Headwinds for media sector despite extended screen time

KUALA

LUMPUR: While most Malaysians stay home, analysts say the media sector still continues to face headwinds as consumers opt for more accessible digital mediums to traditional media.

The research team at Kenanga Investment Bank Bhd (Kenanga Research) said: “With the ongoing Coronavirus Disease 2019 (Covid-19) pandemic, personal consumption would take a hit, especially with the recent Movement Control Order enforced and extended.

“This may further hit the demand for newsprints in favour of more accessible digital mediums. With business activity looking to slow down from a so ening global economic environment, advertisers may further trim marketing expenses.

“Media platforms could also be adversely affected if midyear major sporting events are cancelled or postponedm, such as the Tokyo Olympics.”

Nevertheless, it pointed out that certain media companies have taken measures to weather these headwinds.

It explained, “Recent organisational restructuring exercises by media leaders could not have been more timely in the face of challenging market headwinds. Most of them are focused mainly on traditional

This may further hit the demand for newsprints in favour of more accessible digital mediums.

Kenanga Research

print and publishing segments which saw the largest decline in relevance.

“With digitalisation a growing means of broadening business strategies, media players are implementing focused marketing to ensure that content reaches the most relevant consumers.

“In addition, we start to see advertisers offering integrated media solutions for customers to be er achieve their marketing objectives.”

As for video providers, it noted that Astro Malaysia Holdings Bhd (Astro) looks to continue expanding its content by forging new partnerships in the future.

“However, Covid-19 may hamper any such plans in anticipation of a general slowdown of consumer spending and poorer customer acquisition results. Meanwhile, the group aims to keep costs low and cash liquid, evident by the recent full-year dividend payout which was below its 75 per cent minimum policy,” it added.

Based on Nielsen’s 2019 findings on total gross adex, total value registered at RM5.94 billion (up two per cent year-on-year).

“The growth was thanks to newly introduced digital adex contributing RM781.4 million to the yearly value. Excluding this portion, the industry was at a 12 per cent decline.

“The shi from traditional media to digital outlets could be a ributed by the more interactive and engaging nature of the la er, which could also be argued as the more efficient means for present-day marketing and advertising,” Kenanga Research said.

“Key platforms unsurprisingly contribute most of the decline, with free-to-air television (FTA TV) and newspapers losing 11 and 17 per cent y-o-y in their respective gross adex. Cinema (up 13 per cent) was the outlier, having benefited from many successful film releases in 2019, albeit being a small proportion to the industry,” it added.

All in, Kenanga Research maintained its ‘overweight’ rating on the sector.