Friday 29 Mar 2024
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IN his latest move to consolidate and restructure his media business, Datuk Siew Ka Wei, through his private vehicle Malay Mail Group, is acquiring themalaymailonline.com website. This is with a view to inject the expanded group into a planned listing of the media business as early as this year, say several sources familiar with the matter.

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“The shareholders of themalaymailonline.com that include siblings Leslie and Joan Lau have sold their stakes in the company. The brother-and-sister team is staying on with the website,” says a source.

“The listing plan for the media business is on track … timing-wise, it could be as early as this year or next year. It depends on the market condition, which isn’t exactly the best right now,” adds the source.

Another source says there are also discussions about Siew’s media group buying back the financial newspaper, The Malaysian Reserve. “There is nothing concrete yet … just preliminary talks,” says the source. Billionaire Tan Sri Syed Mokhtar Albukhary acquired The Malaysian Reserve from Siew and his partners in February last year.

themalaymailonline.com was started in 2013 by a team led by Leslie and Joan, previously from The Malaysian Insider. The venture was also financed by Siew and Chan Thye Seng, CEO and managing director of Pacific & Orient Bhd (P&O).

Chan’s P&O has an indirect 19.8% stake in Siew’s Ancom Bhd — the listed company that owns the Redberry Media Group, which has in-store and outdoor advertising platforms.

Redberry also secured the rights to operate and manage advertisements in a major cinema chain in the country and operates an outsourced customer contact centre as well as holds the rights for organising international and local motorsport events. For its financial period ended May 31, 2015, the media business of Ancom (fundamental: 0.55; valuation: 1.20) saw its segmental profit rise to RM11.6 million from RM2.5 million a year earlier.

Malay Mail Group, or its operating entity Malay Mail Sdn Bhd, is currently not part of Ancom. Its connection to the listed company is through Ancom’s group managing director Siew and non-executive, non-independent director Tan Sri Al Amin Abdul Majid. Both have a stake in Malay Mail through their respective 50% equity interest in Dahlia Megah Sdn Bhd, which in turn has a 46.79% stake in Malay Mail. Siew also holds a direct stake of over 20% in Malay Mail.

According to the latest publicly available accounts of Trinity Diligent Sdn Bhd — the parent company of themalaymailonline.com — the group registered a net loss of RM197,146 for the financial year ended Dec 31, 2013.

PricewaterhouseCoopers (PwC), in a study entitled Global entertainment and media outlook 2015-2019, says internet advertising will become the largest advertising segment.

“Global total internet advertising revenue is forecast to grow from US$135.42 billion in 2014 to US$239.87 billion in 2019, a CAGR (compound annual growth rate) over the period of 12.1%. As the segment captures an ever-larger portion of advertising budgets, it will exceed TV to become the largest single advertising category by 2019,” says PwC.

Valued at US$125 million, Malaysia’s internet advertising market has almost doubled in size since 2010 when total internet advertising stood at US$65 million, it adds.

“The rate of growth seen in the historic period is expected to slow down, and with a forecast CAGR of 12.7%, Malaysia will grow more slowly than the regional average. Total internet advertising revenue will reach US$227 million in 2019.”

PwC points out that display commands the largest share of the internet advertising market in Malaysia, comprising 64.1% of total internet advertising revenue last year, and that the segment is expected to grow at a CAGR of 10.4% and will continue to be the main internet advertising format over the forecast period.

“There is room for growth in the market with fewer than half of Malaysian households having fixed broadband in 2014. Projected real GDP growth of 5.0% over the forecast period will help to spur growth in both the internet access and internet advertising markets,” it states.

 

‘Digital is the way to go’

An Ancom source told The Edge as early as last year that the group is taking steps to incorporate more digital elements into the business model of its media business.

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“Digital is a big thing now in media … and the group’s current business model has taken that into account. Moving forward, the media business will incorporate more digital ventures and projects but given the business sensitivity of the discussions, we cannot reveal our plans now until the time is right. Digital is the way to go,” the source said without elaborating.

“The thing with digital is that it is a must-have for everybody but nobody has found a way to monetise it except for maybe online portals like iProperty.com.my and JobStreet.com. Websites such as these target classified sections that used to be the mainstay of media groups. Everybody says digital, digital, digital, but who really makes the money? They still need to crack that code,” says a local media analyst with a bank-backed research house.

Malay Mail Group is undertaking a digital tie-up with Astro and Celcom where the subscribers of the satellite and mobile operators will get access to Malay Mail’s e-paper for free. Astro has over four million subscribers while Celcom has about 12 million.

Malay Mail launched its e-paper at the start of last year and according to a source from the group, it is looking to attract sufficient eyeballs first. “We believe the advertising will come once we have established the eyeballs,” the source says.

According to PwC, close to half of all households in Malaysia have a broadband connection and mobile internet penetration was at 53.7% last year, but news publishers have yet to make significant business from online channels. For example, in 2014, just 1.2% of total newspaper advertising revenue was derived from digital newspaper advertising, it says.

“Many print players are venturing into the e-paper arena. Perhaps it would be easier to monetise using that route as there is no newsprint involved but they have to be able to convince the advertisers to advertise on the e-paper platforms,” says the media analyst.

Star Media Group Bhd launched its e-paper in 2012. According to the Audit Bureau of Circulation, subscription to The Star ePaper more than doubled to 85,806 copies for the period of June 2014 to December 2014, compared with 42,204 copies in the same period back in 2012.

 

This article first appeared in digitaledge Weekly, on August 10 - 16, 2015.

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