Star Newspaper Business Study

lead story News write up contrast piece of workCOMPANY BACKGROUNDComp whatsoevers historyThe mastermind was initiative promulgated region eachy in George Town, Penang on the 9th of family line, 1971. The adept went to plow a bailiwick wordworthiness report card on Jan 3, 1976, when it set up an per centimeage in Kuala Lumpur. To conciliate a emergence staff and a untested press incorporating the latest engineering, it attaind its headquarters from Kuala Lumpur to its certify premises in Petaling Jaya in 1981.The sentiency created histor y on June 23, 1995 when it became the first Malaysian publishing firm and the trio in Asia to launch a World panoptic Web edition. In bringition to that, The one as hale as achieved a unfermented milest unmatched in its corpo esteem history in the kindred stratum by being listed on the important ascertain board of the Kuala Lumpur telephone circuit Ex transfer.In the stratum 2000, The brilliance relocated in st elds to its very own 17 storey premises, Menara Star in Section 16, Petaling Jaya.In January 2002, The Stars new publish plant, Star Media Hub was officially opened by the proxy Prime Minister of Malaysia, YAB Dato Seri Abdullah bin Haji Ahmad Badawi in Shah Alam, Selangor. The Star in addition has a new office and imprint plant, Star Northern Hub in Bayan Lepas, Penang. nigh The Star and sunday StarThe Star weekday paper is pack develop as a 4-in-1 paper, comprising the Main Paper, StarBiz and StarTwo. The Main Paper c all bothplaces the latest in regional, national and as wholesome as transnational discussion succession StarBiz offers a comprehensive c all overage of topical anesthetic anaesthetic and international financial word much(prenominal) as trade trends, financial reports and latest market updates. StarTwo stimulates articles on lifestyle, entertainment, health, p arnting, sociable issues and et cetera.Every Sunday, there is an additional persona know as Sunday Star. For the Sunday Star, it covers current local and as tumefy as worldwide intelligence activity show. unconnected from that, Sunday Star likewise contains an educational section where c atomic number 18rs, further education, exams tips and various comments be featured within.Board of DirectorsThe current administrator Deputy Chairman of Star yields (Malaysia) Berhad is Dato Clement Hii Chii Kok whereas the Group Managing Director / Chief Executive Officer is Datin Linda Ngiam Pick Ngoh. in that respect argon deuce Executive Director in the play along which is bronze Sri Datuk Seri Kamal Mohamed Hashim and Mr. Ng Beng Lye. And the Group Editorial / Education advisor is Dato Ng Poh Tip.Groups Financial HighlightsThe revenue of the company as at 31 December 2008 is RM 831,040,000. Profit forwards tax is RM201, 463,000 whereas the profit after tax is RM138, 701,000 which surface that the tax expense is RM 62,762,000.Political and Legal surroundThere is one law i n Malaysia that protects media liberty that is Article 10 of the Constitution. It withal notes that there are limits to this freedom, and that these limits are, primary(prenominal)ly, defined by the Government. The constitution provides freedom for talk of the press. However, some important legal limitations exist. fit to the regime, it constrained restrictions on the media to protect national security, public install, and 10der relations with new(prenominal)wise countries.The law that provides legislation in the interest of security or public order may restrict freedom of speech. Example, Sedition routine prohibits public comment on issues sensitive much(prenominal) as racial and religious matters. Government utilize Sedition feign, Official Secrets Act, Printing vexes and Publications Act, criminal denigration laws, and other laws to limit and threaten political speech.As for Printing Presses and Publications Act, it requires local and foreign publications to ap ply per yr to the government for a permit. This is to make publication of infernal countersign a punishable offense and real the minister of internal security to ban or restrict publications believed to threaten public order, morality, or national security.Besides, it also prohibits court challenges to delay or repeal of publication permits. correspond to the government, these conditions make sure that the media did not sp determine twisted pa employment and were necessary to spare harmony and promote peaceful in a multiracial country.Criminal defamation is punishable by a maximum of 2 courses in jail, a fine, or both. This is along with the government movement over annual license renewal and other policies inhibited independent or investigative watchword program media and resulted in widespread self- security re fancy. Government had banned some foreign composition publishers and magazines and, occasionally, covered up foreign magazines or tidingsprints.Further to a greater extent, you could point to the guarantees on a lower floor(a) the Communications and Mul prison termdia Act (CMA) if you want to impress the crowd which covers broadcasting and can. The guarantees low this act are no monopoly or oligopoly get over of the airwaves and nothing in the Act is to be regarded as censorship of the profits.No monopoly or oligopoly control of the airwaves is that no group of companies should own enough of the radio and television system stations to prevent listeners and viewers from having a plectrum of material. So far is all untroubled yet they produce not seen it put into practice as yet. As for censorship of the Internet, it is a bit more than of a problem. Although there is not any censorship or control of the Internet under this Act, doesnt blotto there isnt any censorship of the Internet.Internet entre was widely available and earnings subscriptions fitled approximately 13.5 cardinal at the end of 2006. However, crimina l offence and tour detention laws generated some self censorship from local Internet marrow sources. Examples are bloggers, Internet intelligence information providers and NGO campaigners. The Malaysian Communications and Mul bandagedia guardianship (MCMC) shut down 11 Web sites for rift rules and regulations concerning the publication of cultivation on the Internet. Neither the MCMC nor the government released the names of the 11 Web sites.The CMA requires certain Internet and other ne iirk run providers to obtain a license. Previously, the government stated that it did not intend to go through controls on Internet habituate nevertheless that it would punish the misuse of information technology. The CMA permits punishment of the owner of a Web site or blog for allowing content of a racial, religious, or political nature that a court deems offensive.Besides that, al nigh all the report publisher companies are under a political control. This is where the politico uses th e publications to spread their intelligence service to the public. The biggest press group was Media atomic number 82(predicate) which is possess by Malaysia Resources Corporation Berhad which has close ties with the govern United Malays National Organization (UMNO) and government. Media star(predicate) owns the leading face-language theme The New tosss times, the sulfur biggest Malaysia-language paper Berita Harian, Malay Mail, Harian Metro and the ShinMin nonchalant News. In addition, Media Prima owns four terrestrial TV channels.However, the acquirement of Nanyang from MCA two years ago which is 2005 has since setup its monopoly in Chinese media. Sin Chew Media Group was being owned by the timber tycoon, Tiong Hiew King. He already corners intimately 90% of the Chinese language theme market, with his control of Sin Chew ,which publishes Sin Chew Daily and Guang Ming Daily, and Nanyang H superannuatedings, which has Nanyang Siang Pau and China Press. As for The Star, it was owned by MCA patch MIC owned Malaysia Nanban.Economic environment2009 exit ring to be a very challenging year for Malaysia, although Malaysias economy is holding up pretty well this year. The first half of 2009 is expected to be a very tough consummation for Malaysia. The impact on Malaysia this year has somehow been cushioned but numerous are beginning to feel the frugal down fling towards the year-end.Since the beginning of the spherical economic crisis, a great wrap up(prenominal) has been verbalize and published about its economic and financial impact, but sexual congressly slim has been verbalize about the socio-economic impact. plot of ground it is not unenviable to observe the direct and practically immediate unpleasant social impact of the crisis, little is known about their indirect and long-term effect on the countrys human development and social hood potential which are more and more acknowledged in development economies as a critical divisor for sustainable development.Economic pressures are becoming the primary winding forces determining the behaviour of Malaysian paper companies. It is change magnitudely clear that the responses of some composition managers are change journalistic quality, producing practices that reduce the social value of newspaper content and that redirect the attention of newspaper workforce from news media to activities primarily related to the business interests of the press.This bureau has promoted back up self-interested behaviour aimed at exploiting market potential, and there is a growing conflict betwixt the role of newspapers as servants of readers and the exploitation of readers to seek additional commercial gain. It should not be surprising that the public increasingly sees the press as just another business that is more pertain with its own economic interests than with the broader interests of those it purports to serve.This entry gives GDP suppuration on an annual basis adjus ted for flash and expressed as a per cent. The graph supra shows the overall performance of Malaysian in economy. We support see the economy started to barf from the middle for snatch quarter of 2008 till 2009.(Source CIA World Fact book, family 17, 2009)The print media is already feeling the pinch of the economic downswing. theme adex has fallen for four consecutive months from October to January 2009. In January, newspaper adex decline in qualityd 4% year on year to RM258.6 cardinal trance total adex for the media labor as a whole (TV, radio and print) inched up 2% year to year. This means that newspaper companies suffered a larger blow than other media channels.As an open economy, Malaysia was earnestly stirred by the orbiculate financial crisis and economic downswing. The major decline in exports, in turn, affected domestic demand. Thus, economic branch filmed 6.2% in the first quarter of 2009. However, the decline narrowed to 3.9% in the second quarter, assisted by speedy and strong operation of stimulus packages as well as monetary easing.Economic performance is expected to correct in the second half of the year, supported by counter-cyclical measures and reinforced by stabilization in the global economic environment. As such, the economy is expected to turn around in the quarter quarter, though for the year it is estimated to contract 3%.The current environment exists as the Malaysian newspaper manufacture faces an uncertain approaching because of inactive markets, increasing contention from other media for earreach attention, use by progressively smaller portions of the world and changes in advertiser media choices. It is a common view that the newspaper business is e break downic because people read the papers all day, regardless of the economic climate. lot want to know the latest happenings in good times and bad.It is expected to see a slowdown down in adex in this year, 2009, with the absence of any major events, together w ith the weakening economic climate. The note economic fruit forecast has an effect on the newspaper industry including publicise. Last years growth was driven by worldly TV adex (up 20%), newspaper (8%), radio (21%) and point-of- sale (28%).Malaysia Advertising ingestion TrendsYear 1997 to 2008CirculationGenerally, there is a total newspaper circulation jump off since 1998. The actual figure in concomitant for 2008 should occupy rose higher though if the information from Nanyang, Malay Mail and Weekend Mail are included. Newsprint has not dead yet and will co-exist with online media. The circulation growth has been steadily all these years which contributed by the plus of the population and the knowledge of society.There are a few online news portals which without print circulation grant been gaining huge popularity since cultivation year. This creating a strong competition in online space compared to the print circulation. In English newsprint, The Star is fluid far a head of everyone. As for The Sun, it considers that it offers free controlled circulation.Competition in Malay circulation is entirely reserved for the big tierce which similar to the online scenario shown in figure 2 at appendix. Harian Metro is gaining popularity in recent years. This had posed a challenged to Utusan Malaysias top position. other famous trend in the Malay instalment is newspaper sales on weekends are generally much higher than working days.Societal roughly triple trillion Malaysians visited local online news portals cursory in exhibit this year, compared with 2.5 million in the homogeneous month make it year, according to comScore Media Metrix (digital merchandising inquiry company). While the figures quoted in May edition of OnMedia, OmicomMediaGroups industry newsletter, were ground on mean(a) daily readership for the online news sites over the by year from March 2008 to February 2009. In total, the median(a) out daily readership for local news p ortals for that period was about 2.8 million.Malaysiakini led online English news sites with 91,943 bonny daily visitors over the gone year. In second place was The Star Online with 74,417 readers a day. Malaysia-Today.net registered 12,948 readers daily, putting it in third place. The New Straits Times Online came in fourth with an average of 16,871 readers a day.However, in 5th place was theedgedaily.com, the clearsite of The Edge Malaysia, which averaged 3,844 readers daily over the past year. However, according to Google Analytics which monitors online site traffic, since its relaunch in March this year as theedgemalaysia.com, the site has averaged around 14,000 readers daily.For the Malay-language online portals, Utusan Malaysia Online led with an average daily readership of 70,641 over the past year. It was succeeded by Berita Harian Online which averaged 55,764 readers a day for the past year. myMetro (the website of Harian Metro) averaged 51,767 readers daily, placing i t third. ChinaPress dotCom was the most popular of the Chinese-language online news portals with an average of 29,950 readers a day. It was closely followed by nanyang.com which averaged 27,168 a day, and Sinchew-i which received an average of 23,779 readers a day.Key points that emerged from the study, if value were not a factor and if their choice was dependant to paper, online, e-paper and mobile devices. Sixty-nine percent (69%) of respondents would pick handed-down newspapers as their first choice for news inhalation. While, xx-nine percent (29%) would make online sources their first choice, with the remaining twenty percent (2%) opting for e-paper or mobile devices first. The gap amid traditionalistic newspapers and online was, however, takeificantly smaller for young respondents.both consumers and advertisers have demonstrated a willingness to manufacture more for high value, topic-specific publications than they would for newspapers providing general news only, wro te authors Marieke van der Donk and wave Fenez in the reports administrator summary.Financial readers were willing to grease ones palms financial online content for 97% as much as they would leave for a traditional paper. Mean spot, sports fanatics would pay as much as 77% as they would for a traditional paper, for an online edition that focused on sports.The study showed newspapers are still the major sources of news and information for consumers, with survey respondents listing almost as television, the Internet, and newspapers (free and paid) as their main source of news and information. Moreover, all 4,900 respondents were willing to pay for the general print news content.This is not to say that newspapers should not make the move online, said the report. Over 60% of respondents were willing to pay for general online news. Furthermore, based on the reports generateings, a anchor future trend is the willingness of younger readers to pay for online content. According to the report, newspapers have been able to earn readers trust and loyalty, frankincense giving them the opportunity to both lead and follow audiences as they migrate online and into the use of portable electronic media like mobile devices.It also noted that although the rapid adoption of the Internet and mobile technology have created a market for mobile devices, especially for those under 35, they are low on the list of preferences for accessing information because of the difficulty of reading content on these devices.Malaysians are not giving up newspapers for the Internet. This research based on the data sourced from Nielsen Media Index from 2006 to 2008. It shows that newspaper wasting disease levels held steady all through 2008 despite the rise in Internet consumption.Malaysian newspaper consumption holds steady despite Internet. Its compose by Emily Tan, Tuesday, 01 September 2009 at 1124.While the average time a Malaysian spends online has increased by 24% from three arcminute s a day in 2006 to three hours and 46 minutes a day in 2008, the average time spent reading a newspaper has held steady at 49 minutes in the same time span. There is no sign that Malaysians are shifting from newspapers to the Internet, said the report published in PHDs August newsletter PHD Pioneering. PHD is a media service agency under the Omnicom Media Group.The PHD study found that Malaysians over the age of 30 spend more time reading newspapers and its about 50 minutes daily, while the teenagers and young adults read for about half an hour on average per day.A few online news portals that without print circulation have been gaining a huge popularity since last year, creating a stiff competition in online space compared to the print circulation. As for English newsprint, The Star is still well ahead of everyone, considering The Sun offers free controlled circulation.Newspaper readership in Peninsular Malaysia for the fourth quarter of last year (4Q08) grew about two office (2% ) points to 55% from 52.9% in the same period in 2007, perchance in tandem with population growth of those aged 15 and in a higher place. Bahasa dailies seemed to have gained the most from the slight increase in newspaper readership, growing from 26.8% to 29.3% in the fourth quarter. English dailies aphorism gross profit marginal growth of 0.3 percentage point while Chinese and Tamil dailies saw a drop of 0.2 and 0.4 percentage point correspondingly. This is written by Aznita Ahmad Pharmy, Thursday, 05 March 2009, at 1744. engine roomOn the other hand, the media industry is challenged by the quickly changing environment, birth of new digital technologies and advertising money diverting to new media platforms on the internet. The local media industry has yet to capitalize on the affluent potential of the internet which will remain the instantaneous and the next powerful media platform, globally.Largely driving this change is technological development but the industry is also b eing affected by the impact of globalization of media ownership, the phenomenal growth of the internet, and other ambient media such as outdoor, point of sale, television, bus and taxi sites.The appendage of creating media strategies has become more complex and dynamic with the access of very highly developed software intentional to optimize media selection against an unending range of criteria. There is a growing movement away from the use of simple age sex demographics for most media assumptions and an increasing appreciation of the need for a more holistic understanding of current and potential customers, including characteristics such as media usage, buyer behaviour, attitudes, lifestyles and interests.According to Nielsen Media Index, while mainstream media continues to control the Malaysian media scene, the internet is fast catching up. There was a double growth in internet perceptivity which grasp up to two out of ten people compared to five years ago. The executive man ager for Nielsen Media search Malaysia, Andrea Douglas said that internet will become a more important part of the media cockle with its continuous growth in the market.She added that Malaysians are mulish to go on online news for prompt and uninterrupted updates. This can be seen by the 35% growth in online newspaper readership over a year, reaching one million readers. Those who only read news online exclusive online newspaper readers, it grew from 55,000 to 70,000 in 2008. The index signify a 21% increase in internet users with almost four out of ten users pass one to two hours on the internet every day. Increasing internet penetration goes hand-in-hand with increased Internet usage.However, news seekers have not abandoned the traditional medium as nine in 10 readers still obtain their news through a hard copy. Apart from more common features such as email, surfing and information gathering, the popular activities for citizen are online TV/music/games (47%), followed by me ssage/ call in/blogging (45%) and reading newspaper/magazines (35%). Within the Top 10 categories, nine categories advertised online but the expenditure only amidst less than 1% and 3% of the total budget online.Newspaper industry players have to eer evolve themselves to stay ahead by up technology and addressing readers preferences.The second Finance Minister, Tan Sri Nor Mohamed Yakcop urged the industry to play actively its role by involving themselves in developing the digital medium instead of ignoring it. He said it in his keynote address at the Malaysian Newspaper Publishers Association forum.Nor Mohamed said that with the online global reach, publish news about the countrys development became faster and easier. He added that to promote Malaysia as a developing and stable nation to potential foreign investors, information reported must be accurate. This image would be able to attract more foreign investments and visitors in Malaysia.As for Group M chief executive officer, Henry Tan said that as technology drove change, consumers, media, media agencies and clients were changing as well. New contemporaries was created by new technology while new media grammatical construction and ownership will strengthen competition. The role of media agencies has expanded to more than just planning and purchasing media spots. Agencies also have to recognize changes in clients and deal with each one differently.Dow Jones Asia-Pacific sales director, Mark geneva said change was not uncommon in the print media which comprised it to be better and more efficient. strength new revenue stream and the branding receipts from a strong online presence in the combination of global trend, these have seen that local traditional news organizations begin to put more resources on the online platform. Besides, they also hired people who recognize the benefits of Web 2.0 applications such as social networking site Facebook, and Twitter, the so-called SMS of the Internet.The growin g popularity of online news sites where readers can read for free is one reason decision-makers at traditional news organizations find it very hard to raise cover prices for their printing product. A drop in circulation numbers straightway impacts the advertising rate which a publication commands.According to the On Media newsletter, the circulation numbers from Nielsen Media Research signified online news portals have not affected print newspaper that much though online readership has increased rapidly over the past year. At present, online news sites still do not enjoy the level of loyalty and commitment shown by readers to newsprint. Online readership tends to change based on economic, political and social events, said the newsletter. Based on Nielsen Media Research and Com Score, the newsletter concluded that readers spend less time reading online news than print.About three million Malaysians visited local online news portals daily in March this year, compared with 2.5 million in the same month last year according to ComScore Media Metrix, a digital marketing research company. The average daily readership for local news portals for that period was about 2.8 million. Malaysiankini led online English news sites average daily visitors over the past year. As for The Star Online was placing second. Utusan Malaysia Online led Malay-language online followed by Berita Harian Online. As for the Chinese-language online news portals, ChinaPress dotcom was the most popular. There are more on societal changes.Managing director of Omnicom Media Group, Andreas Vogiatzakis said that newsprint have little to fear from online news portals. He said that newspapers must learn to pull on their online portals to add value and enhance their offerings to the consumer.The industry has seen a decline in newspaper adex over the past three years, from 58% in 2006 to 54% 2008 said the Nielsen Co Malaysia executive director Andrea Douglas. She said that the reasons for these changes are difficult to said but some categories have changed their spending patterns. There has been a decline in residential ad spending due to the economic downturn and this category is almost fully print advertising. The web has introduced new advertising potential and new media that could be eroding the traditional print share.According to Nielsen Media Research, newspaper in Malaysia has a mainly younger readership, with 65 per cent below 40 and 35 per cent of its readers are supra 40 years. Percentage of newspaper readership between 20-29 age is the highest while the age between 50-54 is the lowest percentage of newspaper readership.According to Nielsen Media Research, newspaper in Malaysia has a mainly younger readership, with 62 per cent below 40 and 38 per cent of its readers are in a higher place 40 years. Percentage of newspaper readership between 20-29 age is the highest while the age between 50-54 is the lowest percentage of newspaper readership.The readership of age preced ing(prenominal) 55 years old in 2006 increases 3.5% compared with the readership of age 55 years old in 2005. The old generation between the age of 55 and above are still enthusiastic supporters of newspapers while the younger generation appear to be much in tune with computers and the internet. The newspapers are not only challenged by online websites but also the electronic media having regular updates in the news bulletin. Many youngsters enjoyed reading serious news on the internet rather than from the newspapers. Hence, newspaper publisher should focus on public from the age of 55 and above.According to a statistic from Department of Statistics, Malaysia, the population of Malaysia is increasing. The population of age 15 and below is decreasing every year. The decreasing rate of year 2002 to 2004 is 0.3% whereas the decreasing rate of year 2005 to 2008 is 0.2%. The population of age 64 and above is increasing every year by 0.1 % chuck out for the year 2005 and 2006 which remai n same at 4.3%.The same pattern of readership frequence could also be detect among the respondents with different educational backgrounds. According to The Public sentience of Science and Technology Malaysia 2000, the frequency of newspaper readership proceed to be the highest among those with tertiary education where 60.0% of them read the newspaper daily. This was followed by those with secondary education (44.1%) with the lowest frequency (28.1%) among those with primary or lower education.In footing of locality, The Public Awareness of Science and Technology Malaysia 2000 also revealed that 49.3% of the urban respondents read the newspaper daily compared to those in rural areas (39.8%). On the frequency of readership, the opposite situation could also be observed in the other categories (a few times a week, once a week, or seldom). For example, about one-third (32.1%) of the rural respondents and likewise about 34.4% of the urban respondents read newspapers only a few time s a week.Identify the contactry currently exists in the industry in which the company is operating. ar there many an(prenominal) competitor or just a few competitor or no competitor?There are many competitors around Star Publication. For instance, Berita Harian, Guang Ming Daily, Sin Chew Jit Poh, The Sun Daily, Utusan Malaysia, and also New Straits Times. The largest Star Publication newspaper competitor is the New straits Times.The shift recommendation of analysts on Star Publications (M) Bhd are the countrys largest and most profitable print media group and as well as other media stocks, such as Media Chinese International Ltd and The New Straits Times Press (M) Bhd, shows the current negativity on the industrys earnings prospects in the coming quarters, if not years.The Nielsen Media Report shows that Stars gross adex dived 20.6% y-o-y in January. Citi Investment Researchs analyst Alyson Shin has noticed that the foliate count for classified advertisements, which make up 25% of Stars advertising revenue, has fallen 33% to 40 pages from 60 pages in better times.Alyson Shin mention that Star has raised its advertising rates by an average 4% for both classified and display advertisements for the heavier days which is Wednesday to Saturdays. However, this is unlikely to be sufficient to offset the drop in adex in FY (Financial Year) 2009. Factoring in the 4% ad rate hike, we still forecast adex to contract 12% in FY2009, Alyson Shin comments in a February research report.Over the past two decades, Star has grown by shooting up and leap in terms of earnings as well as manpower, after its English daily, The Star, overtook its main rival New Straits Times. The groups fixed operating cost have blown up. Its total operating cost that inclusive of printing and the newsprint have been above RM600 million in the past three years. This rear to RM651.2 million in FY (financial year) 2008 versus revenue of RM831 million and net profit of RM138.9 million.The high fi xed cost structure is a blessing for the group when advertisers are competitiveness for space in the newspaper because of the profit margin is getting bigger as the advertisement relative amount rises. Star has been the case this for over the past 10 years. It is the countrys most profitable newspaper with a handsome pre-tax profit margin of 24.2%, compared with its rival NST (New Strait Times) which manages only 9.5%.NSTP lost much of its thump over the past 25 years, especially on two separate occasions. During Operasi Lalang in October 1987, Star Publications (M) Bhds licence was revoked under a plan to crack down on the opposition leaders and social activists. After Star got back its licence, its readership and circulation surged. According to Nielsen Media Research, as at end-2008, NSTPs flagship newspaper New Straits Times had a readership of 308,000 while New Sunday Times readership stood at 263,000. As at end-June last year, New Straits Times circulation, according to the A udit Bureau of Circulation, stood at 136,530 while that of New Sunday Times was 156,910.These figures cannot rival that of its main competitor, Star Publications, which had a readership of more than one million for both its daily and Sunday paper. Stars circulation was over 300,000 daily.Are the products/ services offered by company very much different from its competitors in terms of price/feature/others.KUNTUMAn educational monthly in Bahasa Malaysia for children ages 6 to 12. In keeping with its Learning is Fun motto, the Kuntum Club organises many fun activities and hoStar Newspaper Business StudyStar Newspaper Business StudyCOMPANY BACKGROUNDCompanys historyThe Star was first published regionally in George Town, Penang on the 9th of September, 1971. The Star went to become a national newspaper on Jan 3, 1976, when it set up an office in Kuala Lumpur. To adapt a growing staff and a new press incorporating the latest technology, it moved its headquarters from Kuala Lumpur to its present premises in Petaling Jaya in 1981.The Star created histor y on June 23, 1995 when it became the first Malaysian newspaper and the third in Asia to launch a World Wide Web edition. In addition to that, The Star also achieved a new milestone in its bodily history in the same year by being listed on the Main Board of the Kuala Lumpur Stock Exchange.In the year 2000, The Star relocated in stages to its very own 17 storey premises, Menara Star in Section 16, Petaling Jaya.In January 2002, The Stars new printing plant, Star Media Hub was officially opened by the Deputy Prime Minister of Malaysia, YAB Dato Seri Abdullah bin Haji Ahmad Badawi in Shah Alam, Selangor. The Star also has a new office and printing plant, Star Northern Hub in Bayan Lepas, Penang.About The Star and Sunday StarThe Star weekday paper is packaged as a 4-in-1 paper, comprising the Main Paper, StarBiz and StarTwo. The Main Paper covers the latest in regional, national and as well as international news while St arBiz offers a comprehensive coverage of local and international financial news such as market trends, financial reports and latest market updates. StarTwo features articles on lifestyle, entertainment, health, parenting, social issues and et cetera.Every Sunday, there is an additional section known as Sunday Star. For the Sunday Star, it covers current local and as well as worldwide news. Apart from that, Sunday Star also contains an educational section where careers, further education, exams tips and various comments are featured within.Board of DirectorsThe current Executive Deputy Chairman of Star Publications (Malaysia) Berhad is Dato Clement Hii Chii Kok whereas the Group Managing Director / Chief Executive Officer is Datin Linda Ngiam Pick Ngoh. There are two Executive Director in the company which is Tan Sri Datuk Seri Kamal Mohamed Hashim and Mr. Ng Beng Lye. And the Group Editorial / Education Advisor is Dato Ng Poh Tip.Groups Financial HighlightsThe revenue of the company as at 31 December 2008 is RM 831,040,000. Profit before tax is RM201, 463,000 whereas the profit after tax is RM138, 701,000 which show that the tax expense is RM 62,762,000.Political and Legal EnvironmentThere is one law in Malaysia that protects media freedom that is Article 10 of the Constitution. It also notes that there are limits to this freedom, and that these limits are, generally, defined by the Government. The constitution provides freedom for speech of the press. However, some important legal limitations exist. According to the government, it forced restrictions on the media to protect national security, public order, and friendly relations with other countries.The law that provides legislation in the interest of security or public order may restrict freedom of speech. Example, Sedition Act prohibits public comment on issues sensitive such as racial and religious matters. Government used Sedition Act, Official Secrets Act, Printing Presses and Publications Act, criminal defamation laws, and other laws to limit and threaten political speech.As for Printing Presses and Publications Act, it requires local and foreign publications to apply annually to the government for a permit. This is to make publication of wicked news a punishable offense and authorized the minister of internal security to ban or restrict publications believed to threaten public order, morality, or national security.Besides, it also prohibits court challenges to delay or revocation of publication permits. According to the government, these conditions make sure that the media did not spread twisted news and were necessary to preserve harmony and promote peaceful in a multiracial country.Criminal defamation is punishable by a maximum of two years in jail, a fine, or both. This is along with the government power over annual license renewal and other policies inhibited independent or investigative journalism and resulted in widespread self-censorship. Government had banned some foreign newspapers and magazines and, occasionally, covered up foreign magazines or newspapers.Furthermore, you could point to the guarantees under the Communications and Multimedia Act (CMA) if you want to impress the crowd which covers broadcasting and Internet. The guarantees under this act are no monopoly or oligopoly control of the airwaves and nothing in the Act is to be regarded as censorship of the Internet.No monopoly or oligopoly control of the airwaves is that no group of companies should own enough of the radio and television stations to prevent listeners and viewers from having a choice of material. So far is all good but they have not seen it put into practice as yet. As for censorship of the Internet, it is a bit more of a problem. Although there is not any censorship or control of the Internet under this Act, doesnt mean there isnt any censorship of the Internet.Internet access was widely available and internet subscriptions totalled approximately 13.5 million at the end of 2006. However, criminal offence and preventive detention laws generated some self censorship from local Internet content sources. Examples are bloggers, Internet news providers and NGO campaigners. The Malaysian Communications and Multimedia Commission (MCMC) shut down 11 Web sites for breaking rules and regulations concerning the publication of information on the Internet. Neither the MCMC nor the government released the names of the 11 Web sites.The CMA requires certain Internet and other network service providers to obtain a license. Previously, the government stated that it did not intend to enforce controls on Internet use but that it would punish the misuse of information technology. The CMA permits punishment of the owner of a Web site or blog for allowing content of a racial, religious, or political nature that a court deems offensive.Besides that, almost all the newspaper companies are under a political control. This is where the politician uses the publications to spread their news to the public. The biggest press group was Media Prima which is owned by Malaysia Resources Corporation Berhad which has close ties with the ruling United Malays National Organization (UMNO) and government. Media Prima owns the leading English-language newspaper The New Straits Times, the second biggest Malaysia-language paper Berita Harian, Malay Mail, Harian Metro and the ShinMin Daily News. In addition, Media Prima owns four terrestrial TV channels.However, the acquirement of Nanyang from MCA two years ago which is 2005 has since setup its monopoly in Chinese media. Sin Chew Media Group was being owned by the timber tycoon, Tiong Hiew King. He already corners about 90% of the Chinese language newspaper market, with his control of Sin Chew ,which publishes Sin Chew Daily and Guang Ming Daily, and Nanyang Holdings, which has Nanyang Siang Pau and China Press. As for The Star, it was owned by MCA while MIC owned Malaysia Nanban.Economic environment2009 will bound to be a very challenging year for Malaysia, although Malaysias economy is holding up pretty well this year. The first half of 2009 is expected to be a very tough period for Malaysia. The impact on Malaysia this year has somehow been cushioned but many are beginning to feel the economic downturn towards the year-end.Since the beginning of the global economic crisis, much has been said and published about its economic and financial impact, but relatively little has been said about the socio-economic impact. While it is not difficult to observe the direct and often immediate unpleasant social impact of the crisis, little is known about their indirect and long-term effect on the countrys human development and social capital potential which are increasingly acknowledged in developing economies as a critical factor for sustainable development.Economic pressures are becoming the primary forces determining the behaviour of Malaysian newspaper companies. It is increasingly clear that the responses o f some newspaper managers are affecting journalistic quality, producing practices that reduce the social value of newspaper content and that redirect the attention of newspaper workforce from journalism to activities primarily related to the business interests of the press.This situation has promoted encouraged self-interested behaviour aimed at exploiting market potential, and there is a growing conflict between the role of newspapers as servants of readers and the exploitation of readers to seek additional commercial gain. It should not be surprising that the public increasingly sees the press as just another business that is more concerned with its own economic interests than with the broader interests of those it purports to serve.This entry gives GDP growth on an annual basis adjusted for inflation and expressed as a percent. The graph above shows the overall performance of Malaysian in economy. We can see the economy started to drop from the middle for second quarter of 2008 t ill 2009.(Source CIA World Fact book, September 17, 2009)The print media is already feeling the pinch of the economic downturn. Newspaper adex has fallen for four consecutive months from October to January 2009. In January, newspaper adex declined 4% year on year to RM258.6 million while total adex for the media industry as a whole (TV, radio and print) inched up 2% year to year. This means that newspaper companies suffered a bigger blow than other media channels.As an open economy, Malaysia was badly affected by the global financial crisis and economic downturn. The major decline in exports, in turn, affected domestic demand. Thus, economic growth contracted 6.2% in the first quarter of 2009. However, the decline narrowed to 3.9% in the second quarter, assisted by speedy and effective operation of stimulus packages as well as monetary easing.Economic performance is expected to improve in the second half of the year, supported by counter-cyclical measures and reinforced by stabiliza tion in the global economic environment. As such, the economy is expected to turn around in the fourth quarter, though for the year it is estimated to contract 3%.The current environment exists as the Malaysian newspaper industry faces an uncertain future because of inactive markets, increasing competition from other media for audience attention, use by progressively smaller portions of the population and changes in advertiser media choices. It is a common view that the newspaper business is elastic because people read the papers every day, regardless of the economic climate. People want to know the latest happenings in good times and bad.It is expected to see a slowing down in adex in this year, 2009, with the absence of any major events, together with the weakening economic climate. The lower economic growth forecast has an effect on the newspaper industry including advertising. Last years growth was driven by worldly TV adex (up 20%), newspaper (8%), radio (21%) and point-of- sal e (28%).Malaysia Advertising Expenditure TrendsYear 1997 to 2008CirculationGenerally, there is a total newspaper circulation rise since 1998. The actual figure in appendix for 2008 should have rose higher though if the data from Nanyang, Malay Mail and Weekend Mail are included. Newsprint has not dead yet and will co-exist with online media. The circulation growth has been steadily all these years which contributed by the increase of the population and the knowledge of society.There are a few online news portals which without print circulation have been gaining huge popularity since last year. This creating a strong competition in online space compared to the print circulation. In English newsprint, The Star is still far ahead of everyone. As for The Sun, it considers that it offers free controlled circulation.Competition in Malay circulation is only reserved for the big three which similar to the online scenario shown in figure 2 at appendix. Harian Metro is gaining popularity in r ecent years. This had posed a challenged to Utusan Malaysias top position. Another famous trend in the Malay segment is newspaper sales on weekends are generally much higher than working days.SocietalAbout three million Malaysians visited local online news portals daily in March this year, compared with 2.5 million in the same month last year, according to comScore Media Metrix (digital marketing research company). While the figures quoted in May edition of OnMedia, OmicomMediaGroups industry newsletter, were based on average daily readership for the online news sites over the past year from March 2008 to February 2009. In total, the average daily readership for local news portals for that period was about 2.8 million.Malaysiakini led online English news sites with 91,943 average daily visitors over the past year. In second place was The Star Online with 74,417 readers a day. Malaysia-Today.net registered 12,948 readers daily, putting it in third place. The New Straits Times Online came in fourth with an average of 16,871 readers a day.However, in fifth place was theedgedaily.com, the website of The Edge Malaysia, which averaged 3,844 readers daily over the past year. However, according to Google Analytics which monitors online site traffic, since its relaunch in March this year as theedgemalaysia.com, the site has averaged around 14,000 readers daily.For the Malay-language online portals, Utusan Malaysia Online led with an average daily readership of 70,641 over the past year. It was followed by Berita Harian Online which averaged 55,764 readers a day for the past year. myMetro (the website of Harian Metro) averaged 51,767 readers daily, placing it third. ChinaPress dotCom was the most popular of the Chinese-language online news portals with an average of 29,950 readers a day. It was closely followed by nanyang.com which averaged 27,168 a day, and Sinchew-i which received an average of 23,779 readers a day.Key points that emerged from the study, if price were not a factor and if their choice was restricted to paper, online, e-paper and mobile devices. Sixty-nine percent (69%) of respondents would pick traditional newspapers as their first choice for news consumption. While, twenty-nine percent (29%) would make online sources their first choice, with the remaining twenty percent (2%) opting for e-paper or mobile devices first. The gap between traditional newspapers and online was, however, significantly smaller for younger respondents.Both consumers and advertisers have demonstrated a willingness to pay more for high value, topic-specific publications than they would for newspapers providing general news only, wrote authors Marieke van der Donk and Marcel Fenez in the reports executive summary.Financial readers were willing to buy financial online content for 97% as much as they would pay for a traditional paper. Meanwhile, sports fanatics would pay as much as 77% as they would for a traditional paper, for an online edition that focused on sports.The study showed newspapers are still the major sources of news and information for consumers, with survey respondents listing almost equally television, the Internet, and newspapers (free and paid) as their main source of news and information. Moreover, all 4,900 respondents were willing to pay for the general print news content.This is not to say that newspapers should not make the move online, said the report. Over 60% of respondents were willing to pay for general online news. Furthermore, based on the reports findings, a key future trend is the willingness of younger readers to pay for online content. According to the report, newspapers have been able to earn readers trust and loyalty, thus giving them the opportunity to both lead and follow audiences as they migrate online and into the use of portable electronic media like mobile devices.It also noted that although the rapid adoption of the Internet and mobile technology have created a market for mobile devices, espe cially for those under 35, they are low on the list of preferences for accessing information because of the difficulty of reading content on these devices.Malaysians are not giving up newspapers for the Internet. This research based on the data sourced from Nielsen Media Index from 2006 to 2008. It shows that newspaper consumption levels held steady all through 2008 despite the rise in Internet consumption.Malaysian newspaper consumption holds steady despite Internet. Its written by Emily Tan, Tuesday, 01 September 2009 at 1124.While the average time a Malaysian spends online has increased by 24% from three hours a day in 2006 to three hours and 46 minutes a day in 2008, the average time spent reading a newspaper has held steady at 49 minutes in the same time span. There is no sign that Malaysians are shifting from newspapers to the Internet, said the report published in PHDs August newsletter PHD Pioneering. PHD is a media service agency under the Omnicom Media Group.The PHD study found that Malaysians over the age of 30 spend more time reading newspapers and its about 50 minutes daily, while the teenagers and young adults read for about half an hour on average per day.A few online news portals that without print circulation have been gaining a huge popularity since last year, creating a stiff competition in online space compared to the print circulation. As for English newsprint, The Star is still well ahead of everyone, considering The Sun offers free controlled circulation.Newspaper readership in Peninsular Malaysia for the fourth quarter of last year (4Q08) grew about two percentage (2%) points to 55% from 52.9% in the same period in 2007, possibly in tandem with population growth of those aged 15 and above. Bahasa dailies seemed to have gained the most from the slight increase in newspaper readership, growing from 26.8% to 29.3% in the fourth quarter. English dailies saw marginal growth of 0.3 percentage point while Chinese and Tamil dailies saw a drop of 0.2 and 0.4 percentage point correspondingly. This is written by Aznita Ahmad Pharmy, Thursday, 05 March 2009, at 1744.TechnologyOn the other hand, the media industry is challenged by the rapidly changing environment, birth of new digital technologies and advertising money diverting to new media platforms on the internet. The local media industry has yet to capitalize on the full potential of the internet which will remain the fastest and the next powerful media platform, globally.Largely driving this change is technological development but the industry is also being affected by the impact of globalization of media ownership, the phenomenal growth of the internet, and other ambient media such as outdoor, point of sale, television, bus and taxi sites.The process of creating media strategies has become more complex and dynamic with the introduction of very highly developed software designed to optimize media selection against an unending range of criteria. There is a growing moveme nt away from the use of simple age sex demographics for most media assumptions and an increasing appreciation of the need for a more holistic understanding of current and potential customers, including characteristics such as media usage, buyer behaviour, attitudes, lifestyles and interests.According to Nielsen Media Index, while mainstream media continues to control the Malaysian media scene, the internet is fast catching up. There was a double growth in internet penetration which reaching up to two out of ten people compared to five years ago. The executive director for Nielsen Media Research Malaysia, Andrea Douglas said that internet will become a more important part of the media mix with its continuous growth in the market.She added that Malaysians are decided to go on online news for faster and constant updates. This can be seen by the 35% growth in online newspaper readership over a year, reaching one million readers. Those who only read news online exclusive online newspaper readers, it grew from 55,000 to 70,000 in 2008. The index signified a 21% increase in internet users with almost four out of ten users spending one to two hours on the internet every day. Increasing internet penetration goes hand-in-hand with increased Internet usage.However, news seekers have not abandoned the traditional medium as nine in 10 readers still obtain their news through a hard copy. Apart from more common features such as email, surfing and information gathering, the popular activities for citizen are online TV/music/games (47%), followed by message/chat/blogging (45%) and reading newspaper/magazines (35%). Within the Top 10 categories, nine categories advertised online but the spending only between less than 1% and 3% of the total budget online.Newspaper industry players have to constantly evolve themselves to stay ahead by improving technology and addressing readers preferences.The second Finance Minister, Tan Sri Nor Mohamed Yakcop urged the industry to play activel y its role by involving themselves in developing the digital medium instead of ignoring it. He said it in his keynote address at the Malaysian Newspaper Publishers Association forum.Nor Mohamed said that with the online global reach, publish news about the countrys development became faster and easier. He added that to promote Malaysia as a developing and stable nation to potential foreign investors, information reported must be accurate. This image would be able to attract more foreign investments and visitors in Malaysia.As for Group M chief executive officer, Henry Tan said that as technology drove change, consumers, media, media agencies and clients were changing as well. New generation was created by new technology while new media structure and ownership will strengthen competition. The role of media agencies has expanded to more than just planning and buying media spots. Agencies also have to recognize changes in clients and deal with each one differently.Dow Jones Asia-Pacifi c sales director, Mark Hollands said change was not uncommon in the print media which comprised it to be better and more efficient.Potential new revenue stream and the branding improvement from a strong online presence in the combination of global trend, these have seen that local traditional news organizations begin to put more resources on the online platform. Besides, they also hired people who recognize the benefits of Web 2.0 applications such as social networking site Facebook, and Twitter, the so-called SMS of the Internet.The growing popularity of online news sites where readers can read for free is one reason decision-makers at traditional news organizations find it very hard to raise cover prices for their printing product. A drop in circulation numbers directly impacts the advertising rate which a publication commands.According to the On Media newsletter, the circulation numbers from Nielsen Media Research signified online news portals have not affected print newspaper th at much though online readership has increased rapidly over the past year. At present, online news sites still do not enjoy the level of loyalty and commitment shown by readers to newsprint. Online readership tends to change based on economic, political and social events, said the newsletter. Based on Nielsen Media Research and Com Score, the newsletter concluded that readers spend less time reading online news than print.About three million Malaysians visited local online news portals daily in March this year, compared with 2.5 million in the same month last year according to ComScore Media Metrix, a digital marketing research company. The average daily readership for local news portals for that period was about 2.8 million. Malaysiankini led online English news sites average daily visitors over the past year. As for The Star Online was placing second. Utusan Malaysia Online led Malay-language online followed by Berita Harian Online. As for the Chinese-language online news portals, ChinaPress dotcom was the most popular. There are more on societal changes.Managing director of Omnicom Media Group, Andreas Vogiatzakis said that newsprint have little to fear from online news portals. He said that newspapers must learn to pull on their online portals to add value and enhance their offerings to the consumer.The industry has seen a decline in newspaper adex over the past three years, from 58% in 2006 to 54% 2008 said the Nielsen Co Malaysia executive director Andrea Douglas. She said that the reasons for these changes are difficult to said but some categories have changed their spending patterns. There has been a decline in residential ad spending due to the economic downturn and this category is almost fully print advertising. The web has introduced new advertising potential and new media that could be eroding the traditional print share.According to Nielsen Media Research, newspaper in Malaysia has a mainly younger readership, with 65 per cent below 40 and 35 per cent of its readers are above 40 years. Percentage of newspaper readership between 20-29 age is the highest while the age between 50-54 is the lowest percentage of newspaper readership.According to Nielsen Media Research, newspaper in Malaysia has a mainly younger readership, with 62 per cent below 40 and 38 per cent of its readers are above 40 years. Percentage of newspaper readership between 20-29 age is the highest while the age between 50-54 is the lowest percentage of newspaper readership.The readership of age above 55 years old in 2006 increases 3.5% compared with the readership of age 55 years old in 2005. The old generation between the age of 55 and above are still enthusiastic supporters of newspapers while the younger generation appear to be much in tune with computers and the internet. The newspapers are not only challenged by online websites but also the electronic media having regular updates in the news bulletin. Many youngsters enjoyed reading serious news on the int ernet rather than from the newspapers. Hence, newspaper publisher should focus on public from the age of 55 and above.According to a statistic from Department of Statistics, Malaysia, the population of Malaysia is increasing. The population of age 15 and below is decreasing every year. The decreasing rate of year 2002 to 2004 is 0.3% whereas the decreasing rate of year 2005 to 2008 is 0.2%. The population of age 64 and above is increasing every year by 0.1 % except for the year 2005 and 2006 which remain same at 4.3%.The same pattern of readership frequency could also be observed among the respondents with different educational backgrounds. According to The Public Awareness of Science and Technology Malaysia 2000, the frequency of newspaper readership continued to be the highest among those with tertiary education where 60.0% of them read the newspaper daily. This was followed by those with secondary education (44.1%) with the lowest frequency (28.1%) among those with primary or low er education.In terms of locality, The Public Awareness of Science and Technology Malaysia 2000 also revealed that 49.3% of the urban respondents read the newspaper daily compared to those in rural areas (39.8%). On the frequency of readership, the opposite situation could also be observed in the other categories (a few times a week, once a week, or seldom). For example, about one-third (32.1%) of the rural respondents and similarly about 34.4% of the urban respondents read newspapers only a few times a week.Identify the contender currently exists in the industry in which the company is operating.Are there many competitor or just a few competitor or no competitor?There are many competitors around Star Publication. For instance, Berita Harian, Guang Ming Daily, Sin Chew Jit Poh, The Sun Daily, Utusan Malaysia, and also New Straits Times. The largest Star Publication newspaper competitor is the New straits Times.The sell recommendation of analysts on Star Publications (M) Bhd are the countrys largest and most profitable print media group and as well as other media stocks, such as Media Chinese International Ltd and The New Straits Times Press (M) Bhd, shows the current negativity on the industrys earnings prospects in the coming quarters, if not years.The Nielsen Media Report shows that Stars gross adex dived 20.6% y-o-y in January. Citi Investment Researchs analyst Alyson Shin has noticed that the page count for classified advertisements, which make up 25% of Stars advertising revenue, has fallen 33% to 40 pages from 60 pages in better times.Alyson Shin mention that Star has raised its advertising rates by an average 4% for both classified and display advertisements for the heavier days which is Wednesday to Saturdays. However, this is unlikely to be sufficient to offset the drop in adex in FY (Financial Year) 2009. Factoring in the 4% ad rate hike, we still forecast adex to contract 12% in FY2009, Alyson Shin comments in a February research report.Over the pa st two decades, Star has grown by shooting up and bounds in terms of earnings as well as manpower, after its English daily, The Star, overtook its main rival New Straits Times. The groups fixed operating costs have blown up. Its total operating costs that inclusive of printing and the newsprint have been above RM600 million in the past three years. This ascend to RM651.2 million in FY (financial year) 2008 versus revenue of RM831 million and net profit of RM138.9 million.The high fixed cost structure is a blessing for the group when advertisers are fighting for space in the newspaper because of the profit margin is getting bigger as the advertisement relative amount rises. Star has been the case this for over the past 10 years. It is the countrys most profitable newspaper with a handsome pre-tax profit margin of 24.2%, compared with its rival NST (New Strait Times) which manages only 9.5%.NSTP lost much of its thump over the past 25 years, especially on two separate occasions. Durin g Operasi Lalang in October 1987, Star Publications (M) Bhds licence was revoked under a plan to crack down on the opposition leaders and social activists. After Star got back its licence, its readership and circulation surged. According to Nielsen Media Research, as at end-2008, NSTPs flagship newspaper New Straits Times had a readership of 308,000 while New Sunday Times readership stood at 263,000. As at end-June last year, New Straits Times circulation, according to the Audit Bureau of Circulation, stood at 136,530 while that of New Sunday Times was 156,910.These figures cannot rival that of its main competitor, Star Publications, which had a readership of more than one million for both its daily and Sunday paper. Stars circulation was over 300,000 daily.Are the products/ services offered by company very much different from its competitors in terms of price/feature/others.KUNTUMAn educational monthly in Bahasa Malaysia for children ages 6 to 12. In keeping with its Learning is Fu n motto, the Kuntum Club organises many fun activities and ho