CHAPTER 4

DATA ANALYSIS AND RESULTS

4.1 BACKGROUND OF MPB

Media Prima (Malaysia) Berhad (MPB) is an integrated investment company in

Malaysia that excels in the local media industry. The corporation has interests in print

media, broadcast media, and other media related businesses such as media-content

production and distribution, outdoor advertising and event management.

MPB was established on 23 September 2003 and has been a public listed company on

the Main Board of Bursa Malaysia (the Malaysian Stock Exchange) since 22 October

2003. MPB became the holding company to the New Straits Times Press (NSTP) and

Sistem Television Malaysia Berhad (STMB) or TV3 (About Us, MPB homepage

2007).

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 4.2 OWNERSHIP AND CAPITAL FINANCING OF MPB

Ownership of MPB is basically by equity share interests spread over majority and

minority shareholders. Parties that have equity stakes in MPB include organisations

and individuals holding interests in the form of Ordinary Shares, Warrants2, and

Irredeemable Convertible Unsecured Loan Stocks3 (ICULS).

In ordinary shares, the most prominent investor is the Employees Provident Board

Malaysia with 19.5% interest. The next highest investor is Gabungan Kesturi

Sendirian Berhad and Amanah Raya Berhad at 14.1% followed by Harris Associates

L.P., and UBS AG each with 8.4% and 6.1% stake respectively (Table 4.1).

Table 4.1: Three Substantial Holders of MPB Ordinary Shares (as of September
2007)

Investors Share Interest

Employees Provident Fund Board 19.5%

Kuala Lumpur City Nominees (Tempatan) Sdn Bhd KLCS

Asset Management Sdn Bhd for Gabungan Kesturi Sdn Bhd 14.1%
Harris Associates L.P. 8.4%
UBS AG 6.1%

Source: Adapted from Investor Centre, MPB (2007).

_________________________________________
2
A type of bond held with the condition of convertibility without ratio upon conversion to ordinary
shares. Each warrant entitles the holder to subscribe for one (1) new ordinary share of RM1.00 each in
MPB at an exercise price of RM1.10 each.
3
A type of bond held with the condition of convertibility to ordinary shares upon maturity at an agreed
upon conversion ratio. Three (3) ICULS are convertible into two (2) new ordinary shares of RM1.00
each in MPB.

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 Apart from ordinary shares, MPB is supported by other forms of capital shares that

include Warrants, 23.6 million units @ RM1.10, and (ICULS), 13.3 million units (3

for 2) (MPB Invest Centre, 2007).

Table 4.2 shows three substantial shareholders of MPB through warrants. The three

most prominent investors are Gabungan Kesturi Sendirian Berhad with 50.76%

interest, Arisaig Asean Fund Limited with 8.46%, and Toh Yew Keong with 5.3%.

Together, the three make up a collective total of 64.58% leaving the remaining

35.42% to minority shareholders.

Table 4.2: Substantial Shareholders of MPB by Warrants.

Investors Share Interest

Alliancegroup Nominees (Tempatan) Sdn. Bhd.
(Alliance Capital Asset Management Sdn Bhd for Gabungan
Kesturi Sdn Bhd.) 50.76%
HSBC Nominees (Asing) Sdn Bhd.
(HSBC- FS for Arisaig Asean Fund Ltd.) 8.46%
Toh Yew Keong 5.36%

Source: Adapted from Analysis of Shareholdings, MPB Annual Report 2006.

Three substantial shareholders of MPB ICULs are Malaysian Resources

Corporation Berhad with a stake of 14.286%, Noor Hizam Mohd Nurdin with

12.66%, and OSK-OUB Kidsave Trust with 11.10% (Table 4.3).

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 Table 4.3: Three Substantial Shareholders of MPB by ICULs.

Investors Share Interest

Cimsec Nominees (Tempatan) Sdn. Bhd.
(CIMB for Malaysian Resources Corporation Bhd.) 14.286%
RHB Capital Nominees (Tempatan) Sdn. Bhd.
(Pledged Securities Account for Noor Hizam Mohd Nurdin). 12.66%
HSBC Nominees (Tempatan) Sdn. Bhd.
(HSBC (M) Trustee Bhd for OSK-OUB Kidsave Trust). 11.10%

Source: Adapted from Analysis of Shareholdings, MPB Annual Report 2006.

Borrowing is a source of capital for MPB to support its operations. The total amount

of funds outstanding as at 31 December 2006 amounted to RM352.8 million (Table

4.4).

Table 4.4: Borrowing details of MPB (including ICULS).

Forms of Borrowings RM’000

Commercial papers/ Medium term notes 70,000
Term loan 123,745
ICULS 13,260
Redeemable unsecured loan stocks (“RULS”) 62,044
Exchangeable bonds (“EB”) 83,762
Total borrowings as at 31 December 2006 352,811

Source: Adapted from FAQs, InvestorCentre, MPB (2007).

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 4.3 MPB MEDIA ASSETS

MPB is parent to a group of companies that engage both directly and indirectly in

businesses related to mass media communications. At the time of research, MPB has

twelve major subsidiaries that allow MPB to have control over four private free-to-air

(FTA) terrestrial television networks, two radio networks, a major newspaper

publishing company, three outdoor-advertising companies, a media-content

production and distribution company, and an events-management company as

illustrated in Figure 4.1.

(TV3)
Sistem Televisyen
Malaysia Berhad.

(ntv7)
Natseven TV
Sdn.Bhd.

(8TV)
Metropolitan TV (Fly.Fm Radio)
Sdn. Bhd. MaxAirplay
Sdn.Bhd.

(NSTP) (TV9) (Hot.fm Radio)

New Straits CH-9 Media Sdn. Syncrosound
Times Press Bhd. Studio Sdn.Bhd.

Print Media TV Networks Radio

Networks

MEDIA PRIMA

Content Creation Outdoor Ads Events

Management

Grand Brilliance Big Tree Outdoor

Sdn. Bhd. Sdn. Bhd. Tiga Events
Sdn. Bhd.
The Right Channel
Sdn. Bhd.

UPD Sdn. Bhd.

Figure 4.1: MPB Media Assets by Platforms.

Source: Adapted from Fact Sheet, Investor Centre, MPB (2007).

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 MPB has the right of ownership over its subsidiaries by virtue of majority share

interests. MPB holds 100% majority interest in STMB, Natseven, Metropolitan TV,

and Ch-9 Media. It also holds 100% majority interests in the three outdoor advertising

firms, The Right Channel, Big Tree Outdoor, and UPD and 100% stake in Grand

Brilliance, Tiga Events, and Syncrosound. At the time of research, MPB holds

majority interests of 43% in NSTP and 75% in MaxAirplay (Figure 4.2).

100% 100% 100% 100%

STMB Natseven Metropolitan Ch-9 Media

TV

MaxAirplay
75%
43%

100% Syncrosound
100%

100%

100% 100% 100%

© tahar, 2007

Figure 4.2: MPB in Relation to Its Subsidiaries.

Source: Adapted from Fact Sheet, MPB (2007).

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 Each subsidiary operates independently as an entity with its own management. As a

holding company, MPB oversees the provision of procurement services for its

subsidiaries as well as monitoring their business performances.

4.4 MPB CORPORATE EXPANSION

Upon its inception in 2003, MPB started off with TV3 and NSTP under its wings. Its

growth has been very rapid for by the end of 2006 MPB has an agglomeration of four

FTA television stations, two radio stations, a print media company, and a number of

companies engaged in media related businesses churning a gross revenue of RM135.1

million (Investor’s Briefing Q1, MPB, 2007).

Starting off with TV3 and NSTP as its progenitors in 2003, MPB proceeded to

acquire companies that are licensed to operate media platforms that involved two

other television channels namely, ntv7 and 8TV, each with 100% majority interest.

With the exception of Fly.fm which MPB maintains 75% interest and NSTP with 43%

interest, MPB has 100% stake in all companies that make up its media platforms

inclusive of its media support subsidiaries namely, The Right Channel, Big Tree

Outdoor, and UPD as well as the media-content creation company, Grand Brilliance,

and the event management company, Tiga Events.

The year 2005 witnessed MPB turning its attention to radio networks and acquired

two radio networks namely Fly FM and Hot FM. Perintis Layar Sdn Bhd, the holding

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 company of Max Airplay Sdn Bhd (“Max”) was acquired with on 29 April 2005,

allowing MPB to have a 75% majority stake in the network. This allows MPB to take

over the right to manage, operate and maintain a radio station by Malaysia Airports

(Sepang) Sdn Bhd., which was originally awarded to MaxAirplay.

In the area of advertising, MPB concentrates on outdoor advertising and had acquired

Big Tree Outdoor Sendirian Berhad (BTO) and UPD Sendirian Berhad (UPD) in

2006, both with 100% majority interest, adding to its existing outdoor advertising set

up, The Right Channel Sendirian Berhad TRC) which was earlier acquired as a result

of internal restructuring.

4.5 PRINCIPAL BUSINESSES OF MPB

MPB actively participates in the media industry through its subsidiary companies that

operate television and radio broadcasting, publication of newspapers, apart from

operating businesses in media related products particularly advertising, events

management, and sales of programme rights and videos.

MPB television stations, TV3, ntv7, 8TV, and TV9 are operated by Sistem Television

Malaysia Berhad (STMB), Natseven TVB Sendirian Berhad, Metropolitan TV

Sendirian Berhad, and Ch-9 Media Sendirian Berhad respectively while Max Airplay

Sendirian Berhad manages and operates Fly.fm and Synchrosound Studio Sendirian

Berhad manages and operates Hot.fm. In the area of print media, NSTP is MPB’s sole

publishing outfit that deals with newspapers, books and magazines.

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 Other subsidiary companies of MPB run media-related businesses. Bigtree Outdoor

Sendirian Berhad, UPD Sendirian Berhad, and The Right Channel Sendirian Berhad

run outdoor advertising services, Grand Brilliance Sendirian Berhad deals in content

creation and the distribution of films and videos in Malaysia as well as abroad, and

Tiga Events Sendirian Berhad manages shows and outdoor events.

Table 4.5: Summary of Portfolio Segmentation Adopted by MPB Television and

Radio Networks. (As of 31 March 2007).

Station Target Viewers Positioning Advertising Focus

TV3 Mass Market skewed towards Channel synonymous with Fast moving consumer goods
Malay audience, with family, real-life, entertainment ("FMCG") products,
progressive mindsets and news content leaning communications, services,
towards cultural proximity transportation

Ntv7 Malaysian Urban Households; Television as an escapade – Brands targeting the Malaysian
25-45 years old; Kids & “My Feel Good Channel” Urban middle to high class;
Chinese image products and lifestyle

8TV Young Malaysian Urban, Tastemaker, energetic and Brands targeting the Young
Chinese; 15-24 years old differentiation in content – “We Urban; sports, energy drink,
are different” fashion, and Chinese viewers;
health and wealth related

TV9 Mass Market skewed towards Traditional Malay skewed FMCG products, non
"traditionalist" Malay audience content with a mixture of traditional advertisers,
drama, real-life and current government
affairs

Fly.fm Urban youths from the 18-25 Contemporary hit radio, Brands targeting the urban
age group and young adults playing more and more music youths and young adults;
from the 25-35 age groups. sports, active lifestyle, health
and wealth

Hot.fm Mass Market skewed towards Entertainment, mixture of hits FMCG products,
Malay audience, young and fun skewed towards current with communications, services,
tie-in to Malay-based content transportation
on TV and other mediums

Source: Adapted from Fact Sheet, Investor Centre, MPB (2007).

As claimed by MPB, its media products, particularly programmes for its television

and radio broadcasts are skewed to a niche market of its own creation, as summarised

in Table 4.5.

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 Malay audience with “progressive mindsets” is the primary target of TV3 which

broadcasts programmes on family, real-life, entertainment and news content leaning

towards cultural proximity. Its advertising scheme is focused on fast moving

consumer goods, communications, services, and transportations. TV9 targets the

“traditionalist” Malay audience with programmes that include a mixture of drama,

real-life and current affairs while its advertisements concentrate on fast moving

consumer goods servicing non-traditional advertisers and the government.

Programmes of ntv7 and 8TV are targeted at young Malaysian urban Chinese of age

15-24 years old while ntv7 targets the Malaysian urban households aged 25-45 years

old. Ntv7 concentrates on Chinese programmes with advertisements focussing on

brands targeting the Malaysian urban middle to high class with image products and

lifestyles. Also with the Chinese viewers in mind, 8TV offers programmes filled with

energetic, tastemaker type of contents. The channel advertises brands targeting the

young urbanites with sports, energy drink, fashion, and health and wealth related

goods.

Fly.fm airs contemporary hit radio, playing music meant for urban youths within the

18 to 25 age group as well as young adults of age 25 to 35. Its advertising focuses on

brands targeting the urban youths and young adults; sports, active lifestyle, health and

wealth. Hot.fm is an entertainment network playing a mixture of hits skewed towards

current music with a tie-in to Malay-based content on TV and other media. Its

programmes are for the mass market but skewed towards the young and fun Malay

audience. Its advertising contents target the fast moving consumer goods;

communications, services, and transportation are its advertising contents.

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 MPB’s print media platform, the NSTP, which is the nation’s oldest English language

newspaper publishing company, caters for the mainstream readers. Its main

newspaper is the English language daily the New Straits Times and its Sunday version

is complemented by its Malay language daily the Berita Harian and the Harian Metro

with their respective Sunday editions, Berita Minggu and Metro Ahad (Investor

Centre, MPB, 2006).

4.6 MARKET AND FINANCIAL PERFORMANCE OF MPB

Products of MPB have captured substantial portions of the market. Collectively,

MPB’s core media assets allow it to reach close to 22 million Malaysians daily

comprising of 11.2 million television viewers, 6.8 million newspaper readers, and 3.5

million radio listeners (Annual Report, MPB, 2006). Through its outdoor advertising

subsidiaries, MPB controls outdoor advertising along Malaysia’s key expressways, at

transportation hubs and retail and shopping malls, on STAR Light Rail Transit, KLIA

ERL trains, and in Kuala Lumpur inner city areas.

At the time of research, television viewership stands at a total of 54% of the local

market from MPB’s four television channels TV3 (33%), ntv7 (7%), 8TV (5%), and

TV9 (9%) (Investor’s Briefing H1, MPB, 2007).

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 The radio station, Fly.fm allows MPB control of 702,000 listeners or 2.8% market

share (Annual Report, MPB, 2006) plus a potential market of 25 million passenger

arrivals at KLIA. Hot FM broadcasts in the Malay language and allows MPB control

of nearly 4 million listeners or 19% market share (Press Releases, MPB Media

Centre, 2007).

NSTP is the sole newspaper publishing company that MPB maintains a controlling

stake in. It is Malaysia’s largest publishing company that publishes leading newspaper

titles such as the New Straits Times, the Malay Mail, Berita Harian and Harian Metro

besides books and magazines. With its newspapers, NSTP attains readership totalling

6.8 million or 50% market reach (AC Nielsen, 2006. Cited in Annual Report, MPB

2006).

600

500
535
400
RM million

400
300
328
279
200
241 244
222
100

0
2000 2001 2002 2003 2004 2005 2006
YEAR

Figure 4.3: MPB Revenue Growth Track.

Source: Financial Info, MPB Fact Sheet (2007).

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 Tracking the revenue growth of MPB from as far back as 2000 until 2006 shows a

steady revenue growth rate of 15.8%. The years prior to its official establishment in

September 2003, recorded a low growth rate with its net revenue staying below

RM300 million. The net revenue shot to RM328 million for the financial year ending

31 December 2004. A tremendous leap in revenue occurred in 2005 when MPB

achieved RM400 million and a greater leap in 2006 with a revenue of RM535 million

(Figure 4.3).

For the year ending (FYE) 2006, the corporation’s revenue stood at RM534.69

million, which is a 33% increase from the RM399.7 million recorded in 2005 (MPB

Investors’ Briefing, 2007). The amount is 91.7% more than its net revenue FYE 2003

of RM278 million (Financial Highlights, MPB Annual Report 2006).

MPB recorded a higher pre tax profit of RM101.7 million, which is a 58% increase

from the previous year’s RM64.3 million. In line with the strong performance, MPB’s

after tax profit and minority interests FYE 2006 grew by 44% to RM82.9 million

from RM54.7 million recorded in 2005 (MPB 5-Year Financial Highlights, 2006).

The recent financial achievement is attributable to an increase in advertising revenue

achieved by its television and radio networks especially TV3 that attained 43 per cent

share of the advertising expenditure and with strong internal cost saving measures

(Chairman Statement, MPB Annual Report 2006).

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 4.7 DATA ANALYSIS AND INTERPRETATIONS

The data and information scrutinised about MPB provides reflections as follows.

4.7.1 Officially established in 2003 with two subsidiary companies, MPB turned six-

company strong in its second year (2004) of operations. By the third year (2005) of

operations MPB has accumulated a total of twelve subsidiaries. MPB’s growth is a

case of accelerated corporate expansion which is evident by its 500% addition of

subsidiaries within a period of three years. The number of subsidiaries accumulated is

well summarised as in Table 4.6.

Table 4.6: Summary of MPB Agglomeration of Media Assets.

No. of companies in:

Asset Type 2003 2004 2005 2006 2007
Print Media 1 1 1 1 1
TV Broadcasting 1 4 4 4 4
Radio Broadcasting - - 2 2 2
Outdoor Advertising - 1 3 3 3
Production house - - 1 1 1
Events management - - 1 1 1
Total: 2 6 12 12 12

Source: Developed from information in Fact Sheet, MPB, 2007.

4.7.2 The corporate expansion activity of MPB concentrates on the accumulation of

television channels in 2004 before moving on to radio networks and others in 2005.

Observed form the industry life cycle point of view, MPB is now past the

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 ‘Introduction’ stage and well within the ‘Growth’ stage. Matching the expansion

activities of MPB to the OLC graph determines the standing of MPB as visualised in

Figure 4.4.

INTRO GROWTH MATURITY DECLINE

100

Hot.fm

Fly.fm
80
Growth rate (%)

BTO

Ntv7
UPD
60

8TV
GB

Ch-9
Tiga
40

TRC

20
NSTP

TV3
0
Year: 2003 2004 2005-07

GROWING AGING

Figure 4.4: Concentration of MPB Expansion Activities from 2003 – 2007.

Source: Developed from facts in Fact Sheet, MPB, 2007 & MPB Annual Report 2006.

4.7.3 The corporation’s ever growing revenue since 2003, from RM279 million in

2003 to RM535 million in 2006 (Refer Figure 4.5), is suggestive that it is too early for

MPB to be in its ‘Maturity Stage’. With reference to Figure 2.2, the assumption of the

PLC at the ‘Maturity’ stage is the entry of competing products that pull down profits.

The situation in which the profit curve peaks within the ‘Growth’ stage explains the

position of MPB as well outside the ‘Maturity’ stage.

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 4.7.4 The underlying assumption of the industry life cycle model that different

product passes through different stages at different rate is observable in the market

performances of MPB’s individual media products. The radio broadcasts, achieving

30%, and the outdoor advertisement with an achievement of 8.3% of the total market

share (MPB First Quarter 2007) suggest their positions to be outside the boundaries of

the ‘Maturity Stage’. Its television broadcasts achieved 54% market share which by

the NLC measurement has just crossed the border into the ‘Maturity Stage’. The print

media achieved 55% market share but the age of the print media firm (over 50 years

old) suggests that its position is most appropriate to be on the downside of the growth

path rather than in the “Growth Stage” zone. Matched to the PLC graph, the

performances of MPB’s individual products could well be presented as in Figure 4.5.

Introduction Growth Maturity Decline

100

80

Print 55%
60
TV 54%


Growth rate %

40
Radio 30%

20
Outdoor Ads
8.3%

0
Year (2007) TIME

Figure 4.5: Integrated MPB Media Platforms Market Performance 2006.

Source: Developed based on facts from MPB Annual Report 2006 and Investors
Briefing, MPB (2007).

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 Table 4.7: MPB Corporate Expansion Mode

MPB Subsidiaries Mode of Possession

NSTP (Newspapers) Progenitor
STMB TV Progenitor
Natseven TV Acquisition
Metropolitan TV Acquisition
CH-9 Media TV Acquisition
MaxAirplay (Radio) Acquisition
Syncrosound Studio (Radio) Acquisition
Big Tree Outdoor (Advertising) Acquisition
UPD (Advertising) Acquisition
The Right Channel (Advertising) Internal restructuring
Grand Brilliance (Content creation) Internal restructuring
Tiga Events (Stage shows) Internal restructuring

Source: Developed from facts in Fact Sheet, MPB, 2007 & MPB Annual Report 2006.

4.7.5 Evidently MPB took over by acquisition seven4 companies (58%) out of its 12

principal subsidiaries (Table 4.7) which commenced after September 2003. The

companies were acquired either by sales and purchase agreement5 (SPA) or share

sales agreement6 (SSA). The acquisition of companies is illustrative of the

corporation’s growth strategy by the external expansion mode.

4.7.7 Capital size is a competitive advantage that helps corporate sustenance in an

industry. MPB operates with high capital and has the resources for capital guarantee.

Apart from investments by shareholders, MPB backs its operations with borrowings.

4 Transactions commencing from 2003 till 2007

5 The acquisition of a target company by an offer of cash exchanges for its assets and shares.
6 The acquisition of a target company by the purchase of its shares.

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 MPB’s record of borrowings that amounted to RM334.7million as at 31 December

2006, (Figure 4.2d), RM339.5million by the first quarter of 2007 (MPB Fact Sheet 31

July 2007) as well as Term Loans and Commercial Papers amounted to RM193.7

million is illustrative of MPB has the ‘buyer power’ -- Porter’s FFA, over its

financiers.

4.7.8 The growth activities of MPB has turned it into a media conglomerate much

akin to practices in the United States by corporations such as Time-Warner, Viacom

Incorporated, NBC Universal, and the Rupert Murdoch News Corporation. Placed

against Malaysia’s population of 23.27million (Population & Housing Census

Malaysia 2000) audience reach of almost 22 million Malaysians daily through its

media platforms -- 11.2m TV viewers, 6.8m newspaper readers, 3.5m radio listeners

(MPB Review of operations, Annual Report 2006) -- is suggestive of a monopolistic

market environment particularly in terms of Adex. With all four private FTA licenses

now owned by MPB, and until another time the Malaysian government issues new

licenses, the possibility of another multi-platform media corporation is vague. With

only Astro (Satellite) TV to compete for market reach, MPB is now monopolising a

large portion of the terrestrial TV market.

4.7.9 The number of audience reach implies a market situation of more buyers than

sellers which by Porter’s FFA model the supplier power is greater and changes in the

quality of products and pricing is at the discretion of suppliers. Under such a

circumstance, MPB as the media supplier has a hand over consumers – audience and

advertisers. Consumers’ bargaining power is weak and a withdrawal will not

influence MPB’s market performance.

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