KUALA LUMPUR (Oct 14): Malaysia’s media companies, bogged down by legacy constraints, continue to struggle in the digital age with recent efforts proving incremental rather than transformative, said Kenanga Investment Bank.

Traditional media companies are still behind the trend with digital advertising, which now accounts for about 70% of the industry’s advertising expenditure, the research house said in a sector note. Current offerings are generally limited to basic formats such as banner ads, Kenanga noted.

“In Malaysia, traditional media players are increasingly challenged by digital-first platforms,” Kenanga said. “These channels are highly attractive to advertisers as they harness technology to optimise campaign reach and effectiveness.”

Social media, influencers, messaging apps, streaming services, search engines, and live-stream commerce offer advertisers advanced targeting tools as well as real-time bidding and measurable results.

In contrast, traditional television, print and radio remain constrained by coarse audience metrics, less interactivity and slower feedback.

“Although recent initiatives such as workforce optimisation, efficiency improvements, and selective asset impairments have helped cushion losses, these measures are incremental fixes rather than long-term game-changing solutions,” Kenanga said.

Sustainable profitability will require more “transformative shifts, including regional expansion, mergers and acquisitions, and divestiture of non-core businesses, the research house said.

Legacy media companies, such as Astro Malaysia Holdings Bhd (KL:ASTRO) and Media Prima Bhd (KL:MEDIA), have been under pressure from a slump in advertising expenditure as brands shift their spending to online and social media, where consumers spend most of their time.

Costly legacy infrastructure, such as broadcast towers, satellite transponder leases, printing facilities, and physical distribution networks, also drags on earnings of traditional media companies.

Overall, Kenanga is keeping the sector on an ‘underweight’ call. The research house also does not have any stock picks for the sector.