KUALA LUMPUR (May 30): Media Chinese International Ltd (KL:MEDIAC), which mainly publishes Chinese-language newspapers, may reduce its workforce by as much as 44% as part of an ongoing restructuring, said Kenanga Investment Bank.

The company could shrink its workforce to around 1,000 from 1,800 people “in future”, according to Kenanga said in a note to clients. Manpower accounts for about 50% of Media Chinese’s costs, followed by newsprint at around 20%, the research house noted.

Media Chinese "believes it can extract significant cost savings by downsizing its workforce and encouraging its employees to multitask”, Kenanga said. If publishing costs rise further, Media Chinese may shutter its printing plants in Johor and Penang, and centralise print operations in Selangor, the research house added.

Shares in Media Chinese have declined 3.7% so far in 2024, following a sharp drop over the past years, as the company grappled with dwindling earnings and losses. The company posted its biggest net loss since 1998 at RM61 million for the latest financial year ended March 31, 2024 (FY2024).

Media Chinese’ financial trouble is part of a wider global trend of escalating cost and slump in revenue from falling sales and advertising expenditure for the industry. In addition, media firms have also struggled to monetise their digital content.

Last year, Astro Malaysia Holdings Bhd (KL:ASTRO) implemented a voluntary separation scheme to cut operating expenses, following the footsteps of Media Prima Bhd (KL:MEDIA) and Star Media Group Bhd (KL:STAR).

Media Chinese exploring AI use in news

In addition to cost control measures, Media Chinese is also considering measures to integrate artificial intelligence (AI) in its operations, and is hopeful that it could monetise its intellectual property or news content in future, Kenanga flagged.

Media Chinese, which publishes China Press, Sin Chew Daily, and Nanyang Siang Pau, among other titles, is collaborating with local publishers through the Malaysian Newspapers Publishing Association to “collectively approach and engage multinational AI companies”, the research house said.

Last week, OpenAI announced a multi-year agreement to bring in news content of News Corp, which owns The Wall Street Journal and Fox News, among other assets.

Still, Media Chinese is more sanguine about reaching commercial agreements with emerging AI players in China, such as Baidu and Tencent, given its niche in Chinese language content, Kenanga said.

Based on the efficiency gains offered, Media Chinese estimated that at least 30% of its staff could be laid off within two years following the adoption of AI, Kenanga added.

On its part, Media Chinese warned that its operating cost is anticipated to remain high, due to elevated commodity and energy costs, and a strong US dollar.

“The management will continue to closely monitor the economic and political developments, adopt a cautious and prudent approach to cost management, and ensure operational efficiency and effectiveness in all business units,” Media Chinese group chief executive officer Francis Tiong said in a statement on Tuesday.

Shares in Media Chinese closed half sen or 3.8% higher at 13.5 sen on Thursday, valuing the company at RM227.78 million.