CONTRARY to popular belief, television (TV) ads have not been badly impacted by digital media. It was pay-TV that took the ad dollars from free-to-air players.
CGS-CIMB Research which made such observation also pointed out an intriguing fact: Although the internet can provide a multimedia and multi-sensory experience, TV has a far wider reach at the end of the day.
Doubtlessly, the annual revenues of Media Prima Bhd’s TV arm tumbled by double digits year-on-year (yoy) between FY2014 and FY2019.
“Many were expecting the country’s media sector to ride off into the sunset as Nielsen Malaysia’s data showed traditional media’s advertising expenditure (adex) prior to discounting factor falling at a 2014-2019 CAGR (compound annual growth rate) of 9.8%,” noted analysts Kamarul Anwar and Mohd Shanaz Noor Azam in a media sector review.
“However, Nielsen does not track pay-TV’s advertising sales.”
According to CGS-CIMB Research, if Media Prima Television Networks’ (MPTN) and Astro’s TV adex (net of discounting factor) were to be combined, Malaysia’s overall linear TV broadcast ad revenue inched down by CAGR of only 4.7% between 2014 and 2019.
In the same period, Astro’s TV ad revenue crept up by 2.4% CAGR and bolstered its market share from 33.8% in 2014 to 48.4% in 2019.
On the same note, the research house further revealed that Nielsen’s data showed MPTN’s ad revenue has started to rise again in January 2020.
Although the movement control order (MCO) that started in March 2020 snapped MPTN’s yoy ad revenue growth streak, the yoy recovery resumed in August 2020. In 1H 2021, MPTN’s adex (ex-discounting factor) jumped 54% yoy to RM1.2 bil.
“High-speed broadband penetration rate in Malaysia came to only 34.5% as of 1H 2020 while nearly all households have a TV set,” observed CGS-CIMB Research.
“Besides, we believe blue-chip advertisers are not exactly fond of ad blocks and skip-ad features. And linear TV is still the go-to medium for live broadcasts which engender a “must-see” feeling that glues viewers to the screen.”
In this regard, MPTN even took the live broadcast concept to a new level by creating programmes specifically for advertisers – most notably e-commerce players Shopee and Lazada – to broadcast live sale events.
All-in-all, CGS-CIMB reiterated its “overweight” call on the media sector with Astro and Media Prima – the dominant players in Malaysia’s pay-TV and free-to-air (FTA) broadcasting space – as its top picks.
“Since they are also the two biggest producers of local content, they have the ‘adhesive’ so to speak to keep audiences glued to their respective TV channels,” opined the research house.
“Media Prima has the turnaround narrative to fuel its share price ascent while Astro is a total-return stock that offers high potential upside and unrivalled CY2021-2022F yields of 8.3-10%.”
The downside risk is Malaysia’s worsening socio-economic situation spooking advertisers to spend further, added CGS-CIMB Research.
At 9.45am, Media Prima was unchanged at 49 sen with 19,300 shares traded (market cap: RM544 mil) while Astro was up 1 sen or 0.94% to RM1.07 with 219,800 shares traded (market cap: RM5.58 bil). – July 30, 2021
