KUALA LUMPUR (Jan 8): The Malaysian print media business model is a dying breed in this digital age, with the harsh reality starting to kick in and printing houses are struggling to survive, according to Hong Leong IB Research (HLIB).
In a note today, HLIB's Rachael Hong said the local media industry is expected to remain challenging this year as traditional media continue to be affected by prolonged weak advertisement expenditure (adex), according to Hong Leong IB Research.
Adex is not anticipated to recover despite the slew of sports and events taking place this year, although there is a possibility of slight revenue growth from major sports events (such as the World Cup 2018 and Premier League 2018) and the 14th Malaysian general election.
“We opine that the sector will remain challenging in the coming year, with traditional media remaining pressured by prolonged weak adex and the industry facing increasing customer fragmentation, technological advancement and the shift to digital media,” HLIB Research’s Rachael Hong said in a note today.
In her note, Hong noted the that the plunge in adex had been reflected in the share price of most media companies, whereby in 2017, media companies lost 18.1% on average. This was, however, with the exception of Astro Malaysia Holdings Bhd, which gained 6.5% year-on-year.
“In order to reach the millennials and Gen Z, companies have to be more digitalised, as the internet penetration is now at 78.8% in Malaysia and consumers are presented with multitude of options for entertainment source with all sorts of price tags,” she said.
“With [the] growing popularity of YouTube as a video-sharing website, we believe online streaming is a direct threat to the media industry as it provides an alternative to paid content and advertising platform, with better flexibility and a more targeted advertising.”
Hong added that she foresees the media industry – which she maintaiend at ‘Underweight’ -- to undergo a “big restructuring” via privatisation or mergers and acquisitions (M&A).
Further, trimming exercises – as witnessed during Media Prima Bhd’s cost cutting initiative in 2017 – might be undertaken by other companies, especially Star Media Group Bhd and Media Chinese International Ltd, this year.