Business Commentary

The Utusan story: Delaying the inevitable

The new Utusan HQ in Chan Sow Lin the company moved into in 2013 despite the company having financial issues.

Written by Aziz Hassan

August 23, 2019.

Recollections & Reflections – A commentary by Aziz Hassan

IT’S one on a company involved in news making the news but unfortunately, it’s all for the wrong reasons.

The Utusan Melayu Group, first through its Jawi newspaper, the now defunct Utusan Melayu, and then the romanised Utusan Malaysia, was long recognised for its role in the fight against colonialism and the Japanese Occupation, with a touch of left-wing politics thrown in in its first few decades.

It held on to its independence and when Umno wanted to buy it over in 1961, the staff resisted and went on strike, the standoff ending only when the Tunku-led government launched a crackdown. Many senior editors lost their jobs. One was placed under detention without trial when he returned to Singapore, where Utusan has its beginnings.

But although it was Umno controlled, Utusan Malaysia and its Sunday edition the Mingguan Malaysia for many years managed to carry on with its independent streak. While it was seen by the political higher-ups as being problematic, there was this realisation that any move to curtail its freedom would be detrimental to Umno and its large support from the Malay hinterland. Such was Utusan’s reputation but in recent years the shift towards political subservience was too glaring for most to miss and the paper’s circulation started to go down south rapidly.

Not many may be aware that Mingguan was the region’s highest selling newspaper until possibly the end of the 90s but despite its popularity, advertising support never quite matched its circulation, with some in the industry saying that there appeared to be a boycott by advertisers who instead spent their money with the English language newspapers.

Everything appeared alright financially when in fact Utusan was bleeding non-stop

Despite the hiccups Utusan marched on with seemingly no major issues to deal with. There was no talk of financial problems, no cashflow issues, the senior executives were well paid, maybe overpaid compared to those at the other mainstream newspapers, no groans were heard from the staff and everything looked good and under control.

The company was listed in 1994 and in subsequent years the financials showed a pre-tax of usually less than RM10 million a year. Peanuts by most big name Malaysian companies’ standards but still a profit each year. Or so it seemed. How many among the company’s top echelon knew the real situation and that some of the expenses were off balance sheet is anyone’s guess.

The story from senior national Umno leaders was that the group had always experienced bad times financially, never actually making money, certainly not since its listing. One Umno official confided to someone the only reason that kept the company afloat were the millions of ringgit pumped into it by Umno year in and year out.

A senior lawyer told a similar story as far back as 22 years ago, when then deputy Umno president Datuk Seri Anwar Ibrahim asked that a company just awarded a contract with Radio Televisyen Malaysia give a bigger shareholding for Utusan than originally planned because “Utusan had never made money since its listing”.

The situation then became so unbearable that an Umno official came out with the proposal in late 2006 for Utusan to merge with the New Straits Times Press – a proposal which not surprisingly met with strong objections from the Utusan side, with its employees lobbying Umno MPs and ministers to support the movement. The main weapon of the protesters were the Utusan annual reports which showed both a profit, even if small, and the remuneration packages for senior executives, not knowing the real situation which was never told to them.

Strangely many decisions made by the management and agreed to by the company’s main shareholder Umno didn’t match its financial situation, including the decision to build a new head office across the road from the old one in Chan Sow Lin comprising three seven-storey blocks moved into in 2013. The designs of the structures look glaringly out of place in an area known for its workshops and all things heavy and rusty.

Company has also failed to meet its obligations under the VSS scheme

After a change in the majority shareholding last year, Utusan decided on a voluntary separation scheme, shedding off about 800 employees.

Unlike most VSS in Malaysia, the company could not afford to pay off those affected in one or two lump sums, giving them the option of monthly payments equivalent to their last drawn salary. It went on uninterrupted for six months beginning last December. In June they were paid RM1,000 each twice but there was nothing in July.

During a recent reprieve, existing employees were paid RM2,000 each and those under the VSS RM1,000 each the next day. The original plan told to the staff during the VSS was that the entire sum would have been settled by this November. That looks impossible now. News reports said that the recent late SOS was made possible by Umno’s contribution of RM1.8 million but this is simply fire-fighting which will be of no help even in the near term.

Roughly calculated, its staff salaries and other operating costs would total easily RM7 million or RM8 million a month.

By the way tycoon Tan Sri Syed Mokhtar Al-Bukhary reportedly picked up the tabs for about two years until a few years ago but what the deal was all about not many know the details.

With huge accumulated losses and almost no end in sight to its cashflow problems, it is highly unlikely Utusan Melayu can find another saviour. Maybe it can but that person would have to be one with bottomless pockets and clueless about what being in business means.




About the author


Aziz Hassan

A journalist since July 1976 with both the English and Malaya press and was with two newspaper groups before The Mole. Does corporate report-writing and translation in his free time. Currently also a contributing weekly rugby columnist for the New Straits Times.