- It was recently reported in a local daily that staff of The Malaysian Insider (TMI) has left to start a new company that will run the The Malay Mail web portal. The Malay Mail is owned by the Redberry Group under Ancom Bhd, which also has in-store and outdoor advertising platforms seen in various malls and airports.

- We believe the impact on media companies is muted for now as the internet share of adex is relatively insignificant at the moment. However, this portrays a trend of media players embracing the online setting and its significance moving forward.

- We gather that the need to penetrate the digital space is further underpinned by an increasing shift of advertising on classified sections of online portals, i.e. advertisements on properties and job listings.

- This is exemplified by Star Publications’ acquisition of Ocision recently, which owns 3 online portals, in an attempt to claw back some of the classified adex revenue that it has lost out in its print segments.

- There have also been various online news portal start-ups. One such start-up is the subscription-based KiniBiz, which focuses on business news coverage. As advertising revenue is understandably low for these independent online start-ups, its main source of revenue would mostly come from subscriptions. However, as start-up and operating costs could be high, it remains uncertain if subscription income alone can offset these costs.

- Interestingly, The Star reported last September that MalaysiaKini has been receiving grants from various organisations to fund its operations.

- Separately, it was reported that an alliance was formed prior to the GE13 among 5 newspapers with the intention to provide comprehensive coverage on the election. The dailies involved are The Malay Mail, Bahasa Malaysia newspaper Sinar Harian, Chinese newspaper Oriental Daily News and Tamil newspaper Makkal Osai, as well as The Malaysian Reserve (covering business perspectives on the election). If the alliance stays, this could potentially pave the way to a change of the media landscape going forward, although there is little news flow on the matter.

- All said, we maintain our view that the traditional newspaper segment will remain strong and relevant, as it is still the main source of information and news for many, especially in the rural areas. This is further underlined by the difficulty faced by media companies to monetise their online news portals, as it is apparent that advertisers still prefer the conventional medium of advertisement for now.

Source: AmeSecurities