Media Prima restructures print operations to focus on digital

Media Prima is restructuring its print operations as the group looks to continue to invest in digital expansion activities. This is in line with the shift in consumers’ preference for digital content.

The group said it is looking to restructure its printing plant operations, to reduce printing capacity and optimise cost efficiencies. This is in line with the declining circulation of physical newspapers across the industry and the significant increase in readership of the electronic versions, as recorded by the New Straits Times, BH and Harian Metro since January 2016.

The company said its performance for the year remains affected by the “soft consumer sentiments” and the overall challenging operating environment. This has impacted Media Prima’s print and content creation businesses where both registered a decline in revenue and earnings for the first nine months under review.

Print revenue declined by 22% y-o-y and incurred a loss of RM125.4 million after tax, on the back of the restructuring exercise. It also recorded a lower ad expenditure of 21% decline y-o-y. There was a continued decline in newspaper sales of 26% decline y-o-y.  Excluding the one-off restructuring expenses, print recorded a loss of RM20.8 million compared to profit of RM24.2 million in 2015.

Print will continue to focus on monetising its digital initiatives such as FullAMark, e-magazines and other digital publications. Media Prima’s content creation unit also posted a revenue decline of 5% y-o-y and recording a profit of RM7.7 million after tax, due to lower sales.

Dato’ Sri Amrin Awaluddin, group managing director of Media Prima said, “The group is continuously reviewing its business operations to improve its cost structure and actively growing its digital presence as part of the group’s medium-term strategy to meet consumer demands.”

He further added that the digital initiatives undertaken earlier this year, such as the revamp of Tonton, have enabled the popular video portal to increase its revenue through subscription fees compared to previous years. Meanwhile, Media Prima Digital (MPD) is expected to be able to monetise the growing reach of its mobile applications which in less than a year, has a combined total of over 900k downloads.

“While the group is pleased with the progress made by our new initiatives, the remainder of the year is expected to remain challenging. Within the media industry, the group continues to face challenges from factors such as consumer fragmentation, technological advancements, the shift in advertisement to digital and increased competition from global media players,” he said.

The group said it will continue to support all digital initiatives within the group and further grow its mobile applications business while content creation will focus to grow external revenue through advertiser content and tapping into international markets through original content programming for video on demand services.

Media Prima Group said other traditional mediums, such as out of home, is expected to remain positive. This is with the help of its roll-out of digital assets and investment into recently secured concessions such as the Light Rapid Transport’s Line Extension and Mass Rapid Transport’s Exterior Outdoor Advertising for Package B.

Big Tree Outdoor, the group’s OOH advertising company and Media Prima Radio Network, registered revenue of RM115.9 million and RM49.2 million respectively against RM112.0 million and RM47.4 million year-on-year. OOH and MPRN also recorded an encouraging growth y-o-y of 3% and 18% of profit after tax respectively.

Meanwhile, radio will continue to offer its integrated radio solutions and further capitalise on the increased listenership of MPRN’s radio stations as reported by the recent GFK Radio Audience Measurement Survey.

Datuk Seri FD Iskandar, group chairman of Media Prima said, “Even under the prevailing soft market conditions, the group was able to record modest results through our integrated media businesses. Our Out-of-Home and Radio media platforms recorded commendable revenue growth during the period. This clearly reflects the group’s ability to remain resilient while weathering the uncertainties in the market with sound business strategies and smart industry collaborations.”

Despite holding a lion’s share, television will continue to face soft ADEX while its new initiatives will be able to contribute to its revenue moving forward. Media Prima Television Network recorded a marginal increase in revenue despite the lacklustre ADEX across the industry, registering a total of RM466.8 million in revenue against the RM463.1 million recorded within the same corresponding period of last year. MPTN’s CJ Wow Shop, had played a significant part in offsetting MPTN’s lower advertising revenue, contributing close to RM40.0 million in revenue in a period of six months since its launch in April 2016.

Over the last year, Media Prima had made significant investments in several new initiatives in early 2016. The new initiatives include the launch of CJ Wow Shop (home shopping), revamp of tonton (Over the Top (OTT) video streaming portal) and the launch of Kool FM. The group had also earlier this year launched several digital initiatives such as the interactive learning portal FullAMark, e-magazines as well as popular mobile applications capitalising on Media Prima’s Intellectual Properties.