KUALA LUMPUR, Aug 15 — A company closely associated with Umno is proposing a major corporate revamp which would privatise the country’s most established newspaper company, New Straits Times (NST) Press.
But analysts and bankers are charging that Media Prima’s financial engineering plan will not help boost the newspaper company’s flagging fortunes.
In fact, the proposal would see NST surrendering its listing status on the Kuala Lumpur stock exchange in a deal that would not be beneficial to its existing shareholders, bankers and analysts say.
“The deal shows that it is tough to make a business model work when a newspaper is used as a political vehicle,” said a senior media industry executive familiar with the proposed transaction.
Media Prima, Umno’s main investment arm, owns a commanding 43.3per cent interest in NST.
Last week, it submitted a plan to the board of the newspaper company to acquire shares it does not already own through a so-called share swap.
Under the proposed acquisition, which has not been made public, stockholders of NST would receive new Media Prima shares in a one-for-one exchange.
Bankers said that the swap favoured Media Prima more than NST because the underlying value of the newspaper company was more than twice the value of its main debt-heavy controlling shareholder.
The deal would also transform Media Prima, which also owns all of the country’s free-to-air television stations, including the profitable TV3, into Malaysia’s most powerful media company.
Financial implications aside, media industry executives said that the proposed corporate revamp would do little to improve the deep financial strife in NST, which publishes the English-language daily The New Straits Times, and two other Malay-language publications, Berita Harian and Harian Metro.
Wracked by management problems, a dwindling readership and shrinking advertising revenue, NST has long lost its premier position in the print media business in Malaysia.
The Star, which last year reported a daily circulation of just over 300,000 copies, is now the country’s top-selling English-language media company.
Media industry executives said that daily circulation for the New Straits Times is struggling at just under 120,000 copies, down from the roughly 140,000 it posted last year.
Its main Malay-language daily Berita Harian has seen daily circulation figures fall by about 25 per cent over the last four years to about 180,000 copies currently.
The publishing group’s Malay readership now favours the racy tabloid Harian Metro, which has seen its circulation jump to roughly 370,000 copies from 180,000 copies in 2004.
“The whole deal will streamline the media assets of Media Prima in a neat fashion and will give the company the financial means to move forward in a very challenging environment,” said one investment banker who is involved in the proposed transaction.
Media Prima’s single largest shareholder is Gabungan Kasturi, which is owned by the business nominees of Umno. - Straits Times
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