NEXT For Astro .. Selling Contents, Big Growth In FY2016 onwards .... !!

It wants to aggressively sell channels and content to regional markets in the near future to reduce its reliance on subscription revenue.

While Astro has been selling local vernacular content overseas, the media group’s two new ventures .. SPARK Asia and a partnership with Mexico’s TV Azteca SAB de CV to produce Asia based telenovelas are its first steps in diversifying into genera based content to appeal to more international viewers.

Astro is still very much reliant on subscription fees. For the first half of its financial year ending Jan 31, 2015 82% of its revenue came from television subscriptions.

However revenue parked under its other segment – comprising licensing income, publications advertizing expenditure, programme sales, revenue from sister company NJOI and movie theatre regenue – more than doubled to rm180 million in 1HFY2015. Its share of group revenue also improved to 6.92% in 1HFY2015 from the previous year’s 4.69%.

The group has also sold some of its channels – such as Astro Ria, Astro Prima and similar channels for local audience to neighbouring countries and is moving into producing various genres that appeal to a wider viewership.

The price paid for SPARK Asia or any other channel by international buyers could translate into pure profit for Astro because all production costs have already been covered by the Malaysian market. Any retransmission cost for international markets will be covered by the subscribers of a particular market.

It is confident that even with rising production costs from increased output, the group can maintain the percentage of its content cost at 32% to 35% of its television revenue. This is because the group’s ARPU has been growing, as it introduces more channels and makes its content available on smart devices.

Also it had increased the fees it charges HD viewers by rm5.00. As 2@Fy2015, its ARPU was rm98.00.

About 90% of its 4.2 million subscribers had swapped their old decoders for the HD ones as at Nov 20 2014. The reinvestment phase is pretty much done because it does not need to swap the old decoders of the remaining 10% of subscribers. There will be natural attrition as and then they upgrade to HD services.

The group might not see big growth in its profit in Fy2016 as that will be the peak amortization year on terms that are unrelated to Astro set top boxes.

Thereafter … 2017 onwards PAT is going to grow very strongly to enable a progressive dividend payout.