Friday 29 Mar 2024
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KUALA LUMPUR (Oct 8): In a day when media players are lamenting about declining advertising spending, and an age when traditional media are continuously facing disruptions, one medium continues to stand resilient.

Radio celebrated its 70th year in Malaysia this year. And it seems unfazed by disruption from new technology and new media, like music services Spotify or free Internet radio stations, if one goes by its rising earnings.

Radio advertising expenditure hit RM478 million last year, marking a growth of 265% over the past 10 years, wrote The Edge Malaysia's associate editor Joyce Goh in the weekly's latest cover story for the week of Oct 10-Oct 16, 'Radio still making waves'.

The advertising money that goes into radio accounts for 3% of the total advertising pie in Malaysia — small, but with plenty of potential for growth.

The reason is simply because radio has maintained its unique strength as a highly efficient media platform that offers advertisers an avenue to react quickly to market opportunities, according to media planners.

On the part of radio players, radio can be a lucrative business if managed well, with Ebitda margins ranging from 40%-60%, the weekly wrote.

For example, Astro Malaysia Holdings Bhd's radio Ebitda margins expanded to 57% year on year for its FY2016 ended Jan 31, compared with 54% previously.

Media Prima Bhd's Ebitda held steady at 40% for FY2015 ended Dec 31, while margins for Business FM or BFM were also at 40%.

And contribution to earnings from the radio segment to Astro and Media Prima are expanding, with radio being one of only three businesses in Media Prima that saw bottom line growth in the first half of its FY2016.

Astro chief operating officer Henry Tan told the weekly that the radio business has contributed well to the group and believes it will continue to do so.

“Radio will remain relevant and if the economy continues to be soft, I think it will probably be the biggest winner. When things are soft, and people are a bit more cautious about spending, radio is perfect, with high reach, low cost and speedy execution,” he said.

“Not everything that is new works, and not everything that is conventional is less appealing. In the last three years, year on year, we have been growing in radio listener and radex (radio advertising) trend. We think radio will continue to do well, in Malaysia in particular. This is fuelled by more cars on the road, a young population and traffic jams … radio has a bright future here,” he added.

The group's confidence in radio is evident as it is planning to buy 2 radio stations from Star Media Group recently, even with Astro already having 18 stations.

“We don’t deny that you have to reinvent and do things to be relevant to your audience, but it also doesn’t mean that everything in digital works. The real issue to look at is the content and to make sure it is relevant and desirable,” he said.

Business station BFM, meanwhile, which is in its 8th year of operation now, is also a profitable business.

“We turned profitable after three years into full operation. Our Ebitda margin has been about 40% historically. Given that we’re a single radio station firm, we do not have the benefit of spreading the cost of share-able resources (for example, sales, news and production talent) across more than one radio station, otherwise our Ebitda margins would be higher,” its CEO Malek Ali shared.

To find out what makes listeners keep tuning in, why vernacular is really the pot of gold in the radio business, and to check out the adspend figures yourself, pick up a copy of The Edge Malaysia today from news stands near you.

P/S: Don't forget — The Edge Malaysia can also be downloaded from Apple's AppStore and Androids' Google Play.

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P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.

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