STAR Media Group chief operating officer Roy Tan speaks to StarBizWeek about the challenges facing the group in terms of advertising revenue, share performance, cash reserves and the upcoming MCA election. Below are the excerpts of the interview:
Star Media Group’s share price has dropped. How does this reflect on the changes the company is making?
I think the more pertinent thing to look at is the performance of the business. For example, the yield and profit margin of the company versus its peers. We benchmark against our peers. On a global comparison, for example, our profit margins/yields have double those of the publishers in the United States. Star Media is a profitable business and moving forward, we believe the group’s performance will be strong and this will translate into improvement in the share price.
Advertising revenue has been on the downtrend for a while. What is the company doing to arrest that?
Not only has the print segment been impacted but the traditional media pie on the whole has seen smaller ad revenue. We are changing the way we work with our partners and advertisers.
We are hiring a growth marketing team. The team, among others, will help their clients in specific industries to grow their business. We have also set up an analytics and programmatic team to improve our advertising revenue stream.
With cash reserves slowly declining, how will the management go about preserving and replenishing the cash holdings for the group?
The management is mindful of the company’s cash position and there is due rigour in where it has invested. There is a payback ie return on investment of between three and five years. We will cease any investments if it is not profitable. We want to invest in the right business to ensure the group’s business sustainability. (As at June 30, cash reserves stood at RM292mil.)
Star Media Group has been seen as a dividend stock and can it continue to pay large dividends when cashflow is weak?
We are looking at making the group continuously profitable. Dividends will be given if profits are up. We want the company to be sustainable moving forward. As far as we are profitable and there are returns on our investments, the group will continue with its dividend policy.
The MCA elections are in November and a new president will be elected. As the president will have his say on how the newspaper is run, what risk is there to the organisation if existing plans are changed?
Regardless of the outcome of the elections, the management will want the company to be successful, profitable and sustainable.
Generally, a new MCA leadership will result in business policies and direction change. Do you think this will happen?
I don’t think it will. Our shareholders know what we are doing. Our transformation plan, for example, is board-driven and not management-driven. So, the business direction on the whole will remain.