Analysis and News

Equity Highlight: Guardian Media Limited

BY GEOCAP's Contributor: Matthew Gaul

Media companies are experiencing paradigm shifts in the industry that are disrupting successful mature markets, disrupting established connections between advertisers and audiences and threatening the profitability and sustainability of their business models. Guardian Media Limited is a conglomerate operating in print, radio, television and digital media. Operations are primarily centred in Port of Spain, San Fernando and Scarborough in Tobago. Guardian Media Limited is a subsidiary of ANSA McAL Limited.

Guardian Media Limited’s mission is to be the solution provider of choice for information and entertainment delivering global quality products to customers, sustainable returns and growth to shareholders in an environment which fosters employee development, innovation, excellence and exemplary customer service. Its vision is to be the leading communications company in the region operating with global standards and values such as honesty, integrity, courage and fairness.

Advertising income is the largest revenue stream for GLM accounting for over 85 percent of its revenues. The emergence of social media platforms like Facebook, Twitter and Instagram has caused a gradual shift of advertising dollars from the traditional means to digital means given the lower costs and potentially wider reach. The COVID-19 pandemic caused a significant decline in business activity throughout the world in 2020. The pandemic took its toll on the advertising industry, as sectors such as automotive, retail and travel sharply curtailed their advertising spending worldwide. There exists a rule of thumb in the advertising industry that ad spend follows any rise or fall in GDP. As companies experience financial shortfalls, one of the first cost cutting measures taken is to reduce the advertising budget.

The advertising income for Guardian Media Limited has had a significant downturn. According to the 2013 Annual report, the company earned $190 million in advertising income. In 2019, that number fell to $103 million and in 2020, it fell to its lowest in over 15 years, $94 million. This decline in advertising revenues has significantly affected the profitability and viability of the company (Guardian Media Limited Annual Report, 2020).

The company experienced net losses from 2017-2019. In 2020, it recorded a net profit of $4.6 million despite a decline in revenues due to a significant decline in its cost of sales. The company’s total revenues have moved from $209 million in 2013 to $110 million in 2020, a whopping 47 percent decline in revenues. Given the precipitous decline in net income, it has had adverse effects on the market prospects ratios for the firm. The share price has moved from $15 in 2018 to $3.42 in 2020, a 77.2 percent decline in share price. The Market Capitalisation has moved from $780 million in 2013 to $136.8 million in 2020, a whopping 82.4 percent decline. These numbers indicate that the company is losing value and worth as determined by the Trinidad & Tobago stock market.

From 2017-2019, the company experienced an earnings loss per share according to the annual reports for the years. For every share of GML’s stock, shareholders lost $8 cents in 2017, $6 cents in 2018 and $14 cents in 2019 (Guardian Media Limited Annual Report 2019). Additionally, the company has failed to distribute dividends to its shareholders over the past two years.

To ensure Guardian Media Limited survives, the Board of Directors and management staff will need to formulate new strategies and business models to offset the loss in advertising income which is currently crippling operations. Guardian Media Limited is currently faced with a plethora of challenges but the company can thrive and survive by diversifying their producing offerings and reforming its business model.

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