This article first appeared in The Edge Malaysia Weekly on December 30, 2019 - January 5, 2020

ONE of the most painful industry shake-ups of the decade took place in the global news media — a continuation of the onslaught in the years since the internet took over the role that had traditionally been the domain of newspapers. With the internet and connectivity pervasive in everyday life, it was only a matter of time before the digital revolution took a toll on the media industry.

And when it did, during the 2010s, it battered the sector, leaving many traditional media companies reeling, and even putting some out of business.

In Malaysia, the media sector was not spared. In the past 10 years, the market capitalisation of listed media companies has shrunk significantly as revenue and earnings dwindled.

Revenue and profits suffered as firms began to diversify their advertisement spending, which the media industry had relied heavily on for income.

Meanwhile, businesses were no longer relying on traditional mediums for advertising, finding cheaper options via digital platforms such as Google and Facebook.

This was made possible as internet speed increased rapidly, allowing for interactive multimedia and high-quality videos, which made advertisements more attractive than before.

Meanwhile, internet services became cheaper and more accessible. Along with this, the widespread use of smartphones and mobile devices spurred the popularity of digital news websites, which offer free news over social media. It was no surprise that many consumers turned to alternative media and discarded traditional news providers.

The readership of print media plummeted, which was another reason for advertisers to shift spending elsewhere.

For local media companies, Star Media Group Bhd and Media Prima Bhd were the worst hit. In 2010, the two media giant were billion-ringgit companies, with market capitalisations of RM2.3 billion and RM1.6 billion respectively.

By the end of the teens decade, Star Media’s market capitalisation had fallen to RM343.11 million, and Media Prima’s to RM321.67 million.

The revenue of Star Media, which used to rake in more than RM1 billion a year, slid significantly as well, falling below that threshold in FY2016 to RM392 million in FY2018. It continued its downward momentum this year, plunging to RM5.45 million for the cumulative nine months ended Sept 30.

Media Prima’s print division, under News Straits Times Press (M) Bhd, posted RM671.32 million in revenue in 2010. In 2018, revenue fell to RM270.29 million and for the cumulative six months ended June 30, 2019, stood at just RM105.39 million.

Meanwhile, Berjaya Media Bhd’s market capitalisation is now close to nine times smaller at RM24.68 million than it was in 2010. The revenue for the media group that prints The Sun has halved over the years. It recorded revenue of RM47.23 million in 2010, but by 2019, that had dropped to RM25.71 million.

In October, Berjaya Media (BMedia), which fell into the Practice Note 17 category in 2017, found a white knight in sewing machine maker Singer (M) Sdn Bhd. Tan Sri Vincent Tan Chee Yioun, who controls BMedia, proposed the injection of Singer into the group as part of its regularisation plan. Singer is currently parked under the tycoon’s private vehicle, Berjaya Retail Bhd.

Media Chinese International Ltd (MCIL) is probably the only media company that has avoided a sharp decline in its market cap, which has, however, remained flattish at RM388.1 million in 2019, from RM368.68 million in 2010.

The media company, which publishes Chinese newspapers in Malaysia and other Southeast Asian countries, Hong Kong and China, saw its revenue dipping 24% to US$285.5 million in 2019 from US$376 million in 2010.

But the most heartbreaking story of the year for the industry is the delisting and shuttering of Malaysia’s oldest Malay newspaper — Utusan Melayu (M) Bhd — after it was unable to turn around following years of financial distress.

Utusan had been in the red since 2012, when it incurred a net loss of RM16.16 million, which deepened to RM184.09 million in 2018. That was when it slipped into Practice Note 17 status. A year later, it was delisted after it failed to submit a regularisation plan to the authorities.

In its last financial performance announcement before it was delisted — for 2QFY2019 — its cumulative net loss for the first half stood at RM12.09 million, or a 10.77 sen loss per share, as cumulative revenue plunged 56% to RM52.66 million from RM119.38 million a year ago.

Retained earnings of RM21.42 million on its balance sheet in FY2012 swung into accumulated losses of RM1.21 million. As at June 30, the group’s accumulated losses had ballooned to RM261.61 million. Net borrowings amounted to RM129.48 million as at June 30.

But the collapse in advertising revenue and readership after 2013 and the digital revolution are not solely to blame for the media companies’ woes.

In 2013, revenue was at a peak for them, thanks in part to the boost from the increased spending during the general election that year.

Seasoned newsmen say the straw that broke the camel’s back was the media groups’ blatant bias towards the government of the day that led to their downfall.

The following year was another significant one for the industry with the introduction of LTE, or long-term evolution — a wireless communications standard to achieve 4G speeds. Cheaper smartphones and decent wireless broadband speed led consumers to switch to alternative media.

Realising that free digital media was a threat, traditional news companies ventured online to provide free content via digital platforms. They turned to digital giants like Facebook and Google, which had superior technology and global scale, to redeem themselves.

Unfortunately, that did not turn out to be the case. Some observers describe it as a self-inflicted wound as providing news free meant the media companies were cannibalising their print copies. Reporting remained biased and going online did not help boost readership for some. Furthermore, media companies were earning little or no revenue from putting up their news free on digital platforms.

The biggest benefactors in the shift to digital are tech giants such as Google. Google’s advertising revenue has ballooned over the last decade, growing from US$28.24 billion in 2010 to a whopping US$116.32 billion in 2018.

Traditional media companies have in recent years tried to diversify by moving into events and more aspects of digitalisation. However, these efforts have yet to bear fruit as revenue remains weak and hence, unable to resolve the financial damage.

In the last few years, thousands in the media industry have lost their jobs. The most recent retrenchment was at the NSTP group, where 543 journalists were let go — a depressing end to the decade for the industry.

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