Astro's home shopping segment pulls ahead as TV and radio revenue dip

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Astro’s home shopping revenue jumped by 14.1% to RM95.3 million during the first quarter ended 30 April 2020 (Q1 2021), compared to RM83.5 million last year. Astro attributed the growth due to higher viewership and the festive season during the quarter. Its earnings before interest, tax, depreciation and amortisation (EBITDA) for this segment also grew by 153% to RM1.8 million.

Leveraging on the surge in online shopping during the Movement Control Order (MCO), Go Shop launched a new channel dedicated to Ramadan and Raya products and expanded its offerings to include fresh and frozen food. It also launched an e-Bazaar to support SMEs during this trying time.

That said, Astro posted a 15% year-on-year (YoY) dip in total revenue for Q1 2021 to RM1.1 billion. It’s EBITDA also dropped by 26% to RM330.2 million, while its profit after tax and minority interest (PATAMI) dipped 58% YoY to RM74 million. Astro's marketing and distribution costs stood at RM69.4 million for the first quarter ended 30 April 2020, narrowing from RM92.4 million a year ago.

In particular, advertising revenue for its TV segment dropped 38% to RM53.1 million compared to the same period last year. Meanwhile, its subscription revenue also declined by 11% YoY to RM821.5 million. Total revenue for TV dropped 16% to RM920.4 million, mainly impacted by the COVID-19 pandemic. Its EBITDA dipped by 23.3% YoY to RM319.0 million.

Its radio revenue also decreased 37% to RM37.2 million despite an increase in listeners from 16.2 million last year to 16.9 million Q1 2021. Consistent with the contraction in business, Astro also experienced a 38% YoY drop in ad expenditure to RM90 million as advertisers pulled back ad spend. Despite the decrease in ad expenditure, Astro Radio's radex share increased by 4 percentage points to 84%.

Business impact of COVID-19 and MCO

The pandemic has seen advertisers pulling back on ad spend and a pause on the production of commercials. In response, Astro integrated its TV, radio and digital teams to offer total advertising solutions to clients. It also introduced new ad formats.

On the content front, it launched new channels and content formats, as well as premiered local movies directly to home cinemas. This was in response to the deferment or cancellation of key sporting and live events worldwide, as well as the closure of cinemas and production with live audiences being prohibited. The company also partnered with Allo Technology for bundled broadband with content, enabling it to reach beyond urban areas that are not covered by its existing partnerships.

Meanwhile, for its home shopping segment, Astro expanded its offerings to include fresh and frozen food, fruits and ready meal options and health-related products. It also included daily social media live streams as a result of supply chain disruptions and reduced frequency of live shows.

Moving forward, the group expects to face headwinds in its advertising and commercial revenue as well as elevated collection risk, and has accordingly raised provisions on receivables. Astro said it has been agile in adapting to the new normal, allowing it to deepen its engagement with its customers, and strengthen the company's value proposition. Through this, the company is also able to seize opportunities for adjacencies in commerce, broadband, digital and OTT post MCO. Astro said it will proactively pursue disciplined cost optimisation and active capital management to further strengthen its financial position.

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