‘RAH PURCHASE POSITIVE FOR MEDIA PRIMA’
Acquisition will reduce dependence on traditional assets, boost digital reach
RAM Rating Services Bhd expects Media Prima Bhd’s plan to acquire full ownership of Rev Asia Holdings Sdn Bhd (RAH) for RM105 million to have no immediate rating impact.
Media Prima carries corporate credit ratings of “AA1/Negative/P1” and so does its RM500 million commercial paper/medium-term note programme.
RAM Rating head of consumer and industrial ratings Kevin Lim said in a statement yesterday the corporate exercise was recognised as a positive effort to diversify Media Prima, given the decline in traditional advertising expenditure and growing popularity of digital platforms.
But he said the earnings accretion was not expected to sufficiently mitigate declining earnings from traditional media platform.
“While the acquisition is expected to provide an avenue for Media Prima to reduce dependence on traditional media assets and/or strengthen its media outreach, earnings contributions from the new unit over the near-term is not anticipated to be sufficient to make up for the steady decline in earnings from its traditional media platforms,” he said.
Lim said the exercise, expected to be completed by the third quarter, would enable the company to capitalise on RAH’s strengths and expand its digital reach to become the largest Malaysian digital platform in terms of number of unique visitors.
“The younger audience of these sites would provide Media Prima access to the urban, techsavvy segment of the population, complementing its current more mature market.
“We noted that these digital assets would enhance the media conglomerate’s existing business profile, allowing it to cross sell its products/ services across a wider range of platforms,” he said.
Lim said the negative outlook on Media Prima’s ratings reflected the agency’s concerns over Media Prima’s reduced print circulation and uncertainty surrounding the rollout of digital terrestrial TV and increasing threat from digital media. Bernama
Media Prima Bhd’s plan to acquire full ownership of Rev Asia Holdings Sdn Bhd for RM105 million will have no immediate rating impact, says RAM Rating.
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