Malaysia's biggest media company, TV giant Astro, is increasingly focused on three key drivers to anchor future earnings growth:

1. Driving yields across its market leading pay-TV business at home, with more traction across existing and new premium services
2. Content monetization at home and abroad, leveraging its own IP, as well as new franchises and partnerships
3. Aggressively ramping up revenue for its recently launched home shopping JV

“Astro has strong consumer cords, with close to 65% of all TV households in Malaysia through its pay and free TV offerings,” says Vivek Couto, director of industry consultants Media Partners Asia (MPA).

“Connecting with the remaining 35% is probably going to occur over the next three to four years,” Couto adds.

“This means that the company is also going to have scale its IP, and some of the new joint partnerships it is incubating, across Southeast Asia, Australasia, the Middle East and more.”

Platforms, especially digital (such as OTT) could be factored into the strategy, Couto suggests.

Astro management is targeting 9% revenue growth and 12% Ebitda growth for FYE Jan. 2016, the same as the previous year.

The company’s Ebitda margin improved from 34% to 35% over the past fiscal, while free cash flow generation remains strong, up 30% to RM1.33 billion (US$403 million).

DOMESTIC GROWTH

Astro capped its financial year with a strong final quarter. For the Q4 period, revenue was up +7% Y/Y, Ebitda +16%, and net profit +26%.

Encouragingly, pay-TV subscriber gains reaccelerated to 31,000 net adds during the quarter (versus a 7,000 contraction in Q3), representing fairly robust growth, given Malaysia’s current macro malaise.

Full-year net additions came in at 70,000, versus 167,000 the previous year. Astro management are guiding for 60-70,000 in the next fiscal.

Njoi, Astro’s prepaid free service, added 547,000 new customers, versus 400,000 a year earlier.

Monthly Arpu, meanwhile, grew more than 3% on a quarterly basis to reach RM99 (US$30) in Q4, driven by adoption of premium services as well as a price increase for HD.

Arpu is expected to grow modestly in FY 2016 to RM101/month, versus RM99 in FY 2015.

Astro has close to 50% share of TV viewing in Malaysia, leveraging the strength of its local content (50 Astro shows attracted more than 1 million viewers in the past fiscal).

Its slice of the TV ad pie, however, sits around 33%. The company is keen to grow its share over the coming year, by leveraging investment in return-path data analytics.

CONTENT MONETIZATION

Astro is also developing more content partnerships, to monetize IP inside and outside Malaysia.

These include co-producing telenovelas with Mexico’s TV Azteca; acting as a foundation partner and investor for Spark, an Asian-focused documentary channel; becoming a licensing partner for Chinese-language TV producer HKTV; and signing an MoU with Japan’s Yoshimoto Kogyo and Hong Kong’s Content Land to license and distribute Japanese content in Southeast Asia.

In addition, FremantleMedia Asia appointed Astro Productions to work on the inaugural season of the successful ‘Asia’s Got Talent’ show.

More announcements on deals and partnerships are expected in the next few months.

HOME SHOPPING

Go Shop, a home shopping JV between Astro and Korea’s GS, has also gained momentum after launching last November, generating RM25 million in sales over its first quarter, and selling goods to more than 75,000 unique customers.

The business could generate RM150 million in sales for FY 2016, rising to RM500 million three years later, with profits starting to flow by end-FY 2016.