KUALA LUMPUR: CGS-CIMB has maintained its "overweight" rating on the local media sector despite news reports on the possible consolidation of major subscription-based video-on-demand (SVOD) services among US media giants.

The research house has raised concerns about the "butterfly effect" on the local entertainment companies that offer SVOD services should more Hollywood giant studios merge.

Last week, multiple news outlets in the United States (US) reported a slew of possible mergers in the video-streaming space.

CGS-CIMB said Astro Malaysia Holdings Bhd's streaming-integration proposition could lose its vigour if there were fewer tent-pole SVOD services under its ecosystem.

"We fear Astro's streaming integration proposition could be blunted if there are fewer services. Media Prima Bhd's content sales growth may be capped as well," it said in a research note.

The research house highlighted that the whole idea behind Astro's strategy is to aggregate all the major content dispersed by various streaming services in order to make it easier for viewers to find all their favourite shows and movies on one device.

It added that if the major Hollywood studios consolidate their SVOD services, there would be less fragmentation of content in the streaming space.

"Also, remember that Astro's distribution agreements are not on an exclusive basis; viewers can still get various SVOD services without subscribing to Astro.

"Media Prima, meanwhile, may have little wiggle room for its content sales growth with fewer SVOD services coming to Malaysia," it said, adding that it has "buy" calls for both Astro and Media Prima due to undemanding valuations.

At 11.40 am, Astro's share price rose half-a-sen to 84 sen per share with 419,800 shares traded, while Media Prima went down one sen to 43 sen with 206,000 shares changing hands.

-- BERNAMA