Astro All Asia Network plc

1.0 Background of TV Broadcasting Industry in Malaysia

TV broadcasting industry first entered into Malaysia was in 1963, it was six years after our country
independence from British (Khattab 2004, p. 2). Before 1996, the TV sector in Malaysia was a public
broadcasting service provided by government. The channels are included TV1, TV2 and TV3. At that
time, TV1 has a title called the prime channel and TV2 is the golden channel. Both of these channels
are providing infotainment to Malaysian. TV3 is the first privatized TV station and it was the leading
national broadcaster (Khattab 2004, p. 3). Follow by NTV7, Channel 9, and 8TV in the following years.

In the pay-tv sector, Mega TV is the first pay-tv that introduced in Malaysia in 1995. But due to their
financial problem, Mega TV stopped broadcasting. Astro is the second pay-tv that establish in
Malaysia in 1996. Astro is the most successful pay-tv that operates in Malaysia. After Astro was
introduced, there are two pay-tv operators entered into broadcasting industry in 2005. There are
MiTV and Fine TV. But both of these pay-tv are not operating well. These pay-tv using broadband
internet service and provide more choices of channels that include western programmes compare
to local channels. 80 percent of the local channels programme was consists with local programme
content.

This few years, the TV broadcasting industry in Malaysia is starting to enter into the new era. This is
because the TV broadcasting is initially moving towards digitalization and also coming out with
alternate delivery platforms such as mobile and Internet. (Changing face of Malaysia's TV industry;
Malaysia's television and broadcast industry is in a state of transformation 2006). With all these new
delivery platforms, TV broadcast industry will be growing rapidly. The developments in the TV
broadcasting in Malaysia recently can be proved that we are ready to moving into more mature
markets and changing their trends. (Changing face of Malaysia's TV industry; Malaysia's television
and broadcast industry is in a state of transformation 2006).

2.0 Background of the Corporation & SBU

2.1 Astro All Asia Network plc

ASTRO ALL ASIA NETWORKS plc (Astro) entered into broadcasting industry of Malaysia in 1996. They
are the leading cross-media operator with direct-to-home satellite television services in Malaysia,
Brunei and Indonesia. (Astro 2007). Around quarter of TV households of Malaysia subscribe to the
Astro. Astro currently hold 36.5% of the market shares, approximately 2.2 million of subscribers.
Astro are aiming to keep increasing their market shares and create customers loyalty by proving
excellent products and services to the subscribers.

Astro has three strategic business units- Television, Radio and Library Licensing and Distribution
(Celestial channels). There are approximately 55 Astro channels currently and 16 music channels that
around 5 celestial movies channels provided to the Astro users. Astros Radio is the leading
commercial radio broadcaster in Malaysia. As for the celestial channels, it has become one of the
fastest growing international pay-tv channels. This is because these celestial channels are not only
can be view by subscribers in Malaysia, Brunei and Indonesia, but also in Singapore, Hong Kong,
Australia, China and Thailand.

Rohana Rozhan, the Chief Executive Officer of Astro in Malaysia and Brunei joined Astro in 1995
during the establishing of Astro. She is the person that in charge the SBU-Television which is the
Direct-To-Home broadcast business with responsibilities for the TV operations in Malaysia and
Brunei. For the SBU- Radio, Borhanuddin Osman is the recent executive director. He is responsible
for the general management of the Astros Radio operations in Malaysia. For the last SBU, William
Pfeiffer is the Chief Executive Officer for the SBU- Library Licensing and Distribution. Hes
responsibility is look for the strategic direction for the SBU and delivering the best performance of
celestial channels.

Astros stakeholders are included the subscribers of Astro, staffs in the corporate, shareholders,
their supplier, partners and the public. Astro is trying to maximize the shareholder value by
expanding their existing businesses. They are now seeking for the new opportunities to grow their
businesses.

Referring to the Press Release by Astro in March 2007, Astro overall performance is quite well for
the financial year ended 31 January 2007. The revenues for the Astro channels had increase 11% to
RM 2,224 million. For the radio business, it had increase 5.4% to RM 151 million and as for celestial
pictures, it rising 25% to RM 75.3 million. But for the investment in Indonesia, Astro has estimated
RM157.4 million for the expected share of the start-up losses in this investment.
Astro is also undertaking into some businesses that relate to their core business. There is Tayangan
Unggul and Astro Shaw, MAESTRO Talent and TV guides and lifestyle magazines likes Astro Guide,
VMAG, iFEEL and InTrend. Astro also venture in India-AMSI and Philippines- PASI. Tayangan Unggul
and Astro Shaw are the leading film producers in Malaysia that producing quality Malay content
products. MAESTRO Talent is mainly draws new talents in Malaysia by organizing live events like
Akademi Fantasia, Astro Talent Quest, Blast Off and Astro Miss Chinese International Pagent. Besides
that, Astro is the major publisher of the TV guides and the lifestyle magazines. For example, VMAG
and iFEEL are the most preferable magazines by the younger.

2.2 Background of SBU Astro Television

Astro Television is one of the SBU of Astro All Asia Networks plc. It provides variety of channels from
local, regional and international programming to the Malaysians. The subscribers can easier access
to the multi-channel television services for 24 hours a day, a wide range. A wide range of
programmes that offer by Astro such as movies, dramas, variety shows, local and international news,
documentaries and also educational programmes. All these programmes are arranged into different
categories.

Astro understands the consumer needs and offers several of packages to customers. These packages
are dividing into three types. There are five mini packages, three super packages and Astro family.
The five mini packages are including: learning package, fun package, variety package, sports package
and news package. And the three super packages are including: dynasty package, emperor package
and movies package. The family package is including the local channels like TV1, TV2, TV3, NTV7, 8TV
and etc, and all these comes free with every Astro subscription.

Subscribers can choose from any of the combination that arranged by Astro. The lowest charges of
the package are RM 49.95 and the most expensive packages charges are around RM 124.95. Due to
high programming costs of football and other sport events, Astro announced that they are going to
increase the monthly subscription fees that are between RM 5- RM 15. They are also introducing a
new package called entry-level package and it is cheaper and costs RM 37.95 to the customers.

Around 90% of the total revenues of Astro are gaining from Astro Television. Astro is doing quite
well as it had a total revenue of 22 billion and Astro Television are generating RM 2,224 million.
3.0 SBU Situation Analysis

3.1 SBU Culture / Resources / Stakeholder / Performance

3.1.1 Culture

In Astro, which is a main provider of Pay-TV in Malaysia, they belief that Astro is strengthening its
flagship Malaysian operations, and expands its distribution and content activities into the region in
Malaysia. They belief what they got now is expertise in Bahasa Malaysia (Malay), Chinese, and Tamil-
language content, and have expertise in Malaysia. Astro currently are actively looking at
opportunities and strategies to bring their expertise regionally. They also establish financial
wherewithal to achieve the company's goals (Bacani, Cesar & Ramos, Abe de 2004).

3.1.2 Resources

Astro Television channel are strongly based on the usage of satellite, which is another main users to
Malaysias Satellite consists of MEASAT-1, MEASAT-2 and MEASAT-3. The way of receiving of Astro
channels are using satellite transmission to the receiving dish and decoded via the decoder provided
by Astro. Astro as among a handful of globally competitive model enterprises in Malaysia, along with
mobile phone operator Maxis, a sister company of Astro, and independent power producer YTL are
works at closed economy where the players sell purely in the domestic market, it should have to
make itself more competitive and reinvent itself since this types of Malaysian corporations still have
a place for improve (Bacani, Cesar & Ramos, Abe de 2004).

3.1.3 Stakeholders

Top Managements
Lead by the group chairman in the 6 members of board of directors, the top management has their
own philosophies for Astro. They always encourage the managers to be creative and ambitious in
order to achieve Astros goals. The core values likes teamwork, synergy and commitment are always
being highlighted by the top management.

Shareholders

Astro is trying to maximize the shareholder value by expanding their existing businesses and they are
now seeking for the new opportunities to grow their businesses. So, investments by the investors
are very important to Astro in helping Astro in liquidity turnover.

Employees

Employees are the main group of people that contribute a lot in the production and administration.

Customers (Subscribers)

Astro will not success in their business without customers because customers are the main user of
Astro. They have a great interest in the areas such as pricing, trust and improvement. Complaints of
customer will help Astro to improve in their production and administration in order to provide better
services in the future.

Supplier (MEASATs)

The main supplier of Astro Television is the MEASAT satellite. With the MEASAT satellite, Astro can
receive many channels from other countries.

Media Partners

Media is a strong party that helps Astro in delivering news or information and helping in promoting
Astros brand in building their image.
Government

Regulations on variety of programmes that can be display on the channels are very important
towards Astro.

3.1.4 Performance

Astro itself is a product of former Prime Minister, Mahathir Mohamad's Bumiputra policy that
handed out business rights to favored individuals. Established in 1996, Astro was given exclusive
license as direct-to-home satellite provider until 2017, and as such enjoys a dominant position in the
booming pay-TV business (the government can award non-direct satellite broadcast TV services).
Astro's cash flow looks volatile. After seven years of operation, the company had just had its first
taste of pre-tax profits RM 22.5 million, for the financial year ending 31st January 2003, on
revenues of RM 1.4 billion (Bacani, Cesar & Ramos, Abe de 2004). From the Astro Annual Report
2006, financial year ended 31st January 2006, Astro are having RM787.2 million of net cash for their
future activities excluding revenue counted in financial year 2007.

Year

Total Revenue

(RM 000)

Market Share

2004

1,265.5

26.5%
2005

1,530.6

30%

2006

1,787.0

34%

2007

1,978.3

36.5%

Table 1: Astros televisions total revenue and market share for 2004-2007

Refer to the table above, it shows the past performance of the Astro Television from financial year
2004 to 2007. The total revenue of the SBU is increasing year by year as well as their market share.
By reviewing to Astro Annual Report 2006, Astro have achieved RM2,012.5 million in the revenue
which has met one of the companys mission, which has a revenue increase of 17.25% from the
previous year revenue, while the Astro Television have occupied RM1,787 million out of the revenue
of RM2,012.5 million, about 89% of the total revenue. The increase if the revenue is due to the
increased of 218,400 Astros subscribers. Even though Astro is making profit but they have claimed
that the licensing fees is increasing and more operating cost occurred due to the increase of
television channels, an increase of subscription fees will be increase shortly in mid-year 2007.
3.2 SBU Customers Analysis

Current Market

Astro is a sole proprietor of pay-tv industry in Malaysia. They are monopolizing the Malaysias pay-tv
market. The market growth of Astro in Malaysia is probable and stable. Television is the SBU that
contribute most of the revenue for the company. It contributed 89% of the total revenue which is
around RM 1.787 billion for the financial year ended 2007. Although they are obtaining high level of
revenue, Astro is still can not capture a higher market share in TV household sector in Malaysia. They
only capture 36.5% of the TV household in Malaysia. To increase their market share in Malaysia,
Astro have to make some enhancement on it and find better strategies to implement.

Performance of Astros Television (SBU)

Year

Total Revenue

(RM 000)

Market Share

2004

1,265.5

26.5%
2005

1,530.6

30%

2006

1,787.0

34%

2007

1,978.3

36.5%

Table 1: Astros Televisions total revenue and market share for 2004-2007

From the table above, it is clearly shows that the growth of total revenue for the television and the
increase of market share in Malaysia for year 2004 to 2007. In year 2004, Astros television managed
to gain RM 1,265.5 million of the revenue throughout the year. For the following year from 2005 to
2007, television had obtained RM 1,530.6 million, RM 1,787.0 million, and RM 1,978.3 million
respectively. Their revenue was increased constantly year by year. As well as their market share in
TV household. For year 2004, their market share was 26.5% of the TV household. It increased 3.5%
from 26.5% to 30% in year 2005. There was a slightly higher increase of 4% in their market share
from 30% to 34% in 2006. Until the financial year ended 31 January 2007, Astro had announced that
their successfully increase their market share to 36.5% of the TV household.

Year
Malay

Chinese

Indian

Others

Total

2004

431,550

618,072

178,674

54,746

1,283,042

2005

626,708

645,322

216,750
76,974

1,565,754

2006

799,854

643,372

243,750

97,183

1,784,159

2007

978,183

644,853

273,196

120,021

2,016,253

Table 2: Astros subscribers segmentation according to ethnics from year 2004-2007

Refer to Table 2, it shows the Astros subscribers segmentation according to ethnic groups from year
2004 to 2007. In year 2004-2005, the figure shows that the Malay subscribers are lesser compare to
Chinese subscribers. But in year 2006-2007, the Malay subscribers are become the major group of
the total Astros customers. This is because Astro had introduced more channels that near to the
flavor of Malays such as Astro Ceria, Astro Prima and etc. Astro are also organising more Malay
shows like Akademic Fantasia and Roda Impian to attract the Malays customers. As for the Chinese,
Indian and other ethnics, the total of subscribers are increasing constantly year by year.

Market Segmentation

In order to increase the total revenues or gain more market share in TV household of Malaysia,
targeting the right customer and fulfill their needs and wants must be concern. That is why Astro
introduce several types of package to the customer: Learning Package, Fun Package, Variety
Package, Sports Package, News Package, Dynasty Package, Emperor Package and Movies Package.
These segments are used to aim different types of customer depend on their own interests and
lifestyle. Astro are offering customers to choose the packages by Mix n Match Packages. Thats
mean customer can choose the packages that they like.

3.3 SBU Competition Analysis

Astro Televisions Major Competitors and Relative Market Share

Astro is the only pay-tv sole proprietor in Malaysia, which mean Astro has monopolize the pay-tv
market in Malaysia. As a result, Astro Television do not have direct competitor to compete with. But
in reality, Astro just holding 36.5% market share of TV household. Astro did not manage to gain a
high market share. Seems Astro is monopolizing the market, they do not have to really focus on
obtaining the highest market share. They are more concentrate towards profit maximizations. So
they can maximize their profit by having growth rate of 2% each year. In a word, Astro as a sole
proprietor of pay-TV is holding unshakable advantage in the market.
Although Astro Television does not have direct competitors, they still having some indirect
competitors that might affect the market share of Astro. The indirect competitors are including local
channels, online TV and illegal satellite TV in Sabah and Sarawak.

Table 3: Market Share of Astro and indirect competitors in 2006

Table 3 shows that the percentage of Astros indirect competitors. It also shows the market share of
Astro based on the whole population in Malaysia. The total population in Malaysia is around
28,294,120 people (Malaysia Internet Usage Stats and Marketing Report 2006). The poverty
population in Malaysia has stands 3.5% of the whole population. This group of people is living in the
rural area so they did not have much entertainment. They are possible to become potential
customers of Astro. Based on the estimation, Astro has 36.74% of the population is the Astro
subscribers. 38.9% of the population is the internet users. According to Malaysia Internet Usage
Stats and Marketing Report 2006, the internet user in Malaysia will expected to be double the
internet users now in ten years time. For the other entertainments, it stands 20.88% of the
population. The other entertainments are including DVD, VCD, Cinema, satellite, local channels and
etc. However, some populations are overlap with several entertainments.

Astro Competitive Advantages

Astro is the first pay-TV that broadcast with multi-channels with different languages such as Bahasa
Malaysia, Mandarin, Tamil and others. Astro also offer many categories of programmes to
consumers to choose. Customers can select the channels based on their preferences.

Besides that, Astro are fully utilized the satellite MEASATs to have different channels from other
countries. This will benefit the customers because they can have more channels to watch. Astro has
the competitive advantage to keep growing 11% of revenue each year. Watching TV is the best
leisure for the people that dislike exercising to relax. Customers just have to pay an affordable
monthly fee to enjoy plenty of channels in Astro. Even though the internet users are growing rapidly,
TV is still the best choice during leisure time. It will be an opportunity to Astro to keep growing to
compete with other competitors.

Indirect Competitors Competitive Advantages

However, when the Astro compare with the indirect competitors like local channel, online TV and
satellite TV, it looks like more costly to the customers. Local channels are free providing to
customers in Malaysia. But they just can view few channels such as: TV1, TV2 and TV3. The
programmes that offer by local channels nowadays are interesting than before.

For the internet users, they do no need to pay any extra fees to watch online TV or download
movies. They just have to pay the internet monthly fees then they are able to enjoy a lot of services
in the internet. Nowadays, people are having more time facing to the computer. Access to computer
is easier to the younger.

Besides that, there is a group of people that prefer to buy DVD and VCD in order to subscribe Astro.
This is because buying DVD and VCD are cheaper than Astro. It is faster for them to get the new
release movies that might not show in Astro. Especially the pirated DVD and VCD, it is easy for them
to obtain everyway nowadays.

3.4 SBU Changes Analysis

Implicit here is that due to the continuously changing in the external environment, company has to
keep watch so as to interact with these movements. The environment changes can be divided into
micro and macro environments.
Micro-Environment

Customers (Subscribers)

Refer to Table 2; Astros Malay customers are increasing rapidly in 2006 and 2007. Early in the years
when Astro was first set up, Chinese customers are the major subscribers of Astro. This is because
that time, more Mandarin channels are offered. And now, Astro is introducing more Malay channels
that near to their preference. That is why Malay subscribers are increasing.

Suppliers (MEASATs)

After launching MEASAT-1 and MEASAT-2 in 1996, Malaysia had launched a new satellite to the
space again in December 2006. This satellite, MEASAT-3 can help to increase market demand for
satellite services within the region. Astro will be benefit from this new satellite.

Stakeholders

Astro is involving more in the sponsorship activities this few years. By sponsorship, Astro can
increase their reputation and also benefit the public. For example, Astro is sponsoring in the Formula
One car racing. Astro is the co-organizer.

Macro-Environment

Political Environment
Early in the broadcasting industry in Malaysia, government did not restrict the TV programmes
provider to display the categories of programmes to be shown before the programmes to be shown.
But now, government restrict that every programme have to be categorized according to their
levels. The levels are including U (Umun), 18SG, 18SX, 18PL and etc

Economic Environment

Currently Malaysia is experiencing the stable growth in economic development. The living standards
are increasing and it will increase the buying power of the consumer. With a strong buying power,
consumer will spend their money to enjoy their life.

Social Environment

The living standards in Malaysia are improving now. The improvement of citizens welfare is the
apparent ongoing changes. Thus, people now requesting quality- life by enjoying their life. People
nowadays always having big pressure in their careers. Watching television become one of their
leisure activities to relax. These groups of people are more enjoying the passive leisure activities.
They tend to prefer any activities that are involve with less movement. TV channels now offering lots
choices of TV programmes. Astro can have this opportunity to increase their market share.

Technological Environment

For the technological aspect in influencing TV watching, currently, new innovation like 3G phone and
wireless TV code receiver which allow computer receiving TV program, is available for Astro to
expand their services as to enlarge their market share.

4.0 Key Trends, Issues, Problems and Opportunities

Key Trends
Increase of Living Standards

Living standards of Malaysian are increase. People request for quality life by enjoying their lifestyle.
They willing to pay more to enjoy.

The usage of Internet

Internet usage is an emergent trend for Astro to be considered and it increases at the growth rate
of 1.7% per year in Malaysia. The competitive advantage for internet is due to its multi-function. The
internet is composite of functions like: communicating with friends and family by MSN, meeting new
friends, acquiring information about news, health, and other topics, entertainments like playing
online game and downloading movies. With this advantage, either TV or TV programme can not
support communicating channels as efficient as what Internet does. Considering the information
dissemination as TVs traditional territory, the emergence of Internet still ends the televisions
dominant position as major media. However, as what stated before, Astro could also offer Internet
TV programme which has same channel service as television. Therefore what Astro need is a feasible
repositioning strategy.

Environment Impact

For the groups of people that are health conscious, they preferred to stay at home due to the
polluted air, traffic jams, and unsecured environment. They will end-up staying at home and watch
TV and doing other indoor activities.

Key Issues

Sole Proprietor in Malaysia

Astro is the sole proprietor of pay-TV industry in Malaysia and Brunei and it also leading in Malaysia
TV broadcasting.

Capture market share of 36.5% of TV household

Astro captured 36.5% market share of TV household. Of course, this figure is not enough for Astro
and this can not satisfied Astro as the monopoly in Malaysia. However, this 36.5% of market share
already brought RM 2 billion of revenue to Astro. So, Astro is big profit maker in the TV broadcasting
industry.

Launching of MEASAT-3

Launching of new MEASAT-3 enable Astro to receive more channels from other countries. So, Astro
can provide more enhance services to the subscribers. This can increase the loyalty of customers
towards Astro.

Unexpected losses of RM 101 million in Indonesia

Losses of RM 101 million in Indonesia venture is caused by the distribution of license of broadcasting
and new regulation set by the Indonesians Government.

Increasing of subscription fees

In beginning month of May, Astro had announced that the subscription fees will be increasing RM 5-
RM 15 every subscription. The new price is effective commencing on June. This increasing of
subscriptions fees are caused by the high programming costs especially broadcast for football and
other sport events.

Key Problems

CRM Problems

Astro failed to deliver qualitys customer expectation to customer. Due to this CRM problem, Astro
has loss a number of customers. As a result of CRM problem, Astro is not able to grow their
subscriber base at the rate that they previously expected.

Indirect Competitors
Although Astro does not have direct competitors to grub their market share, its indirect competitors
are also holding a strong power that might have the ability to substitute watching TV in the future.
For example, some people in Sabah and Sarawak are choosing to set up the illegal satellite. This is
because it is cheaper on the installation fees compare to the monthly fees pay to Astro.

Key Opportunities

64.5% of available market

What parentage of market share Astro has already occupied is merely 36.5%, which, in turn,
indicates there is still 64.5% of TV household available for Astro to capture. To be success in
capturing this market, Astro need to deal with the competition problem well. Although Astro is the
monopoly in Malaysia broadcasting market and they enjoy the dominant position, Astro still have to
put in more effort in order to increase the market share and stable their position.

Offering more programmes on seasonal periods

Seasonal factors may influence the Astros sales performance. For instance some big events in sport
areas like FIFA, Thomas Cup, MBA, and some big events like Oscar film festival, Grammy Awards and
etc...will definitely increase the viewing rate. Therefore, it is an opportunity to do seasonal program
to attract more subscribers.

5.0 SBUs Portfolio Analysis

BCG Matrix
Basically, there are 3 major SBUs for Astro: Television, Radio, and Library licensing & distribution. To
identify these position and performance, BCG Matrix is employed to assess each.

Television

Growth Rate (%)

Radio

Library licensing & distribution

Relative Market Share (RMS)

Television : GR 10.1%

RMS 21.13

Radio : GR 15.87%

RMS 1.23

Library licensing & distribution : GR 14%

RMS 0.23

Television

It is major source of generating cash to support Astros operating activities. It is located in quadrant
3 called cash cow. Business in this quadrant is characterized as low growth and high market share.
In simple words, it generates net cash but it need little reinvestment. Therefore the cash that had
saved can be used to invest in other product or service.
For Astro, there is still one characteristic to make sure that opportunity is available to expand their
Television services. It is due to the dominant position of Television set. Although the emergence of
information products which might be more convenient, flexible, and high involved level, most of
people is still exposed to TV programme. Therefore, this service product will has longer life-cycle
compared with lots of physical items.

Radio

This service is positioned at question mark quadrant. For conceptual framework, business in this
quadrant has the feature that these products require more cash than they are able to generate on
their own. Therefore, if no change happened, this business will absorb large amounts of cash in the
short run and later.

The radio service once dominated the market to serve a role as information exchanging, but this has
been replaced by the Television. It is due to humanitys nature because for human, we are referring
to visualize something. However, it does no doom the death of radio, because this service has
opportunities to reach some people constrained by their job or other reasons. They have no enough
time to watch TV and surfing the net, but they still can listen to the radio during work time.

Library licensing & distribution

This SBU is facing the same problem as what Radio has faces. It generates the least cash flows to the
company.

6.0 Assumptions
Unexpected issues may take place anytime and anywhere. Therefore it is important to make some
assumptions on the likelihood changes, which may influence TV broadcasting industry.

Economical Changes

Economical changes in the future will influence the customers buying behaviour and their spending
patterns. For example, if economic crisis happen again in the future, jobless people will increase and
their financial ability to enjoy their lifestyle will become lesser. People will choose other alternatives
to substitute watching Astro. Total revenue of Astro will be affect due to this problem.

Social Changes

More and more people are well educated nowadays. They are more used to the computer, so, the
time they are willing to sit in front of the TV will become lesser. This is because computer can give
more entertainments to the young people such as playing online game, chatting online, watching
movies, listen to the music, gambling and others. Compare to watching TV, people can only watch
and hear to the TV programmes. In the future, Astro will have a high possibility that substitute by
Internet.

Technological Changes

Rapid technological changes in this world can let the possible competitors to enter into broadcast
industry. More and more advanced technology will be introduced in the future. Maybe in the future,
everyone can use their hand phone to watch TV everywhere. It will be a potential opportunity to
invent in this technology.
7.0 SBU Objectives and Goals

SBU Objectives

To build and strengthen loyalty to Astro brands by providing excellent products and services. This
will help Astro to maximize their brands values and leverage on the power of Astro brands across
their various media platforms and across borders to the benefit of all stakeholder. (Astro Annual
Report 2006)

To build and leverage on Astro core competencies and assets such as operational expertise,
broadcast and distribution infrastructure and multi-lingual, multi-ethnic content creation and
aggregation capabilities). (Astro Annual Report 2006)

SBU Goals

To expand Astro services by providing customers both greater choice and flexibility with the
availability of additional satellite capacity on MEASAT-3. (Astro Annual Report 2006)

To manage down the problems like disconnecting non-paying delinquent new accounts to the more
acceptable level of 10-12%. (Astro Annual Report 200

To resolve the CRM-related issues and regain the customer goodwill that has been lost as a result,
and thereby improve Astros customer retention rate. (Astro Annual Report 2006)

8.0 SBU Current Strategies & Recommendations

8.1 Market Strategies

Total Market Strategy

Currently, Astro is applying the total market strategy. Astro is trying to capture the whole market
with its variety of TV channels to attract different level of consumer. For example, Disney Channel
and Cartoon Network are targeting the kids and HBO, Cinemax and STAR Movies are targeting the
young people. Besides that, Astro also encourage the subscribers to subscribe a second account at
fifty percent (50%) discount on the second account, this are enable to reduce the subscription fees
being paid by the subscriber who having more than two person watching TV at the same time but
different channels. By doing this, Astro are able to capture more market share and this method are
recommended to be continue in the future and Astro may also giving more rewards for those who
subscribe for second account.

Market Demography

Astro also using market demography method by expanding its service business to different
countries, even though the investment spent in Indonesia did not return favourable and making
losses, Astro are required to continue with the business setup in Indonesia due to there is a huge
market size in Indonesia and may making profit in the next five (5) years. Besides that, Astro also
have Joint-Venture (JV) with several corporate in difference country especially in Asia. From this
issue, we are able to tell that Astro is diversify the investment to other countries and making profit
with the international businesses. From the article extracted from CFO Asia, it has mentioned that
Astro having insufficient funds for investment, but it is recommended Astro keep continue to invest
in different countries with their available funds and this may help the company grow and making
profit in the future.
8.2 Product Strategies

Product Repositioning

Over the past three years, Astro have added a total 24 new channels to the subscribers, although
there are positive response from the viewers due to free charges for the trial period, but there also
have negative feedback saying the additional channels are not favourable by the subscribers, in
order to improve the situation, Astro are advised to increase the channels but which the channels is
favourable by the subscribers.

8.3 Pricing Strategies

Optimal Pricing

Currently Astro facing the increase of cost of programming especially in the live sports channel
broadcast and Astro have been absorbing the increase in cost for the last three year starting from
year 2004 till 2006; it is recommended that Astro continue with their price revision between RM5
and RM15 in order to cover certain costs. The increase of price should be optimal that enable the
company cover all the costs and making reasonable profit.

Value-Based Pricing / Flexibility Pricing Strategy

Beside the price revision, Astro have repackaged all the channels, and now, all the subscribers have
the flexibility of choosing two mini-packages instead of the previous starting point of three mini-
packages. It is recommended due to the repackage will benefit to all the subscribers by selecting the
favourable package at an appropriate subscription fee. Besides that, the subscription fees charged
are based on the customers needs and willingness to pay for the package chosen.

Penetration Pricing Strategy

Astro is also introducing a lower entry-level package at RM37.95 down from the current entry-level
package at RM49.95. It is recommended due to by setting a lower entry-level package, Astro may
able to attract those low income subscriber and helpful in increase the subscribers which have meet
one of the objective of Astro. This may also help to increase the market share of TV household rate.

8.4 Distribution Strategies

Direct Channels Strategy

Astro are providing broadcast services to the subscribers, unlike the other product which required
intermediaries to distribute their product to the final consumer. What had Astro done for its
distribution is by setting up Customer Service Center in different location to do the registration,
payment and Customer Relationship Management (CRM) that handling complaints. By using this
method, Astro have ensured the quality of service toward customers. It is recommended that
improve the skill of the employees to maximize the usage of the service center.

Astro facing lost of revenue will have been analyzed previously are due to the system of Astro
company, from an interview with one of the subscribers of Astro, we have found that the person are
satisfy with the employees attitude but dissatisfy with the system of Astro, the employee cannot
settle the complaint on the spot and required a period of time to let the company technician to find
out the problem, sometimes the billing system have overcharge the monthly subscription fees and
payment method only limit to credit cards and cheques payment which have bring inconveniency to
the customers. Regarding Astro Call Center, it has a limit of time and sometimes no one answering
the phone call, this has made the customer frustrated with the service provider (Astro). It is
recommended that Astro should improve the system of Astro Company used and consent to the
Astro Call Center in order to provide a better and quality service to the customers.

8.5 Communication Strategies

Sales Promotion

Astro currently are promoting the new low entry-level package in certain low cost area by setting up
a small counter and using promoter to promote the new package, this method is incurred a lower
cost compare advertise through newspapers or billboard, and level of reaching to the customer is
better but having a low response to the registration for new customer. It is advised that Astro may
use other promotion method such as waiving 2 months subscription fees for those low entry-level
package, this may increase the registration for those low income subscribers.

Advertising

For business such as Astro which in the entertainment services by broadcasting, advertisement
through Television could not reached to the people who did not subscribe Astro. Astro may consider
using different kind of advertisement such as advertise thru the newspapers by introducing new
services and programmes channels, advertise thru billboard may capture certain group of people
who does not concerned to reading material such as newspapers, and sponsorship for event have
expand the reaching level to the people in the society. By using sponsorship method, it not only can
help to advertised itself but also build up a strong goodwill to the public.