Media Prima set to exit Philippines TV

According to a report in The Star in Malaysia, the media company is looking at divesting its shares to the Philippine Long Distance Telephone Co (PLDT).

MPB has accumulated losses of US$13.3 million to $20.2 million in financial year 2008 and $6 million in the first half ending June 2009.

A sell-off would be a blow to the media company’s ambitious expansion plans. Last year MPB outlined its regional expansion intentions with the proposed establishment of the MPB Strategic Media Fund, a private equity fund set up for the purpose of investing in media assets across Southeast Asian and other Asian emerging markets.

The fund could not be set up as it failed to attract investors.

The Media Fund’s first investment was in the Philippines, where the company entered into an airtime and consultancy agreement with the ABC TV5 network, one of the television networks in the Philippines.

The channel was relaunched in August 2008 to target young Filipinos via reality TV, drama, teen programmes, movies and cartoons.

Experts in the industry still seem to be supportive of the media company's pan-regional ambitions.

Rahul Thappa, CEO of Mindshare Malaysia, said that it was unfortunate that this partnership could not succeed. “Media Prima has exhausted its photosynthesis capacity in Malaysia and we would have been happy to see it succeed in the Philippines. Organic growth for the company can come only through rate increase and new media in Malaysia. Astro has begun to increase its penetration, so it is important for it to target new markets.”

According to Thappa, even though the venture was a good start, the fact that MPB could not gain executive control of TV5 was a primary reason for its failure.

“The company has the money and expertise to succeed but it probably needs to target markets that are less developed, such as some African countries. The Philippines is a very developed market with strict media ownership laws.”

A source who did not want to be named said that the partnerhip made sense but the decision to withdraw also makes sense as the company would have experienced a further erosion of profit.

“Media Prima has had sizeable losses after it tied up with ABC. I would attribute this debacle to a handful of reasons. The company was in too much of hurry to get into the Philippines market. They could have evaluated it better. The strategy was a clever one but it needed more homework.”

S. Ranganathan, CEO of Starcom Malaysia, however feels that in turbulent times companies tend to focus on the core and try to get away from distractions and that might be the reason behind Media Prima’s decision.

“Malaysia’s economic outlook looks very positive and MPB's senior leadership might have just decided to focus on leveraging its Malaysian operation. There are still growth opportunities here and there's higher share opportunity for TV to grow. Pan-regional ambitions are good but you don’t need a distribution platform. You can do that by creating smart content.”

Some experts in the industry see a parallel in the failed partnership between Astro and Lippo in Indonesia.

According to reports in Malaysia, MPB is also seeking to take The New Straits Times Press (NSTP) private via a share swap exercise.

In May, MPB's group managing director and chief executive officer Abdul Rahman left the company, with Datuk Amrin Awaluddin, the CEO of TV3, appointed as the chief operating officer.