Print media business model hard hit in digital age, says research house

newspaper2PETALING JAYA: Printing houses are struggling to stay afloat, with the print media business expected to be hard hit by prolonged weak advertisement expenditure this year, a research house warned today.

In a note cited by The Edge, Hong Leong IB Research (HLIB) said the sector would likely remain challenging in 2018, with traditional media remaining pressured by a continued weak adex.

The industry was also facing “increasing customer fragmentation, technological advancement and the shift to digital media”, HLIB’s Rachel Hong was quoted as saying.

According to the report, adex is not expected to recover this year although a small growth in revenue is possible due to major sports events like the World Cup 2018 and the 14th general election.

This is in line with comments by AmInvestment Bank Research, which said last month that the gloomy state of affairs for the media was aggravated by the rising penetration of high-speed internet and falling cost of data.

In a note, it said the sector’s prospects in 2018 were tepid as digitalisation initiatives undertaken by the media companies remained ineffectual in cushioning the decline in adex rates.

Numbers from the Audit Bureau of Circulation (ABC) showed that newspaper sales in Malaysia had been on the decline since 2016, as opposed to the more popular digital media.

In March, news broke that the New Straits Times Press (NSTP) media group was selling one of its printing plants in Hulu Terengganu, Terengganu, for RM25 million.

The site was among two printing plants that the newspaper was reported to have decided to shut down in 2016, believed to be due to dwindling revenues from newspaper sales and advertising.

The other plant was in Senai, Johor.

A former top editor with the company, Mustapha Kamil, said the closure of the two plants was believed to be steps by the company to avoid incurring further losses, brought about by dwindling newspaper sales and advertisement revenue.

Hong said in order to reach the millennials, companies had to be more digitalised as growing internet penetration meant that consumers now had a wide range of entertainment options.

“With [the] growing popularity of YouTube as a video-sharing website, we believe online streaming is a direct threat to the media industry as it provides an alternative to paid content and advertising platform, with better flexibility and a more targeted advertising,” she was quoted as saying.

Media revenue to remain tepid in 2018, says research house