Market Insight

Media Prima gears up digital offering to boost revenue via digital advertising

May 22, 2017  | Subscribers Only

Kia Ling Teoh Kia Ling Teoh Senior Research Analyst – Advertising & Television Media, IHS Markit

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Malaysian leading media owner Media Prima has acquired Rev Asia for MYR 105 million (US$ 24 million). The acquisition will give Media Prima ownership of web portals such as OHBULAN!, SAYS, Viral Cham, Rojaklah, JUICE, 8Share, MyResipi, KongsiResipi.com and SirapLimau. 

Media Prima’s operates four FTA television channels TV3, TV9, ntv7, and 8TV, as well as three national newspapers - New Straits Times, BH and Harian Metro. Besides television network and newspapers, the company portfolio also covers radio, outdoor and digital media. It was founded in 2003 and had total revenue of MYR 1,300 million (US$ 297 million) in 2016.

Rev Asia has been primarily engaged in online social media, online advertising, content and publishing. Its operations span across Malaysia, Indonesia and the Philippines. It was incorporated in 2010 and had total revenue of MYR 24 million (US$ 5 million) in 2016. 

 

Our analysis

Media Prima acquired Rev Asia to counter rapid declines in the company’s traditional media revenues. IHS Markit expects the newly-acquired digital assets to help lift advertising revenues.

Advertising is the key source of Media Prima’s income, it contributed 83.4% to the total revenues in 2016. However, advertising revenue has been in decline since 2014 and fell faster than ever in 2016;  -12.4% in 2016 compared to - 4.5% in 2015. The increase in minor segments revenues was not able to offset the rapid fall in key segments.

TV network and newspaper accounted for 80% of the company’s revenue in 2016. TV network advertising revenue declined 2.7% in 2015 and 10.0% in 2016, whereas newspaper advertising revenue dropped 2.7% in 2015 and 22.1% in 2016. Conversely, digital media revenue, which only contributed 3% to the company’s revenue, grew 19.9% in 2016.

Media Prima witnessed an evident shift of audience from print newspapers to digital platform in 2016; print readership (based on newspaper sales) dropped 10.5%, whereas on digital platforms such as social media, news website (based on monthly average unique visitors) and mobile apps (downloads), readership rose 50.0%.

Rev Asia recorded 31.8% revenue growth in 2016, while revenues from online advertising and content nearly tripled (280%). The company’s sponsored content production increased by 50% year-on-year; growth that has been spurred by is the increased traffic that had attracted higher advertiser spending.  Malaysia is Rev Asia’s key operation market, where 94.5% of its revenue was generated in 2016. Assets in Rev Asia’s portfolio address all three languages spoken in the multiracial country and total visitors across the group’s online assets were 5.8 million in December 2016.

Currently, Media Prima’s digital media includes home shopping platform CJ Wow Shop, over-the-top video platform Tonton and mobile gaming. By integrating Rev Asia’s assets into the portfolio, we expect Media Prima’s to become one of the largest online players in the country, where traffic is currently dominated by global giants Facebook and Google.    

According to IHS Markit, TV and newspaper took up 24.6% and 36.0% of Malaysian advertising revenue respectively in 2016, whereas online stood at 16.5%. However, the changing viewing habits mean the country is ready to consume more digital content and we expect online advertising to eat into the share of traditional media to represent 37.6% of the total advertising revenue by 2021. 

Research by Market
Media & Advertising
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