding consumer business through CJ Wow Shop home shopping.
Outlook for Media Prima’s radio segment is expected to remain positive, with continuous existing efforts to strengthen content quality across multiple platforms. It will also look to enable growth in the traditional and digital radio landscape. It aims to do this through the introduction of Radio Plus, which serves to offer clients with integrated solutions and innovative ideas.
BTO will also bank on growth opportunities from the expansion into rapid transit advertising concessions secured in 2016. These include the new MRT line and LRT line extensions. In addition, digital assets located at key premium sites is expected to remain a strong contributor to the platform.
For print media, despite the challenging outlook for the traditional newspaper business, the group will look into continuous cost management and operational efficiency, especially in view of the lower advertising and newspaper sales outlook affecting the industry. It will also continue diversification into digital initiatives as a way to enable future growth.
In the area of content creation, the group said that PWS will strive to develop and own hit intellectual properties, as a way to grow external revenue and distribution business, in part to reduce its dependency on MPTN. It will also continue to explore international markets through various co-productions and expanding animation investment.
“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,” Datuk Seri FD Iskandar, group chairman of Media Prima said.
“2016 saw the Group undertake efforts to restructure our print operations as more of our consumers migrate towards our digital products such as the electronic version of our newspapers. We have also made disciplined investments in new business initiatives that will provide new revenue sources for the Group moving forward,” Dato’ Sri Amrin Awaluddin, said.