KUALA LUMPUR: Kenanga Research has maintained its Neutral call on the media sector as the prolonged weak adex sentiment as a result of the rising cost of doing business continued to dampen the adspend in CY17.
"The weak adex performance was also aligned with the country’s latest consumer sentiment index, which continued to stay below the 100-point optimism threshold at 77.1 in 3Q17," said the research firm.
The key segments, except for cinema, saw weak gross adex in CY17, led by the newspaper segment, which dropped 22%.
"All the print media incumbents’ gross adex declined in 4Q17 with Media Prima at the top of the list dipping 13.4% QoQ (to RM187m) followed by 10.4% QoQ decline (to RM133m) in Star and 1.1% decline (to RM142m) in Media Chinese."
The radio segment, however, surged 133% on-yer to RM487mil as Neilsen resumned monitoring Astro
's radio adpsend since October 2017 and included it in the previous quarters as well.
The research firm also noted that media prima's gross TV adex reversed its negative trend in the previous quarter, advancing 9.4% on-quarter in 4Q17 due to higher contribution from all channels as a result of the year-end holiday and festivals.
However, AlHijrah TV bucked the trend by recording 76% on-year growth to RM166mil, although the research firm noted the growth may be inflated due to the fewer TV viewership for the channel.
Kenanga Research said MCMC's recent proposal to regulate the digital terrestrial television (DTT) broadcasting prices for 2018-2020 based on per channel cost and bandwidth cost per mbps per year.
As the revised ciling rates were lower than the proposed rates, MYTV may slash the annual fees for a single channel to be as low as RM5mil, said Kenanga, citing press reports.
"Should the latter rate materialise, it could provide a much-needed catalyst to Media Prima as the group is currently paying c.RM30m/year for its transmission cost."
Kenanga Research expects the country's gross adex (ex-Pay TV) to climb 4.5% in CY18 as a result of the low base effect and pre-14th General Election-led adex push but the subdued adex outlook coupled with heightened cimpetition may keep the number in check.
"Changes in consumer habits, behaviour, lifestyle and technology have reduced the barrier to entry of social networks that has created a massive disruption to the traditional media."
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