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Communiqué 38: East Africa's largest economy has a media crisis
Kenya’s most prominent media companies face the toughest times, and journalists feel the pinch.
Many Kenyans think of the media as a glamorous business. For instance, media personalities in the biggest TV and radio roles are bonafide celebrities with millions of followers on social media. But recent headlines surrounding the country’s largest media companies are taking the shine off the industry, raising further questions about the sustainability of Africa’s media ecosystems.
Journalists going unpaid for three months at Standard Group, Kenya’s second-largest media company, is the latest headline maker. To outside observers, the news was surprising, shocking even. Because despite the decline in legacy media companies’ prospects, no one imagined it was that bad – at least not at a company that generated $11.2 million (Ksh1.4 billion) in revenue between January and June 2022.
The company is paying salaries in instalments while fighting off the Kenya Union of Journalists (KUJ). Standard Group owns The Standard newspaper, Kenya’s second-most circulated paper, as well as the 24-hour news channel KTN News, entertainment channel KTN Home, and several other TV, radio, digital, and print brands, all occupying different niches. Since 2019, a year after it posted a net profit of $2.08 million (Ksh261 million), the company has been in the red.
That same year, when it launched new broadcast properties Spice FM, Vybez Radio, and Burudani TV, Standard posted a $3.8 million (Ksh 484 million) loss. In Covid-ravaged 2020, it recorded a $3.4 million (Ksh434 million) loss. It significantly cut its loss for the year ended 31st December 2021 to $175,957 (Ksh22 million) as the economy bounced back and advertising income rose.
In November 2022, the company warned shareholders that earnings for the year ending December 31st, 2022, were expected to be at least 25 percent lower than reported earnings for the previous year. CEO Orlando Lyomu attributed the expectedly poor performance to the increased cost of raw materials, global supply chain disruptions, and depreciation of the Kenyan shilling. He blamed these factors for a 50% increase in the cost of production, as well as “the heightened political environment with advertisers pulling out during the political campaign period between July and October.”
Standard Group journalists who spoke to us indicated that in their communication to staff, the company blamed declining print circulation and macroeconomic factors, including the lingering effects of the pandemic, for the company’s financial challenges.
“Officially, we were told it’s because print sales are down, and the lingering effects of Covid-19, but there are a lot of rumours and stories going around,” one journalist stated, speaking on condition of anonymity.
In watercooler conversations, staff members also question the company’s recent expansion. Standard’s new capital-intensive ventures, mostly niche radio and TV stations launched within the past four years, are yet to turn profitable.
“As with other media houses, we experienced a decline in print circulation numbers, and achieving profitability from our new products has taken longer than forecast,” the company observed in its 2021 annual report [pdf].
Like other leading Kenyan media houses, Standard’s cash flow challenges have been exacerbated by dues owed to them by the Government Advertising Agency (GAA). Kenya's government owes media houses over $8.7 million (Ksh1.1 billion). The debt is only a tiny fraction of the $4.3 billion (Ksh504 billion) government ministries and agencies owe suppliers. President William Ruto’s administration promised to settle the media debt.
Notably, media companies in Kenya, including Standard Group, have struggled to keep up with shifting media consumption and advertising trends. Robert Ndung’u, publisher of Kenyans.co.ke, one of Kenya’s most visited news websites, said:
“It's a combination of many factors. Generally, the economy has been on a downward trend. Digital is also playing a big role because a majority of people are now consuming their news online, and the numbers keep growing. The other thing is companies also haven’t been able to monetise online platforms as well as they should, so there’s a gap. The business model of digital is not catching up to the speed at which people are using digital. With that, these companies are caught in a situation where they have to lay off people.”
The situation at Standard is particularly dire, but the struggles of traditional media companies aren’t unique to it. Nation Media Group (NMG), the biggest media house in Kenya, began trimming its payroll in November 2022 to remain competitive. It pushed out top editors and famous on-screen personalities, such as primetime news anchor Mark Masai and editor-in-chief Mutuma Mathiu.
Standard Group also began laying off staff earlier this year. Radio Africa Group and Capital Media are among the leading media companies that have announced plans for mass layoffs within the past quarter. Layoffs across the sector have happened regularly over the past few years. A common thread sees these companies tying the layoffs with plans to restructure their operations and accelerate digital transformation.
The challenges facing legacy media companies aren’t unique to Kenya. They are a global problem, Mutana Gakuru, a media entrepreneur, said. In the past year, CNN has laid off hundreds of employees, while the BBC announced plans to lay off 382 staff members as it accelerates its digital shift.
Who owns Kenya’s media?
The vast majority of Kenya’s biggest media houses are either owned by politicians or individuals affiliated with politicians. This influences political coverage, as media houses align their content with shareholders’ varying interests. The family of the late former President Daniel Arap Moi, now led by his son and former Senator Gideon Moi, is closely associated with the Standard Group.
Public perception of the media is already complicated enough. Market leaders Nation Media Group, Standard Group, and Royal Media Services (RMS) all attracted the ire of President William Ruto and his supporters over what they perceived as bias against him during the Presidential campaign of 2022. Much like Trump, Ruto himself rallied his supporters against the mainstream media.
During the 2022 General Elections, Moi supported Raila Odinga’s bid for president against Ruto. RMS Chairman SK Macharia did, too, and was a familiar face at Odinga’s rallies. Ruto’s lieutenants also accused top editors at Nation Media Group (NMG) of supporting Odinga.
In response to trending stories on the woes bedevilling media houses, it isn’t uncommon to find a section of Kenyans supporting the downfall of these organisations over their perceived political biases - highlighting just how much work needs to be done by media houses to win public trust.
The sorry state of the Kenyan media gets more worrying when you consider the implications of a struggling, demoralised journalistic workforce. Besides the diminished public access to quality news and information, the industry regulator Media Council of Kenya (MCK) is linking journalism’s financial woes to an uptick in extortion and unethical practices by its practitioners.
“If you open a media house and recruit people, make sure that they earn. Otherwise, they become extortionists. You saw last week we cancelled accreditation cards to deal with this matter,” stated MCK CEO David Omwoyo at a forum with lawmakers while decrying journalists' non-payment at top media houses.
It is clear that to ensure journalists are rewarded for their work and the media serves its purpose and delivers on its responsibility to the public, there needs to be a concerted effort to make media ecosystems in Kenya (and Africa) more sustainable. Media houses need to be better equipped to thrive in this digital age. Innovation and digital transformation should be more than corporate buzzwords but fundamental facets of companies’ operations and strategies. Localising innovation, rather than copy-pasting what works for global publications and audiences, is also vital.
Those in the industry believe it is possible to monetise digital media outlets in Kenya sustainably and that it's only a matter of time.
“The thing about paying for content is about value. Even in the US, when you talk about the New York Times being able to monetise sustainably, it’s because they have invested heavily in their journalism and are giving very valuable content that people want to subscribe to. And also, in the US, many outlets haven’t been able to monetise. So it’s not a country-specific thing. It’s about whichever media can provide valuable content to the audience, and that depends on how fast they can do it, so it can even happen this year (in Kenya) if someone can hack the content,” Ndung’u said.
Martin K.N Siele is a digital storyteller and audience builder. He is a contributor for Quartz Africa and also the content lead at Business Today Kenya. Passionate about African media, sports, and entertainment, Siele also launched Loud.co.ke.