Analysts: No changes to Astro forecast despite BPL rights win

  • Business
  • Saturday, 17 Nov 2012

PETALING JAYA: Changes will not be made to the forecast for Astro Holdings Bhd following the company’s winning bid for the broadcast rights to the Barclays Premier League (BPL).

Analysts who track the stock said the winning bid was expected.

“No suprise. We would have been most surprised if Astro did not to retain the rights, given the cult following for this iconic content,” OSK Research analysts Chan Jit Hoong and Kong Heng Siong told clients in a note.

They said there would be no change to the house’s forecast for now as they expected the company’s margins to remain under pressure from escalating content cost, which accounts for some 30% of revenue and over 50% of operating cost.

Hong Leong Investment Bank Bhd is not making any forecast change either as it believes that the BPL content cost is within its estimates.

On Wednesday, Astro announced that it had won the tender for broadcast rights to the BPL in Malaysia for three seasons starting season 2013/14 to 2015/2016.

Astro said that as part of its arrangement in winning the broadcast rights to the BPL, all 380 of the football matches would be telecast live.

A local business daily reported that the cost of winning the BPL was almost RM1bil for the three seasons, up from the RM800mil it paid to televise the current three seasons ending 2012/2013.

Hong Leong said by assuming that the broadcasting rights cost a maximum of RM1bil (RM333mil per year), this figure translated to around 29% and around 10% of financial year Jan 31 content cost and subscription revenue respectively.

Based on the residential subscribers of 3.166 million for the second quarter of financial year 2013, this works out to a maximum monthly average cost per user of RM8.77, which is only 10% of the current monthly average revenue per user (Arpu) of RM91.80.

“We believe that it is important for Astro to retain the BPL rights as it will allow the company to continue on with its market dominance and lead to higher Arpu growth,” it said.

OSK Research analysts said they did not rule out a potential subscription price hike (the last price hike was in 2009) to pass on some of the cost to Astro’s viewers.

For now, they would be retaining the house’s forecast pending the release of the company’s quarterly results in October.

At the close, Astro shares ended 2 sen higher to RM2.74.

Since listing on Oct 19, its shares had been steadily dropping, hitting a low of RM2.61 last week from its initial public offering price of RM3.

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