This article first appeared in Corporate, The Edge Malaysia Weekly, on May 9 - 15, 2016.

MEDIA Prima Bhd, the country’s second largest media group by market capitalisation, will not be spending more time than necessary courting urban English-speaking viewers. That’s because efforts to get this declining group of audiences to view free-to-air (FTA) television (TV) have proved futile in the face of fast-growing online streaming services such as YouTube and Netflix.

“The truth of the matter is fewer urban English-speaking youth are watching TV — not just FTA TV but any form of traditional TV viewing,” Datuk Kamal Khalid, who assumed his position as CEO of Media Prima Television Networks (MPTN) on Jan 1 this year, tells The Edge.

“We are the most affected because more viewers are now watching their favourite TV shows and movies at coffee shops and mamak stalls that provide free WiFi [instead of watching FTA TV programmes on their TV sets],” he laments.

According to Kamal, one of the demands of urban English-speaking viewers is for the immediate screening of shows from Hollywood. However, the cost of purchasing the broadcasting rights for such shows is a major barrier for FTA broadcasters such as Media Prima.

“There is a premium in acquiring the rights to air shows from the US as soon as they are available to the foreign market.

“A lot of [production] studios have this concept called ‘windowing’. They will show [a programme] on their channel first in the US, and then sell it to the one that pays the most money, and this is more often than not a pay-TV operator or channels that go on pay TV.”

Also, “technology being what it is now”, users from all over the world can upload and download new episodes of TV shows after the initial airing for free, says Kamal.

Thus, he is of the view that it no longer makes sense to spend too much on winning urban English-speaking youth to its TV stations, although Media Prima will continue to serve this segment as a “responsible media organisation”.

For instance, it still airs relatively recent Hollywood series such as The Flash, which Kamal says garners “good ratings”, as well as older family friendly blockbusters.

“Apart from that, we don’t have that much to offer [to this group],” he adds.

MPTN operates four FTA TV stations, namely TV3, ntv7, 8TV and TV9, which command a combined 40% share of the country’s TV viewership.

The group saw its net profit jump 83.7% to RM138.72 million for the financial year ended Dec 31, 2015 (FY2015), from RM75.53 million in FY2014, which saw a one-off mutual separation scheme (MSS) cost of RM79.8 million.

Media Prima said that if the MSS cost had been excluded from the results for FY2014, net profit for FY2015 would have declined by 2% year on year.

Revenue for FY2015 fell 5.3% y-o-y to RM1.43 billion on softer advertising spending and subdued market sentiment.

Kamal says Media Prima realises that it has been too dependent on advertising dollars and hopes that a shift in focus to non-advertising segments will help boost its revenue going forward.

The group wants non-advertising segments, such as its video-streaming portal Tonton, content creation and newspaper sales, to contribute 30% to its revenue in five years. In FY2015, they only contributed 13.7% or RM1.43 billion to its revenue.

Last month, Media Prima reintroduced Tonton, where viewers can stream the four main TV channels free of charge. The revamped portal also offers a premium category, which requires payment in the form of “credits”. Credits allow the instant purchase and playback of media, which is made available for a one-month or three-month period.

Kamal expects Tonton to be profitable after three years.

As for Media Prima’s 51%-owned home shopping joint venture with South Korea-based CJ O Shopping Co Ltd, the group is also targeting for it to turn a profit in three years, he says.

CJ WOW Shop shares a similar concept with SmartShop, a home shopping network that was introduced on TV3 in the 1990s that sold Malaysian-made products to its viewers. SmartShop ceased operations in the early 2000s.

Kamal is determined to ensure the success of CJ WOW Shop. “We’ve partnered with a company that is one of the biggest, if not the biggest, [home shopping network] in its home country. It operates in places as diverse as Mexico, Turkey, China and India, and it has made it worked in these diverse markets.

“So, obviously, a lot of the systems, procedures and strategies work across the board.”

Media Prima is aiming for CJ WOW Shop, which was launched last month, to record RM100 million in sales this year. This means that it will have to make about RM11 million every month from April.

“I think it is a realistic target. It’s ambitious, definitely, but I think it is not impossible for us to achieve it. We’re on track to do it, so I’m keeping my fingers crossed,” says Kamal.

CJ WOW Shop made nearly RM6 million in the first three weeks of its launch, he reveals, with sales gaining momentum by the week.

“We went on air at 6am on April 1 and made our first sale at 6.23am. My colleagues at CJ WOW Shop told me it’s the fastest [time they have] done business anywhere in the world,” Kamal recalls.

Still, pay-TV giant Astro Malaysia Holdings Bhd has a first-mover advantage in the TV home shopping industry here.

Last year, which was the first full calendar year its GO SHOP home shopping channel came on air and online, the business recorded RM189 million in sales, according to Astro’s annual report for the financial year ended Jan 31, 2016 (FY2016).

Nevertheless, Kamal believes there is still room for another player and remains positive about the prospects of CJ WOW Shop.

Citing data from Euromonitor International, Media Prima said physical products sold on the online commerce market in Malaysia stood at RM1.58 billion last year.

“About 85% [of CJ WOW Shop’s buyers] come from TV [viewers]. Another 15% go through either the mobile app or our website. The [latter] is almost double what we recorded in the first week of business, so we are gaining more traction on the online and mobile side of those sales.

“And the fact that we have the 85% is great because that is something a non-broadcaster (online merchant) cannot offer,” he says.

Media Prima’s share price has fallen 9% over the past year, from RM1.55 on May 5 last year, to close at RM1.41 last Thursday. Its market capitalisation stood at RM1.56 billion. 

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