Figuring out mkini accounts
Steve OhPublished: Mar 1, 2001 7:28 AM | Updated: Jan 29, 2008 6:21 PM
First, I'd like to congratulate malaysiakini for its bravery in revealing its financial statistics for all to see ([#1]M'siakini registers marginal loss for first financial year[/#], Feb 27). It is not often a non-listed company does that. If more companies follow its example, it augurs well for the investing public. I'd just like to comment on the accounts that were disclosed.
The marginal loss of RM32,000 is not a loss in the true sense but rather a deficit of expenditure over income since the revenue from operations is a mere RM190,000 which is less than what one of the major newspapers would earn in a day from advertising alone. The rest of the 'income' is from subsidies from Southeast Asian Press Alliance (Seapa), so it is not a true operating revenue.
If the online paper was not subsidised heavily by Seapa, it would be technically insolvent. It is grossly undercapitalised.
I would, however, not be perturbed because no newspaper makes money in the first few years of its operation. In fact, most newspaper companies make losses until their circulation and advertising revenue reach a break-even point. The reason for this is the heavy investment in machinery and labour-intensive nature of the business.
In the age of Internet, technology set-up costs for an online newspaper are relatively low compared with a traditional print newspaper company. This is reflected in malaysiakini's accounts which show operating costs of RM162,963, which I presume include computer expenses. In the next year's estimates, I am baffled how the operating costs can drop to RM140,000, including computer (technology) costs. I would expect them to rise considering the increased volume of work generated by increased advertisements sales and editorial content. The inconsistency in classification of the accounts does not help comparison.
The report said the advertising revenue would double but in fact it will more than double. From RM190,000 to RM430,000 is a 126 percent increase, a remarkable achievement considering the expected downturn in the economy. How this can be achieved without increasing editorial content is not explained. I presume editorial content will increase as the cost of staff salaries will more than double unless the crew is expecting hefty pay rises.
I am curious how revenue will increase substantially with the marketing costs at a low RM30,000.
As no year end dates are given I presume it is Dec 31, 2000. Two months of the year have elapsed and the Media Fund stands at a humble RM2,477. Is the target of RM330,000 realistic? As the fund stands it is in deficit by RM52,523 after two months. No information is given how the balance will be raised during the rest of the year as the figure constitutes almost 30 percent of the total income.
It was also reported that the average daily readership was 100,000 in September and is expected to reach 250,000 in 10 months to come. That is impressive growth if it can be achieved. I would be interested to know how readership is determined and on what basis such optimistic growth is estimated.
If I may offer a suggestion, it is that malaysiakini could consider a subscription plan. If say, based on a readership of 100,000, a fee of RM10 is charged, RM1 million can be raised. Paid in advance, it will certainly help cash flow. Whether a fee plan may deter readers and affect readership, I don't know. Malaysiakini can always do a survey. The fee could be voluntary initially, but seeing it is so negligible I doubt it will be the reason for readers not joining.
The report also stated the activities of related ancillary businesses which I hope will not distract the online paper from its raison d'etre. It is not always easy to keep one's eyes on the ball with so many tempting possibilities, but it may be necessary as management master Peter Drucker would require any fledgling business to ask, "What is my business?"
I wish malaysiakini success and hope many Malaysians will not only read but make positive contributions to the paper. The online daily deserves support and can only get better.
The marginal loss of RM32,000 is not a loss in the true sense but rather a deficit of expenditure over income since the revenue from operations is a mere RM190,000 which is less than what one of the major newspapers would earn in a day from advertising alone. The rest of the 'income' is from subsidies from Southeast Asian Press Alliance (Seapa), so it is not a true operating revenue.
If the online paper was not subsidised heavily by Seapa, it would be technically insolvent. It is grossly undercapitalised.
I would, however, not be perturbed because no newspaper makes money in the first few years of its operation. In fact, most newspaper companies make losses until their circulation and advertising revenue reach a break-even point. The reason for this is the heavy investment in machinery and labour-intensive nature of the business.
In the age of Internet, technology set-up costs for an online newspaper are relatively low compared with a traditional print newspaper company. This is reflected in malaysiakini's accounts which show operating costs of RM162,963, which I presume include computer expenses. In the next year's estimates, I am baffled how the operating costs can drop to RM140,000, including computer (technology) costs. I would expect them to rise considering the increased volume of work generated by increased advertisements sales and editorial content. The inconsistency in classification of the accounts does not help comparison.
The report said the advertising revenue would double but in fact it will more than double. From RM190,000 to RM430,000 is a 126 percent increase, a remarkable achievement considering the expected downturn in the economy. How this can be achieved without increasing editorial content is not explained. I presume editorial content will increase as the cost of staff salaries will more than double unless the crew is expecting hefty pay rises.
I am curious how revenue will increase substantially with the marketing costs at a low RM30,000.
As no year end dates are given I presume it is Dec 31, 2000. Two months of the year have elapsed and the Media Fund stands at a humble RM2,477. Is the target of RM330,000 realistic? As the fund stands it is in deficit by RM52,523 after two months. No information is given how the balance will be raised during the rest of the year as the figure constitutes almost 30 percent of the total income.
It was also reported that the average daily readership was 100,000 in September and is expected to reach 250,000 in 10 months to come. That is impressive growth if it can be achieved. I would be interested to know how readership is determined and on what basis such optimistic growth is estimated.
If I may offer a suggestion, it is that malaysiakini could consider a subscription plan. If say, based on a readership of 100,000, a fee of RM10 is charged, RM1 million can be raised. Paid in advance, it will certainly help cash flow. Whether a fee plan may deter readers and affect readership, I don't know. Malaysiakini can always do a survey. The fee could be voluntary initially, but seeing it is so negligible I doubt it will be the reason for readers not joining.
The report also stated the activities of related ancillary businesses which I hope will not distract the online paper from its raison d'etre. It is not always easy to keep one's eyes on the ball with so many tempting possibilities, but it may be necessary as management master Peter Drucker would require any fledgling business to ask, "What is my business?"
I wish malaysiakini success and hope many Malaysians will not only read but make positive contributions to the paper. The online daily deserves support and can only get better.
View Comments0