Abdul Rahman Ahmad

December 2008

Over the last few years, Malaysia’s Media Prima Berhad has made an ambitious play to reach the nation’s more than 27 million residents on as many platforms as possible. Malaysia’s largest integrated media company operates four of the country’s six free-to-air stations, including the market-leading TV3—Malaysia’s first private TV network, founded in 1984—which targets families with a cross section of factual, entertainment and news content. In 2004, the company acquired 8TV, focusing on urban viewers of Chinese descent, aged 15 to 24, and the following year added ntv7 and TV9 to the portfolio. With those four networks, Media Prima holds a 50-percent share of Malaysian audiences. The company’s portfolio includes two radio stations, Fly FM and Hot FM, and plans are under way to acquire Radio Wanita. Media Prima also produces content through Primeworks Studios and operates the event-management firm Big Events and the outdoor advertising company Big Tree Outdoor. It owns a stake in the Malaysian newspaper publisher New Straits Times Berhad. In all, Media Prima reaches almost 22 million Malaysians daily, including 11.2 million TV viewers, 6.8 million newspaper readers and 3.5 million radio listeners.
Having been successful in its strategy for attracting media consumers and offering targeted, cross-platform opportunities for advertisers in Malaysia, Media Prima has set its sights on the international market. It has an interest in the free-to-air station TV3 in Ghana and this year established a private-equity media fund to invest in assets in emerging Asian markets. The first was the Philippines, with the establishment of a subsidiary, MPB Primedia, which has entered into a content provision and consultancy agreement with the ABC5 TV (now TV5) network. Media Prima is also aiming to export content produced by its Primeworks Studios arm and is fostering local talent with its “What’s Your Big Idea?” initiative.
At the helm of Media Prima as group managing director and CEO is Abdul Rahman Ahmad, who is credited with leading a turnaround at the company since taking the reins in 2003. In this interview with World Screen, Rahman articulates his strategy for Media Prima in the months ahead, as he looks to position the company to weather the advertising downturn and tap into new-media business models.

WS: You are credited with successfully revamping Media Prima’s business model. What were some of the key strategies you put in place?
RAHMAN: Our group has gone through various phases of growth.  During the early years we were beset with high debt and a weak operational performance. Our [plan] was based on what we called the 3R strategy: We had to restructure the group by undertaking a comprehensive corporate and debt restructuring exercise. At the same time, we rationalized the operations to generate significant cost savings through tough measures, and thereafter rejuvenated the business by focusing on content and reinvesting the cost savings into our brands.
Once our core operations stabilized and turned around, we then embarked upon an aggressive expansion strategy by acquiring additional TV networks to allow us to consolidate the market and benefit from economies of scale and enter into new markets such as radio, outdoor advertising and new media.
We are pleased to note that these strategies have worked and enabled our group to diversify its revenue and earnings base, while at the same time they have allowed us to establish a platform of strong brands across all media.

WS: You’ve amassed a portfolio of free-to-air networks. What was the thinking behind this strategy, and how are you using the networks to target diverse Malaysian audiences?
RAHMAN: When we started, we realized that the Malaysian TV-advertising market is small—it was approximately only 25 percent of the total ad market. Discounting among TV networks was rife, with average discounts of more than 70 percent, and we knew it was an unsustainable situation.
We felt consolidation was the way forward, and so we embarked upon a strategy to acquire the available free-to-air networks. But at the same time, we knew each network had to be differentiated and target a specific segment of the Malaysian audience, which is diverse.
As the leading TV network with more than a 30-percent share, we maintain the position of TV3 as the mass-market station, but for the other networks, we created a clear new positioning strategy. For instance, we developed 8TV as a young brand targeting urban 15- to 24-year-olds, whilst ntv7 we positioned as an urban station targeting [viewers] 25 years and above in the Chinese community. At the same time, we positioned TV9 as our second mass-market Malay channel.
This way, we are able to offer advertisers an easy way to reach all of their targeted audiences in a cost-effective manner.

WS: How do you plan on maintaining TV3’s market share and further strengthening your other networks?
RAHMAN: In the current fragmented world, with new channels proliferating, this presents a significant challenge for us. But we strongly believe that as long as we invest in our content, brand and, most importantly, talent, we can continue to remain appealing and relevant to our audiences.
At the same time, we believe that it is no longer enough just to invest in on-air content. We are totally focused on having a direct relationship with our viewers and spend a significant amount of resources in doing this.
Our on-ground activity, the TV3 Jom Heboh carnival, for instance, is a unique way of reaching out to our audience beyond television and at the same time attracting new fans for TV3. [The event attracts] more than 5 million [visitors] across ten sites all around Malaysia. We believe that by being creative and ensuring that our talent is passionate about what they are doing, we can stay ahead of the curve.

WS: How important has local content creation been for the group?
RAHMAN: Similar to the [worldwide trend], local content is becoming extremely important for us. Our ratio of local content has increased significantly over the years, and we continue to increase our investment in local [programming] year on year. We currently spend more than 60 percent of our content budget on local production, and we expect this to continue.
At the same time, we feel that international content still will play a role, but over time, this may shift from standard licensing of syndicated content to probably more local adaptation of formats.

WS: How is the local ad market, and how are you serving your clients across your portfolio of assets?
RAHMAN: The local ad market in the first half of the year was very strong, with total ad expenditure growing more than 15 percent, buoyed by advertising spend on EURO 2008 [soccer] and the [parliamentary] election [in March].
However, this has significantly decelerated over the last quarter or so, and we expect this to continue for the rest of the year. The global financial turmoil and the fear of global recession have inevitably affected business confidence in Malaysia, so we expect the advertising market to be challenging.
However, we are totally focused on growing our business by providing value-added services to our clients and utilizing our large portfolio of media assets to ensure that advertisers can reach their target audience in a cost-effective manner.
Further, we believe this situation presents an opportunity for those clients who want to grow their business by investing in their product.

WS: I’ve read that Internet advertising is a priority for you—what initiatives do you have to drive this segment?
RAHMAN: We believe that Internet advertising is the next big growth area in our market. While there are challenges in terms of the speed of broadband and the willingness of advertisers [to invest online], we think the consumer trend towards spending time on the Internet is irreversible and will continue to grow. At the end of the day, advertisers will follow where the eyeballs are, and we believe that the web is a critical part of our future.
Our strategy in new media is twofold. First, we have invested in the portals of our existing media, such as introducing catch-up TV online, where viewers can watch any missed programs online for free for seven days. The other was to launch a new lifestyle and entertainment portal, Gua, which is targeted towards the young. The initial results have been amazing. For the period between January and June 2008, our television networks’ online portals received approximately 73 million page views, 4.8 million average monthly unique visitors and more than 23 million video views.
And we hope that over time, advertisers will take notice of this trend and start spending a significant amount of their budget online.

WS: What are your other plans for expanding the Media Prima brands into the new-media arena?
RAHMAN: The next step is to figure out how to sell our library of content online and develop a mobile-distribution strategy. This remains a challenge given the complexity of dealing with telcos and [mobile operators], but we hope to make some headway in this area shortly.

WS: What opportunities exist for monetizing your library of content?
RAHMAN: We are currently the largest creator of Malay content and the owner of the largest library of Malay content. At present, we have about 40,000 hours sitting in our books at zero cost.
This opens a new market for Media Prima to tap into—the pay-TV market—by being a channel provider and diversifying our earnings into consumer-based revenue rather than solely relying on advertising revenue.
However, this involves us working with a pay-TV operator to distribute our content, which is something we are striving to establish.
At the end of the day, we see this opportunity to be significant and we hope to be able to exploit it over time.

WS: How is your business outside of Malaysia, and are you looking to expand this?
RAHMAN: We are currently in the midst of listing our Ghana TV3 Network on the Ghana Stock Exchange, after turning around the network into a leading and profitable station.
We hope the listing will allow the Ghanaian public to participate in the success of TV3 Ghana and provide additional capital to expand our operations.
As for our foray into the Philippines, we [have a] consultancy agreement with a national network [the Associated Broadcasting Company]. This allows us to provide TV5 (formerly ABC5) with content as well as to market its airtime.
The advertising market in the Philippines is huge, estimated at four times the size of the Malaysian market, and accounts for 70 percent of the total advertising expenditure. We believe there is room for a niche player such as TV5 and hope to build a differentiated and fresh TV network catering to the young.
It’s still early days and there are always challenges, but we are optimistic with the start that TV5 has taken.