So as usual, lets practise some qualitative analysis. First, why is The Star so unpopular?
1. It's is owned 42% by MCA. Who will not sell under ANY circumstances. OK, no problem here.
2. It's print media has dropped in the last few years ever since Malaysia changed government, from a 1 billion in revenue, to 600 million, to 300 million in revenue, and dissapearing earnings (due to no more support from previous government).
3. Warren buffett has sold his newspaper business to Lee Enterprises, declaring it very difficult to handle. Multiple newspapers have been unable to compete in the digital age, going bankrupt left right and center.
SO, IS IT REALLY OVER?
I believe not. There are a few very key strategies that has to happen that will allow this stock to flourish back to its heydays, if done properly. I believe that they have ample breathing room, a publishing license, a broken but reworkable reputation, and they have all the tools and connections in place to become a media juggernaut again, provided they EMBRACE THE FUTURE.
1. CASH: Lots of it. They have 385 million ringgit IN CASH, with zero borrowings and debt. They also have 278 million in property and 148 million in investment properties
2. Publishing License. I believe this is valuable intellectual asset, which can be very valuable to the right group.
3. Connections. Since old Brother Wong is still working in there with his 34 years of experience, I believe given the right environment, the most important thing to a newspaper is still going to be around that the group can salvage.
WHAT IS THE STAR'S MOST VALUABLE ASSET AND HOW CAN IT GROW FROM THE ASHES?
The simple answer is: CONTENT.
I believe journalism is the most important thing to society. A clean, reputable piece of writing that changes and informs the public. Bringing in the spark of knowledge and awareness that drives a group of individuals into a state, a country.
But.... it doesn't pay the bills. Never has. What pays bills?
ADVERTISING.
Problem is, everyone hates advertising. Even journalists.
So now, the problem is not the content. It is in monetizing the content... How to do it? Maintain a credible journalistic avenue ( you obviously could not maintain credibility when BN was paying your salary, can you?) and at the same time generate a profit?
Hard? Yes.
Impossible? No.
NOW, HOW WOULD YOU GO ABOUT INVESTING IN A DOWNTRODDEN STOCK WORTH 192 MILLION RINGGIT, AND BRING IT BACK TO ITS BILLION DOLLAR VALUATION?
IF I WERE PHILIP, CORPORATE RAIDER TURNED CEO WHO BOUGHT AND PRIVATISED THE STAR MEDIA GROUP, WHAT WOULD I DO?
Lets ponder on this question a little bit, shall we? Here is where I would start looking at the problem.
1. Firstly, I would look to increase the number of subscribers. Reduce the number of advertisements. Hire the top journalists, give them a budget and free reign to write about topics that matter. Topics and pullitzer prize winning articles that readers care about. No one wants to read about the boring stuff or the advertising materials, they want to read about gripping information, personalized writing, award winning investigative journalism. This will bring back readers, if not the revenue.
2. Secondly, fix the revenue problem. In the end, the most important thing to a paper is content. CONTENT! That is what a paper is about. That is how you fix the revenue problem. Monetize the content. But how? Obviously, you follow the smell of money in advertising. And where are the big bucks? Where it has been for the last few decades, and where the big bucks still reside: SOUND AND VIDEO. It is no longer in the written word, but that doesnt mean that it is not news. It is just not only in PAPER ANYMORE.
Why do people newspaper just has to be paper anymore, ITS THE 21st CENTURY!
Instead of producing loss making paper trails, The Star could easily use the same team, same group to create content that Youtube, Facebook, Netflix, and even Astro will buy. Products that are investigative, fun, interesting, and build a lot of buzz.
Just by spending a part of that cash hoard (around 100 million), The Star media could get into producing good journalism content(or buying production) similar to:
Jason's food trails, Jason can't cook, Jason Food memories (Malaysian based - Food documentaries, food journalism,) Ugly Delicious, salt fat acid heat (food learning)
Dark Tourism, Our planet, restaurants on the edge, The kindness diaries (tourism shows, travelogues)
Rotten, Dirty money, explained, Icarus, Don't FxxK with cats, the staircase (investigative journalism on sensitive topics )
The pixar story, Jiro dreams of sushi, Dogs, Last Chance U (Uplifiting documentaries, autobiographies)
What you will quickly notice out of this is the cost. Similar to making porn, it is a very low budget (compared to movies), and high impact (and revenue generation), which combines all the parts that newspapers are good at, and what the general public are willing to pay for and where the revenue dollars are coming from.
Think about it, how much is the cost of producing 1 episode of Jason cooking show? One host, an honest review from the chef, a good production and research team, a good cameraman. 50K-100K per episode including post production? 500K per series? Imagine the advertising, subscription on youtube, facebook, netflix, astro if it goes viral and is shown throught Asia? How much ROE would that series bring in?
What is different is the reach, if done properly, the STAR media group could generate revenue OUTSIDE of Malaysia, thus paying for its journalism department, and providing quality content.
Imagine providing content(or buyout) like this
Low cost, high level of investigative journalism, concentrating on the neighbourhood feel, a beautiful view of how to truly make content that individuals would want to follow.
BUT SADLY, I AM NOT THE NEW CEO APPOINTED FOR THE STAR MEDIA GROUP.
SO ALL I CAN POINT OUT TO YOU IS: THE POTENTIAL OF THE STAR MEDIA GROUP, BASED ON PURE CASH BASIS, THE POSSIBILITY OF CHANGE WITH A NEW CEO.
MY 2ND PUMP AND DUMP ARTICLE.
Remember.
1. You will be buying a company with 800 million in assets, 390 million in cash, no debt or borrowings. All for 192 million.
2. You will be buying a MCA majority company, which could be a good/bad thing, depending on the politics of the day.
3. You will be buying a company with a publishing license, the ownership of 988 radio, Suria, a team of event managers, and still looking for that CEO to change the world.
I hope you learned something new today:
Philip
rylakk2016@gmail.com
https://klse.i3investor.com/blogs/philip5/2020-04-11-story-h1505927167-My_Second_Pump_Dump_Article_How_to_pump_with_a_Conscience.jsp
