KUALA LUMPUR: With Astro Malaysia Holdings Bhd bringing in more channels and streamers from Hollywood giants, the group’s content cost-to-TV revenue is likely to remain between 34% to 37%.

       There has been changes in Astro Malaysia’s channel lineup and also an addition of 15 subscription-based video-on-demand services expected by the end of financial year ending Jan 31, 2023.

       CGS-CIMB Research said Astro Malaysia has been getting more than it bargained for from the Hollywood studios over the year as its content cost has been stable since its re-listing in October 2012.

       “It is the international media giants that have more to lose if piracy upends their streaming gambit in Asia.

       “The video streaming market surfeit and subscriber fatigue are slowing down their growth in the United States, yet they continue to be mounted by high production costs to satisfy subscribers’ demand for content.

       “With the streaming integration and international media giants’ backing against piracy, we are hopeful that an earnings resurgence is in sight,” added the research house.

       Astro Malaysia is bringing in 13 new television channels to replace 11 channels owned by The Walt Disney Co, which will go off-air by end of this month.

       Replacing these channels is part of the media giant’s effort to reduce its exposure to linear broadcasting in international markets.

       According to CGS-CIMB Research, this is proof to the global media corporations depending on Astro Malaysia to get their direct-to-customer projects to work.

       As such, the research house is keeping an “add” call on Astro Malaysia with a target price of RM1.51.

       Currently, Astro Malaysia is trading at a 74.9% discount to the global pay-TV and streaming players’ weighted average enterprise value and earnings before interest, taxation, depreciation and amortisation of 23.1 times for calendar year 2021 forecast.

       The research house believes that Astro Malaysia has decided to “replenish its channel count rather than taking this as an opportunity to cut its content costs further” because of its viewers that like to watch whatever is on television compared to choosing on what to watch.