The directors were of the view that the company is no longer solvent to continue business
by AFIQ AZIZ/ pic by RAZAK GHAZALI
UTUSAN Melayu (M) Bhd pulled the shutter down yesterday, ending the publication of the country’s oldest Malay language newspaper — Utusan Malaysia — and becoming the first major casualty of the torrid media industry.
In an abrupt announcement yesterday morning, the company announced the cessation of operations and the termination of services of all its employees. The company has been forced into liquidation following dwindling revenue and circulation drop. The move to put the company in receivership left more than 800 staff jobless.
The board of the former listed company had approved the Creditor’s Voluntary Liquidation proposal and appointed UHY Advisory (KL) Sdn Bhd as the interim liquidator.
“This step had to be taken because of the board of directors (BoD) were of the view that the company is no longer solvent to continue business.
“For that reason, the company will cease operations on Wednesday Oct 9, 2019,” executive chairman Datuk Abdul Aziz Sheikh Fadzir said in a statement yesterday.
Speculations had been rife since Tuesday evening about the newspaper’s uncertain future. The announcement in the morning seal the fate of the newspaper which was previously owned by Umno.
Staff scurried to vacate their desktop and return their access card by 1pm yesterday. But employees were given until 6pm today to clear the workplace and their belongings.
Analyst had predicted at least a decade ago that the print media, along with some of its electronic counterparts, would be obsolete as more consumers’ appetite shifted to online content and mobile devices.
According to Bloomberg data compiled by The Malaysian Reserve a year ago, the market capitalisation of five major players in the media industry dropped over 50% within the previous 12 months.
The main listed media companies are Utusan Melayu, Star Media Group Bhd, Astro Malaysia Holdings Bhd, Media Prima Bhd and Berjaya Media Bhd.
Utusan Melayu was classified as Practice Note 17 (PN17) after the group was unable to meet the requirement of the regularisation plans of Bursa Malaysia
Bhd. Its share price had plummeted almost 37% after that. It was recently delisted.
The company was also embroiled in a management-employees industrial tiff over unpaid salaries.
The publisher also pulled the rug for its popular websites utusan.com.my and kosmo.com.my.
Utusan Melayu recently announced the disposal of a 70% interest in its subsidiary Dilof Sdn Bhd to Aurora Mulia Sdn Bhd. Dilof holds the publication and printing permits for Utusan Malaysia and Kosmo including their Sunday’s edition.
Aurora Mulia is also the largest shareholder in Media Prima with slightly below 32% interest.
Last year, Utusan Melayu slashed almost half of its 1,500-strong workforce to cap operational cost. But the move failed to revive the ailing company.
The newspaper reported a net loss of RM3.89 million for the second quarter (2Q) ended June 30, 2019, compared to a net profit of RM18.85 million a year ago.
Utusan is not the only media house in financial dire and staring at a bleak future.
The Star Media’s share price had plummeted about 31.58% in the past 12 months, ending yesterday’s trade at 52 sen. Media Prima which prints the New Straits Times, Berita Harian and Harian Metro was traded at 45 sen yesterday, 2.17% down year-on-year.
Berjaya Media Bhd, which publishes The Sun Daily newspaper, reported a 4Q net loss quadrupled leading it into PN17 status as its shareholders’ equity fell short of listing requirements on June 30, 2017.
The Internet boom, lightning data speed, rise of mobile devices and advertisers’ preference of digital advertisement had punished traditional newspaper companies.
Despite the high traffic to their websites, loss of revenues from the printing business and legacy issues of the good old newspaper days weighed on newspaper businesses.
Meanwhile at the Parliament, Human Resources Minister M Kulasegaran has urged Utusan Melayu’s employees to seek employment insurance system (EIS) coverage.
The minister said the Social Security Organisation scheme could provide payments of up to 80% of a worker’s salary for a period of six months.
“If the workers are retrenched, under the law, they can always make representation to the EIS. For six months, there will be some payment of their salaries. After six months, they should be able to get a job, there are more than 560,000 vacancies in the country,” he said at the Parliament lobby.
He also hoped that the Utusan Melayu’s owners would reconsider their decision.
“Utusan has been in the industry for a very long time. They should see whether other quarters can help and rehabilitate the company. I hope Utusan will reconsider,” he said.
Umno secretary general Tan Sri Annuar Musa said the political party has no power to interfere in Utusan Melayu’s decision to shutter the 80-year-old daily. He said Umno was no longer a major shareholder in the company.
“We will let Utusan make their own business decision, the party cannot intervene. The BoD is free to make any business decision. Umno is left with very little shares,” he said.
The Ketereh MP described the end of the publication as “unfortunate”. — Additional reporting in Parliament by ALIFAH ZAINUDDIN & DASHVEENJIT KAUR