KUALA LUMPUR (Jan 28): Advertising expenditure could continue to contract in 2026 after last year’s sharp fall, and drag on Malaysian media firms, Kenanga Investment Bank said.

Spending is expected to shrink 9.5% this year to RM4.24 billion with broad-based declines across free-to-air television, newspapers, magazines, radio, cinema, and digital advertising, according to its forecasts. Kenanga is one of a handful of research firms covering the media sector.

“Despite the projected decline, we expect a milder contraction, supported by a low base effect and an uptick in marketing activity around major 2026 sporting events, including SUKMA Selangor, FIFA World Cup, and Winter Olympics,” Kenanga said.

Advertising expenditure, or adex, fell 22% to RM4.74 billion last year, reflecting broad weakness led by free-to-air television that dropped 19%, while newspaper adex was 12% lower.

Digital adex plunged 39% largely due to a sustained pullback in advertising spend on youtube.com, which has now recorded nine consecutive quarters of decline amid intensifying competition from social media, search engine and live commerce platforms.

Brands are now shifting their spending to online and social media where consumers spend most of their time, while legacy media firms grapple with costly legacy infrastructure such as broadcast towers, satellite transponder leases, printing facilities, and physical distribution networks.

For Media Prima Bhd (KL:MEDIA) and Astro Malaysia Holdings Bhd (KL:ASTRO), the research house said building and monetising proprietary intellectual properties (IP) should be prioritised as traditional distribution-driven revenue models continue to weaken.

While domestic film and TV productions have shown encouraging traction supported by strong box-office performances from titles such as Papa Zola The Movie, Polis Evo and Ejen Ali, Kenanga noted that IP monetisation remains at an early stage, contributing only a small portion of overall group revenue.

“We believe a sizeable and well-curated library of local IP could emerge as a key revenue anchor for Malaysian media companies, particularly as adex for traditional media continues to structurally decline,” the research house said.

Despite these initiatives, Kenanga reiterated that legacy media players remain constrained by high fixed costs tied to broadcast infrastructure, satellite capacity, physical distribution fleets and print operations, limiting earnings recovery in a digital-first advertising landscape.

Overall, Kenanga maintained its 'underweight' stance on the sector, as legacy media players continue to face structural adex share losses amid persistent cost pressures.