FEER : A Portrait in Mixed Media
Yap Yok Foo
Issue cover-dated 26th July 2001
A Portrait in Mixed Media
Malaysian newspapers have recently been at the heart of political
squabbles--which are in turn tied up with big business deals and a
potential shakeout in the industry
By Lorien Holland
Malaysian newspapers have been making the headlines themselves
recently. In May, the Chinese-language Nanyang Siang Pau got
temperatures rising when the main Chinese political party bought a
majority stake in Nanyang Press Holdings. Now, industry sources are
saying that a controlling stake in the English-language New Straits
Times Press may be sold to Telekom Malaysia. Both counters are worth
watching for future movement, but analysts advise caution.
"We tend to shy away from media stocks," says Edmund Cheah, executive
director of KL Mutual Funds, one of Malaysia's largest privately owned
unit trusts. "The fundamentals of a company are difficult enough to
read, and with politics involved, it is even harder."
Nonetheless, other analysts say that both deals could eventually
bolster the bottom line of the newspapers concerned. For Nanyang,
which already boasts an average return of 14.2% over the past five
years, the sale could lead to closer affiliation with the
English-language The Star--Star Publications is also controlled by the
Malaysian Chinese Association, or MCA.
For the New Straits Times Press, new management could refocus the
group's publications and help stem losses on circulation and
advertising revenue. In fact, NSTP has seen its share price rise by
22% in the past week on expectations of the sale. Its shares are
currently at around 3.40 ringgit ($0.89). But there remain significant
political uncertainties ahead.
In Nanyang's case, the May 31 purchase met such strong resistance in
the Chinese community that the MCA that bought it has offered to sell
its entire stake. As negotiations with potential buyers have not made
much progress, the MCA's investment arm will still have to make a
mandatory general offer to all minority shareholders before the end of
July, because it bought more than one-third of the company. That
prospect has kept the share price stable at around 5.20 ringgit.
As for NSTP, its sale has yet to get the seal of approval from the
Ministry of Finance, and Telekom Malaysia denies that negotiations are
currently under way. In addition, NSTP will need to find a buyer for
its stake in financial-services company Commerce Asset Holding, or
CAHB, in order to reduce its heavy debts. Interest payments on those
debts currently run at around 80 million ringgit ($21 million) a year,
and recently pushed even the operational profit of NSTP into the red.
To add to short-term uncertainties, both publications are facing
industry-wide difficulties: high newsprint costs and falling
advertisement revenues as a result of the economic downturn.
"Industry-wide, the situation is not improving, but the upside could
be six months down the line if there is an economic recovery in the
fourth quarter," says Jeffrey Tan, media analyst for KAF-Seagroatt
Research in Kuala Lumpur.
If that upside does emerge, then NSTP could see its situation
improved, as a potential buyer for its CAHB stake is rumoured to be on
the horizon, according to research papers from Merrill Lynch. However,
the sale of CAHB itself will not be enough to turn the group around,
and even the prospect of a new management team under Telekom Malaysia
failed to excite analysts polled by the REVIEW, who said the New
Straits Times must first overcome a perception that it is too closely
linked with the government. Its share price is also seen by some as
expensive compared with that of the market leader, Star Publications.
**************From Uncle Yap**************
Berita Malaysia - The Malaysian News & Discussion Group
===========================================
Archives/manage subscription: http://groups.yahoo.com/group/beritamalaysia
To subscribe by e-mail, send empty e-mail to:
beritamalays...@yahoogroups.com
To unsubscribe by e-mail, send empty e-mail to:
beritamalaysi...@yahoogroups.com
bmalaysia - Just The Malaysian News
============================
Archives/manage subscription: http://groups.yahoo.com/group/bmalaysia
To subscribe by e-mail, send empty e-mail to:
bmalaysia...@yahoogroups.com
To unsubscribe by e-mail, send empty e-mail to:
bmalaysia-...@yahoogroups.com