PETALING JAYA: STAR MEDIA GROUP BHD is adopting and transforming quickly into the digital platform to cater to the ever-demanding requirements of the digital world.
Group chairman Datuk Fu Ah Kiow said the company was riding on its major strengths – the creditworthiness of The Star brand, its vast content and its ability to reach out to 15 million people across all its platforms – as it transforms.
While maintaining and sustaining the company’s traditional print revenue, the group is developing its main brands further under its transformation plan by reorganising them into three major platforms.
The Star Online, The Star and The Star Mobile will come under Media and Content (English), dimsum and 988 will be parked under Entertainment, and the third platform – Media and Content (Malay) – comprises mStar and Suria.
“We also think there’s a lot of potential in Malay content and media, where mStar and Suria will emphasise more on the social and entertainment aspects, and not so much on news. We have to quickly transform to the digital platform and to do all these, we have to invest in technology, IT infrastructure and do data analytics,” Fu told shareholders at the company’s AGM at Menara Star here yesterday.
Despite the digital onslaught that has affected print media companies in recent years, Star Media Group managed to record an 11.24% jump in operating profit before tax (PBT) of RM25.34mil for the financial year 2018 (FY18) ended Dec 31 as compared to RM22.78mil in FY17.
Revenue saw a 16% decline from RM469mil to RM392mil, but cost cutting and rationalisation efforts by the board proved to be fruitful with the increase in its PBT. Print remained the main revenue driver at 80%, while digital and radio each contributed 7%.
The uncertain business environment last year, the change in the Malaysian government and the trade war between the United States and China affected the property and retail sectors, which then affected the advertising revenue of Star Media Group as the two sectors are major advertisers.
Fu said the growth in PBT was made possible with the board undertaking cost-cutting measures in 2017 and 2018 to ensure the company was more sustainable, going forward. Shareholders also raised questions about the direction of the company and how it expects to remain profitable in the future.
The company downsized from around 1,700 employees to 1,200 via a voluntary separation scheme (VSS) and a mutual separation scheme (MSS) and an early retirement option due to the changing structure of its operations requiring fewer staff and different skillsets.
Other rationalisation efforts included closing down the printing plant in Penang in view of lower circulation and the disposal of loss-making subsidiaries. Goodwill was also impaired and reduced from more than RM100mil to RM21.9mil to make the company’s balance sheet healthier and cleaner.
It has also paid out RM100mil to settle its medium-term notes that were taken some seven years ago, which means that the company now has zero borrowings.
“These are for long-term purposes and sustainability of the company. Of course, if we had not done the MSS or VSS, the profit would immediately jump up. It would look very good, but it would not be good for the company in the long run because it would then have to bear unnecessary staff costs and we would be overstaffed,” said Fu.
He added that transforming the company was no easy task and a combined effort from all departments was vital, as the company places its focus on revenue generation without drifting from its social responsibility of being the people’s paper and protecting the people’s voice.
“It is so important to us that we now have a joint key performance indicator (KPI), meaning that part of everybody’s KPI would be measured on how the company achieved revenue, whether you are from the content department or from the technology department. The management and the board are very motivated and positive and we’re ready to take on new challenges,” he said.
On Star Media Group’s future prospects, Fu said the group was always willing to seek other investment opportunities, specifically in the digital space to further complement and enhance its existing assets. The group will also explore investment opportunities in sectors and industries that may be unrelated to its core activities, but has the potential to deliver strong returns on investment and value to shareholders.
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