ABNxcess, a content-is-king casualty?

PETALING JAYA: Asian Broadcasting Network (M) Sdn Bhd (ABNxcess), the first digital cable TV operator in the country that is said to be facing financial woes, has to be more appealing in content offerings, said analysts.
An analyst who covers the media industry said the TV operator, which lacks big events such as football matches, should improve its programmes in order to attract more subscribers.
"For pay TV operator, if you don't have desirable content, no matter how cheap it is, there will be not much demand for it," he noted.
The analyst said ABNxcess' content caters more to the low and middle income group, which faces greater risks after the Goods and Services Tax (GST) implementation.
"It's not surprising the GST and subsidy cuts are also affecting Astro, with higher churn rate among the low and middle income group, whereas the churn rate in high income group is not that much," he noted.
He added that the digitalisation of free-to-air TV and declining advertising expenditure (adex) in the media industry will put even more pressure on ABNxcess.
Another analyst opined that ABNxcess needs to find its market niche in a bid to grab market share in the increasingly competitive media industry.
"They're still new, they don't have the market niche yet, so content-wise, they have to bring something that can suit the local market," she noted.
She however, is of the view that ABNxcess will be able to continue its business operation despite the difficulties.
Starting operation in June 2013, ABNxcess currently offers more than 60 channels. ABNxcess' target was to cover 70% Malaysian homes by 2017, which is seen as the key success factor.
ABNxcess had said it was looking to reach a subscriber base of 100,000 by the end of last year. However, it is not known whether the target had been achieved.
Filings with the Companies Commission of Malaysia show that ABNxcess incurred a widened net loss of RM30.72 million for the financial year ended June 30, 2013 against RM4.65 million a year before.
ABNxcess has loan facilities totalling RM465 million, of which RM450 million is owed to Bank Pembangunan Malaysia Bhd and RM15 million to Malayan Banking Bhd (Maybank). Some reports state that not the entire amount has been drawndown as yet.
Worth noting is that the RM450 million loan that ABNxcess secured from Bank Pembangunan was once the subject of debate in Dewan Rakyat in July 2013.
On this, an analyst opined that it is very "risky" for Bank Pembangunan, a government owned bank, to finance this project with such a large loan considering that this is an industry that is monopolised by Astro, which has about 3.5 million subscribers.
ABNxcess has reportedly closed down its news division in early April, which saw the retrenchment of 60 staff. Other reports have surfaced that the group has not paid salaries to its staff and contractors.
Its owner Tan Sri K K Eswaran, a news portal said, has since denied that the group's financials were in dire straits.
ABNxcess CEO did not respond to queries sent regarding the issue.
ABNxcess' packages are bundled with internet as well as TV and radio programme. It has the capacity to offer more than 1,000 channels against the current offering of about 60 channels. More than half of these channels are in English, followed by the Indian and Chinese channels.
K K Eswaran owns a 70% stake in ABNxcess through ABN Media Group. It currently operates from a network centre at the Puchong Gateway.
Astro has managed to increase its dominance in the pay TV segment of the broadcasting industry despite seeing the advent of many challengers over the 20-odd years it has been in operations.
A similar project that did not succeed in the mid 2000's was MiTV Corp Sdn Bhd initiated by Tan Sri Vincent Tan. It is learnt that some RM300 million was invested and lost in this project.