Last week's column ended with Ho Kay Tat joiningThe Star as chief operating officer (COO) in July 2010 during the time when Clement Hii was executive deputy chairman (EDC). He rose to become group managing director and CEO in July 2011.
Hii, widely believed to be a confidante of former MCA president Ong Tee Keat, replaced Steven Tan as EDC in January 2009 after Ong became MCA president in October 2008.
Hii himself stepped down as EDC at the end of 2010 after Ong Tee Keat lost the MCA presidency to Chua Soi Lek in March 2010 in a three-cornered fight which included former MCA president Ong Ka Ting. Advertising man Vincent Lee of Naga DDB, was appointed in his place on Jan 3, 2011. Lee and Ho are close friends and Lee had been appointed to The Star board earlier in May 2010, two months after Chua Soi Lek's win.
But this could have been the point at which Ho's (left) disaffection with his bosses started. Sources indicate that Ho had been given to understand that there would be no executive above him after Hii left. But apparently Chua wanted someone who he was more familiar with and whom he could trust to follow instructions - Lee.
Although Lee and Ho were close friends, Lee's appointment above Ho as executive deputy chairman must have miffed Ho and could well have been the source of some strain further down the line. Besides a huge loss in potential income - the EDC earns just under RM7 million a year compared to the group managing director and CEO's of just over RM3 million a year - it also meant that Ho was CEO only in name because there was an executive above him.
Ho himself was only appointed to the board on Jan 3, 2011, 10 months after group chief editor Wong Chun Wai, who became executive director on March 11, 2010. When Linda Ngiam stepped down as managing director and group CEO, Ho was appointed in her place on July 1, 2011.
Barely a year and four months later, on Nov 21, Ho quit. Including his earlier stint as COO, he had served The Star for two years and four months, leaving eight months of his three-year contract yet to be served out and to be paid for.
Those who were at that final board meeting said it was tearful and that Ho basically said he wanted to go back and help his friend, tycoon Tong Kooi Ong, as part of a solemn undertaking he had given to Tong's late wife that he would help Tong if Tong needed him. Tong's wife, Carol, died of cancer in December 2008.
Soon after, it was announced that he would become group CEO and publisher of The Edge Communications Sdn Bhd, Tong's current media arm.
To understand why he quit, it is necessary to look at what Ho tried to achieve at The Star and how much he succeeded. At the end of the day, the CEO is judged primarily on the bottom line and then only on the other things.
Double-edged sword
As the top position tends to be contracted in short terms of no more than three years, most CEOs, and that would have included Ho, would look at the short-term gains they can get to boost profits.
In terms of editorial content, The Star in the wake of the astounding March 2008 election results and while Steven Tan was still EDC, attempted a renaissance of sorts by beefing up content with weightier columnists and giving more discretion to editors to push limits.
But that wilted after Tan left at the end of 2008 although there was a creditable effort introduced by his successor Hii to revive editorial through ‘StarProbe', an effort at investigative journalism which was only half-heartedly received by top editorial staff.
By 2011 when Vincent Lee (far right) assumed the EDC mantle, much of the editorial bite had already withered. His ‘Be Inspired' slogan to tell human stories of achievement was received with considerable cynicism and disdain not just by the public but staff too. Ho's and Lee's attempts to change layout and appearance remained cosmetic with no discernible improvement in editorial content.
Group chief editor Wong was quite content to keep political bosses and corporate advertisers happy by steering a course wide away from unwanted controversy and slanting political and other news in favour of Barisan Nasional even more than necessary.
News coverage had deteriorated considerably, especially in the wake of political pressure on speculation that a general election was imminent.
At one time in the late 80s and 90s when The Star was establishing its editorial credentials, a common quip was this: "The Star is owned by the MCA and run by the MIC for the benefit of the DAP." This referred to the high number of Indian reporters and editors then and the tenor of the news which was issues-based, adventurous and often anti-establishment.
Now observers wonder whether The Star was serving even the interests of the Chinese community, often being looked upon as a propaganda tool for Umno first and foremost and being reluctant to report wrongdoings within government except when it is about opposition-controlled states.
The politics of it being owned by the MCA, with its gamut of ramifications and different bosses to satisfy, made editorial independence difficult at the best of times. There was little that Ho could do editorially even if he wanted to.
Since editorial change was largely not open to him, he sought to make changes elsewhere - advertising and circulation. This is a double-edged sword - increasing circulation is expensive because of newsprint and distribution costs. But if circulation increases, one can command higher advertising rates. If circulation however stagnates, or worse declines, and if readership goes down along with it, then it becomes difficult to increase advertising rates.
And then you have online media putting pressure on print. On top of that, Star Online is free making it totally unnecessary to subscribe to The Star if you are properly connected to the Net. An increasingly larger number of people are. That puts tremendous pressure on circulation.
Despite its strong online presence, The Star's online advertising revenue is a fraction of print's, way less than 10 percent. Print is by far the cash cow. The question is how to ensure it produces and to lengthen its lifetime.
Struggle to boost profits
Newspaper costs are mainly newsprint and staff, both of which are difficult to control. That means advertising is key except for the times when a sudden drop in newsprint prices brings windfall gains. By the same token, sudden newsprint price increases can wreak havoc with newspaper profits.
After Ho became CEO, he struck on a plan to increase circulation by providing the print newspaper and the online e-paper for RM260 a year (it was subsequently raised to RM360 a year) to subscribers. The vendors would still distribute the paper.
This was a strange arrangement because the print newspaper now sells at RM1.20 a copy on week days and RM1.50 on weekends which works out to about RM460 a year per copy in gross circulation revenue. That meant an incremental loss of RM200 on each new subscription. If there were 60,000 new subscriptions, that means the negative impact on profit will be RM12 million! If the entire 300,000 circulation came from this, the negative impact will be a massive RM60 million.
One can only surmise that such attempts were an attempt to try and boost circulation by offering a steep discount in price so as to keep advertising rates up.
Ho also campaigned aggressively to get advertisements in, trading in editorial write-ups. Articles perceived as even slightly negative to big advertisers were not run. This eroded further The Star's credibility in terms of reporting on companies in addition to its liabilities in terms of fair political coverage.
But despite Ho's desperate efforts, advertising revenue declined, while circulation continued to be under pressure and profit dropped. For the first nine months of this year, group pre-tax profit declined nearly a fifth to RM147 million from RM183 million in the previous corresponding period.
Print and new media pre-tax profit amounted to around RM158 million with most other units operating losses. Print revenue for the period declined four percent to RM570 million. Meantime, operating expenses rose RM12 million to RM216 million.
It is a foregone conclusion that pre-tax profit for the full year will decline by as much as 20 percent or more from 2011's RM250 million, itself a slight decline from 2010's bumper RM259 million.
Ho is finding out that it will be increasingly difficult to raise profits atThe Star. Political pressures make it impossible to improve the product while structural changes in the media industry will crimp circulation and therefore advertising revenue.
And then there is the pressure to do deals and make arrangements which may not always be in the best interests of the company. It takes a lot of courage and gumption to stop those deals, often brought by those with connections. Sources say that Ho might have been threatened anonymously via mail while a senior staff employee doing a due diligence on one deal was violently attacked and hurt.
A new business daily
But is that alone enough for Ho to want to step down? Don't CEOs deal with threatening situations? Can't he continue and get the lucrative income he would as CEO? But then there is no assurance that his contract would be renewed. And then, who knows what will happen at the general elections and the MCA elections after that?
Now, however, there is a new factor for Ho to consider. Tong describes Ho as one of his closest friends and said that he wants to expand the media business with Ho as a partner. That opens up new dimensions for Ho, but not enough if it is only Tong's current media business.
Tong has been talking about going regional for years but not much has materialised except for an operation similar to The Edge in Singapore. What is exciting - much more exciting - is that Tong could get permission to expand the licence for the The Edge's sister publication, a business daily, called simply Financial Daily.
The first round of applications to the authorities seem negative but even if it is so, the speculation is that the currentFinancial Daily can expand its role into general areas by covering political and social news. And it can be distributed free to boost circulation immediately.
Politically, there may be opposition from some quarters within Umno for Tong to get a licence now ahead of the general elections, especially since he was known to be an ally of Opposition Leader Anwar Ibrahim and still good friends with him. But Tong has sought to mend fences with Umno leaders while maintaining links to the other side. His connections now go right to the top.
It may be a question of timing but it seems fairly certain that Tong will be allowed to move into the domain of daily general newspapers, if not now then after the general elections, no matter who wins.
Now, that's exciting and that would be something for Ho to look forward to - a brand new free paper.
If indeed Tong's new newspaper comes through - and it seems likely it will - Ho will be better placed than most to lead it forward after his experience at The Sun and The Star, both newspapers he has been intimately connected with and who will without doubt be the main competitors.
Among the others, The New Straits Times has steadily lost credibility and circulation and has few redeeming features such as supplements, advertising, a strong leisure section, a strong Metro section, etc. The Malay Mail has re-launched as a morning paid newspaper but while content is respectable, it will be a long haul to gain reader acceptance.
Back to basics
The lure of a new newspaper, an equity stake, a larger field with exciting possibilities and becoming a supremo again without reporting to multiple bosses and without dealing with political appointees within the organisation is an attractive proposition for Ho.
A loss in immediate income could be mitigated by a chance of bigger gains if Ho gains significant equity interest in the overall venture. In any case, there is no guarantee that his tenure at The Star would have continued. Tong offers much better stability than the MCA.
In his new position, Ho must come back to basics. At the end of the day, it is editorial excellence which sells newspapers - everything else such as marketing and advertising is built around that primary outstanding editorial product. That was what Ho did at The Edgeand made it such a success.
In the controlled print media environment that is Malaysia, The Star, for all its shortcomings, is still far ahead of its English language print competitors. It will take years to challenge its dominance.
That such a giant struggle withMalaysiakini in the online realm for viewership is clear indication of the kind of challenges which will face The Starwhen the print media sector opens up, as eventually it must and more independent and fair reporting emerge.
It must be intimidating to those at The Star that it is Ho Kay Tat, who now has intimate knowledge of The Star's workings, who will be among those who will face them soon and may well become a formidable competitor in future. Ho is likely to be more comfortable being an underdog again rather than top dog.
But if Ho chooses to pander to advertisers and politicians here as well at the expense of editorial quality, then The Star will be spared yet again by a lack of competent competitors.
If he chooses not to and if Tong has the moral stomach and financial stamina for a long fight, the print media scene is likely to get very exciting very shortly. And yes, Ho is going back to help his friend Tong. But is Tong helping him more?
Hii, widely believed to be a confidante of former MCA president Ong Tee Keat, replaced Steven Tan as EDC in January 2009 after Ong became MCA president in October 2008.
Hii himself stepped down as EDC at the end of 2010 after Ong Tee Keat lost the MCA presidency to Chua Soi Lek in March 2010 in a three-cornered fight which included former MCA president Ong Ka Ting. Advertising man Vincent Lee of Naga DDB, was appointed in his place on Jan 3, 2011. Lee and Ho are close friends and Lee had been appointed to The Star board earlier in May 2010, two months after Chua Soi Lek's win.
But this could have been the point at which Ho's (left) disaffection with his bosses started. Sources indicate that Ho had been given to understand that there would be no executive above him after Hii left. But apparently Chua wanted someone who he was more familiar with and whom he could trust to follow instructions - Lee.Although Lee and Ho were close friends, Lee's appointment above Ho as executive deputy chairman must have miffed Ho and could well have been the source of some strain further down the line. Besides a huge loss in potential income - the EDC earns just under RM7 million a year compared to the group managing director and CEO's of just over RM3 million a year - it also meant that Ho was CEO only in name because there was an executive above him.
Ho himself was only appointed to the board on Jan 3, 2011, 10 months after group chief editor Wong Chun Wai, who became executive director on March 11, 2010. When Linda Ngiam stepped down as managing director and group CEO, Ho was appointed in her place on July 1, 2011.
Barely a year and four months later, on Nov 21, Ho quit. Including his earlier stint as COO, he had served The Star for two years and four months, leaving eight months of his three-year contract yet to be served out and to be paid for.
Those who were at that final board meeting said it was tearful and that Ho basically said he wanted to go back and help his friend, tycoon Tong Kooi Ong, as part of a solemn undertaking he had given to Tong's late wife that he would help Tong if Tong needed him. Tong's wife, Carol, died of cancer in December 2008.
Soon after, it was announced that he would become group CEO and publisher of The Edge Communications Sdn Bhd, Tong's current media arm.
To understand why he quit, it is necessary to look at what Ho tried to achieve at The Star and how much he succeeded. At the end of the day, the CEO is judged primarily on the bottom line and then only on the other things.
Double-edged sword
As the top position tends to be contracted in short terms of no more than three years, most CEOs, and that would have included Ho, would look at the short-term gains they can get to boost profits.
In terms of editorial content, The Star in the wake of the astounding March 2008 election results and while Steven Tan was still EDC, attempted a renaissance of sorts by beefing up content with weightier columnists and giving more discretion to editors to push limits.
But that wilted after Tan left at the end of 2008 although there was a creditable effort introduced by his successor Hii to revive editorial through ‘StarProbe', an effort at investigative journalism which was only half-heartedly received by top editorial staff.
By 2011 when Vincent Lee (far right) assumed the EDC mantle, much of the editorial bite had already withered. His ‘Be Inspired' slogan to tell human stories of achievement was received with considerable cynicism and disdain not just by the public but staff too. Ho's and Lee's attempts to change layout and appearance remained cosmetic with no discernible improvement in editorial content.Group chief editor Wong was quite content to keep political bosses and corporate advertisers happy by steering a course wide away from unwanted controversy and slanting political and other news in favour of Barisan Nasional even more than necessary.
News coverage had deteriorated considerably, especially in the wake of political pressure on speculation that a general election was imminent.
At one time in the late 80s and 90s when The Star was establishing its editorial credentials, a common quip was this: "The Star is owned by the MCA and run by the MIC for the benefit of the DAP." This referred to the high number of Indian reporters and editors then and the tenor of the news which was issues-based, adventurous and often anti-establishment.
Now observers wonder whether The Star was serving even the interests of the Chinese community, often being looked upon as a propaganda tool for Umno first and foremost and being reluctant to report wrongdoings within government except when it is about opposition-controlled states.
The politics of it being owned by the MCA, with its gamut of ramifications and different bosses to satisfy, made editorial independence difficult at the best of times. There was little that Ho could do editorially even if he wanted to.
Since editorial change was largely not open to him, he sought to make changes elsewhere - advertising and circulation. This is a double-edged sword - increasing circulation is expensive because of newsprint and distribution costs. But if circulation increases, one can command higher advertising rates. If circulation however stagnates, or worse declines, and if readership goes down along with it, then it becomes difficult to increase advertising rates.
And then you have online media putting pressure on print. On top of that, Star Online is free making it totally unnecessary to subscribe to The Star if you are properly connected to the Net. An increasingly larger number of people are. That puts tremendous pressure on circulation.
Despite its strong online presence, The Star's online advertising revenue is a fraction of print's, way less than 10 percent. Print is by far the cash cow. The question is how to ensure it produces and to lengthen its lifetime.
Struggle to boost profits
Newspaper costs are mainly newsprint and staff, both of which are difficult to control. That means advertising is key except for the times when a sudden drop in newsprint prices brings windfall gains. By the same token, sudden newsprint price increases can wreak havoc with newspaper profits.
After Ho became CEO, he struck on a plan to increase circulation by providing the print newspaper and the online e-paper for RM260 a year (it was subsequently raised to RM360 a year) to subscribers. The vendors would still distribute the paper.
This was a strange arrangement because the print newspaper now sells at RM1.20 a copy on week days and RM1.50 on weekends which works out to about RM460 a year per copy in gross circulation revenue. That meant an incremental loss of RM200 on each new subscription. If there were 60,000 new subscriptions, that means the negative impact on profit will be RM12 million! If the entire 300,000 circulation came from this, the negative impact will be a massive RM60 million.
One can only surmise that such attempts were an attempt to try and boost circulation by offering a steep discount in price so as to keep advertising rates up.
Ho also campaigned aggressively to get advertisements in, trading in editorial write-ups. Articles perceived as even slightly negative to big advertisers were not run. This eroded further The Star's credibility in terms of reporting on companies in addition to its liabilities in terms of fair political coverage.But despite Ho's desperate efforts, advertising revenue declined, while circulation continued to be under pressure and profit dropped. For the first nine months of this year, group pre-tax profit declined nearly a fifth to RM147 million from RM183 million in the previous corresponding period.
Print and new media pre-tax profit amounted to around RM158 million with most other units operating losses. Print revenue for the period declined four percent to RM570 million. Meantime, operating expenses rose RM12 million to RM216 million.
It is a foregone conclusion that pre-tax profit for the full year will decline by as much as 20 percent or more from 2011's RM250 million, itself a slight decline from 2010's bumper RM259 million.
Ho is finding out that it will be increasingly difficult to raise profits atThe Star. Political pressures make it impossible to improve the product while structural changes in the media industry will crimp circulation and therefore advertising revenue.
And then there is the pressure to do deals and make arrangements which may not always be in the best interests of the company. It takes a lot of courage and gumption to stop those deals, often brought by those with connections. Sources say that Ho might have been threatened anonymously via mail while a senior staff employee doing a due diligence on one deal was violently attacked and hurt.
A new business daily
But is that alone enough for Ho to want to step down? Don't CEOs deal with threatening situations? Can't he continue and get the lucrative income he would as CEO? But then there is no assurance that his contract would be renewed. And then, who knows what will happen at the general elections and the MCA elections after that?
Now, however, there is a new factor for Ho to consider. Tong describes Ho as one of his closest friends and said that he wants to expand the media business with Ho as a partner. That opens up new dimensions for Ho, but not enough if it is only Tong's current media business.
Tong has been talking about going regional for years but not much has materialised except for an operation similar to The Edge in Singapore. What is exciting - much more exciting - is that Tong could get permission to expand the licence for the The Edge's sister publication, a business daily, called simply Financial Daily.
The first round of applications to the authorities seem negative but even if it is so, the speculation is that the currentFinancial Daily can expand its role into general areas by covering political and social news. And it can be distributed free to boost circulation immediately.Politically, there may be opposition from some quarters within Umno for Tong to get a licence now ahead of the general elections, especially since he was known to be an ally of Opposition Leader Anwar Ibrahim and still good friends with him. But Tong has sought to mend fences with Umno leaders while maintaining links to the other side. His connections now go right to the top.
It may be a question of timing but it seems fairly certain that Tong will be allowed to move into the domain of daily general newspapers, if not now then after the general elections, no matter who wins.
Now, that's exciting and that would be something for Ho to look forward to - a brand new free paper.
If indeed Tong's new newspaper comes through - and it seems likely it will - Ho will be better placed than most to lead it forward after his experience at The Sun and The Star, both newspapers he has been intimately connected with and who will without doubt be the main competitors.
Among the others, The New Straits Times has steadily lost credibility and circulation and has few redeeming features such as supplements, advertising, a strong leisure section, a strong Metro section, etc. The Malay Mail has re-launched as a morning paid newspaper but while content is respectable, it will be a long haul to gain reader acceptance.
Back to basics
The lure of a new newspaper, an equity stake, a larger field with exciting possibilities and becoming a supremo again without reporting to multiple bosses and without dealing with political appointees within the organisation is an attractive proposition for Ho.
A loss in immediate income could be mitigated by a chance of bigger gains if Ho gains significant equity interest in the overall venture. In any case, there is no guarantee that his tenure at The Star would have continued. Tong offers much better stability than the MCA.
In his new position, Ho must come back to basics. At the end of the day, it is editorial excellence which sells newspapers - everything else such as marketing and advertising is built around that primary outstanding editorial product. That was what Ho did at The Edgeand made it such a success.
In the controlled print media environment that is Malaysia, The Star, for all its shortcomings, is still far ahead of its English language print competitors. It will take years to challenge its dominance.
That such a giant struggle withMalaysiakini in the online realm for viewership is clear indication of the kind of challenges which will face The Starwhen the print media sector opens up, as eventually it must and more independent and fair reporting emerge.It must be intimidating to those at The Star that it is Ho Kay Tat, who now has intimate knowledge of The Star's workings, who will be among those who will face them soon and may well become a formidable competitor in future. Ho is likely to be more comfortable being an underdog again rather than top dog.
But if Ho chooses to pander to advertisers and politicians here as well at the expense of editorial quality, then The Star will be spared yet again by a lack of competent competitors.
If he chooses not to and if Tong has the moral stomach and financial stamina for a long fight, the print media scene is likely to get very exciting very shortly. And yes, Ho is going back to help his friend Tong. But is Tong helping him more?
P GUNASEGARAM has been a journalist and analyst for over 30 years, having worked in key positions in Malaysian newspapers and magazines including Business Times, Malaysian Business, The Edgeand The Star. He has also worked as an analyst and head of equity research at local and foreign brokerage firms. Early next year, he will help launch business news portal KiniBiz in a joint venture withMalaysiakini.
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