By Robert Yota
The integrated media company, PT Media Nusantara Citra (MNCN) recorded revenue growth at the end of this year’s first quarter, mainly driven by the rise of TV viewers in the country since the start of the COVID-19 pandemic.
Based on a recent report by the Indonesian Broadcasting Commission (KPI), the country has experienced a 50% growth in TV viewers at the end of March due to more people self-isolating at home. Furthermore, free-to-air (FTA) TV consumption has increased significantly in terms of its number of viewers and average viewing duration per viewer. The increase is mainly attributed to the rise in people’s need for free entertainment and news updates.
In Q1, MNCN booked revenue of Rp 2.01 trillion, up 7% (YoY). Non-digital ads contributed the most to revenue with Rp 1.61 trillion in 2020 1Q, which grew slightly from 1.608 trillion from last year’s first quarter. In addition, digital ads grew to Rp 199 billion in 2020 1Q, up 25% from Rp 159 billion from 2019’s 1Q. Meanwhile, MNCN’s content revenue was posted at Rp 471.4 billion before elimination in 2020 1Q, which is a 2% increase from Rp 460 billion in 2019 1Q.
“The biggest benefactor on the rise of TV viewers is MNCN since the company has a market share of 35% last year, owning television stations like RCTI, GTV, iNews, and MNC TV. MNCN has also entered digital media by operating several YouTube channels amassing more than 70 million subscribers. And because the streets are now almost empty, advertisers began to switch from outdoor billboard ads to television. MNCN has increased advertising rates by around 10 to 25% since January, and it could rise further in the future,” said capital market expert Teguh Hidayat.
However, MNCN’s net income dropped to Rp 332.7 billion in 2020 1Q, which is a 43% drop from Rp 584.9 billion in last year’s first quarter. The noticeable drop in net income is caused by Rp 244 billion foreign exchange loss in 2020 1Q compared to last year’s first quarter when the company enjoyed a Rp 70 billion foreign exchange gain.
To strategize amidst the ongoing coronavirus, MNCN is set to launch a new advertising initiative in May 2020, which would allow viewers to purchase products off advertisements on its free-to-air (FTA) channels during commercial breaks via QRIS (quick response code Indonesian Standard). The revenues generated will be split between MNCN and advertisers and may prove to be a win-win solution for both parties. In the same month, the company is also aiming to finalize a placement process with a strategic investor. The proceeds from the deal will be used to reduce the company’s debts, which mature in August 2022. The placement will also result in MNCN’s free float percentage to reach over 40%, which allows MNCN to enjoy a tax rate of 19% in 2020 compared to 25% from last year.
“We remain upbeat that the company will achieve 7-9% revenue growth by the end of 2020. To mitigate the 2Q20 performance softness, the company is handing out non-time consuming (NTC) bonuses to advertisers, which is predicted to generate up to Rp 600 billion in revenue for the rest of 2020. MNCN also still produces new content, and thus the company will still enjoy the revenue from built-in advertisements placed in its programs,” stated Danareksa Sekuritas analysts Andreas Kenny and Ignatius Teguh Prayoga in a report.