Cost cuts in media

Published November 19, 2018

ONE 24/7 news television channel has shut down. Many other news channels, big and small, are teetering on the brink: their advertising revenues have been falling for several months.

The keyword in the (electronic) media these days is ‘rightsizing’. From camerapersons to producers to programme hosts — everyone’s job is on the line. Bureau offices have been particularly vulnerable to the campaign to cut expenses with many shutting down, rendering hundreds without work.

The devastation caused by plunging government and commercial advertising is real and substantial, and not limited to news TV networks alone. After all those doomsday predictions made ever since the birth of free electronic media some two decades ago, the bubble, it appears, has finally burst.

TV channels were always destined for some correction, meaning that some of them were supposed to fizzle out post-boom, only the fittest among them surviving. But the crisis is not limited to the channels, of which the experts say Pakistan has too many.

The newspaper industry has its own demons to overcome. Watching resignedly as companies took a substantial portion of their media spend from their print to their digital platforms to reach out to their target markets, the good old trusted newspaper is faced with a mortal threat as incomes fall drastically.

Thus starved of resources, newspapers and magazines have shed pages and created redundancies of their own. Some are finding it hard to pay salaries to their retained employees, contributing to the unrest and the increasingly vocal protest among journalists and other workers in the industry.

Here, too, media accounts do not match. Job loss estimates in television and newspapers vary from one industry source to another. Afzal Butt, president of his faction of the Pakistan Federal Union of Journalists (PFUJ), puts the number of employees who have lost their jobs in this latest wave somewhere between 300 and 500. He fears more bad news over the next several months if the “bleeding doesn’t stop”.

‘The government has cut its media spend by more than 70 per cent and companies by almost 50pc’, says a leading advertising agency owner

Much has been said about how the current crisis is linked with the ascent to the throne of Prime Minister Imran Khan, who emerged on top in the midst of a badly polarised media. However, some sombre, less emotional versions say the difficulties predate Prime Minister Khan.

What has happened is that the government decision to sharply slash media spend and its refusal to clear outstanding payments to TV channels and newspapers, on account of advertisements released by the previous PML-N administration, intensified the trouble.

Information Minister Chaudhry Fawad Hussain promised last week to clear the unpaid bills of the media houses to protect jobs, but it is not yet clear if the provincial governments also plan to make the outstanding payments to help ease financial pressures facing television networks, newspapers and magazines.

A leading advertising agency owner told this correspondent in Lahore that the government has cut its media spend by more than 70 per cent and companies by almost 50pc, agreeing with the minister that the previous government had been ‘very generous’ in financially supporting media organisations through its publicity campaigns.

“The government’s media spend started falling soon after the installation of the caretaker governments in Islamabad and the provinces in the run-up to the July elections. Commercial advertisers began cutting their expense on media campaigns soon after the new government came into power because of tax and economic policy uncertainty,” he says, requesting anonymity because of his business relations with the federal and Punjab governments.

Indeed, the federal and provincial governments, especially of Punjab and Sindh, have in recent years heavily spent their way into the list of top 10 print media advertisers along with commercial banks, telcos, real estate developers, FMCG firms, food companies, etc.

Industry sources claim that advertising spend of both federal and provincial governments contributed the lion’s share to the incomes of TV channels in the last few years, but its exact size is difficult to calculate.

“The government has actually subsidised news channels for several years by buying air time at a much higher rate — around three times higher than the rate charged by the channels from a private company for the same duration and slot. The majority of the channels are facing the present financial crunch because their revenues from government advertisements have suddenly vanished,” says a senior executive of another major advertising agency from Karachi, refusing to reveal his identity.

The total advertising spend is ‘assumed’ to have grown at a reasonable rate over the last few years but the market remains significantly small given the number of media sources claiming their share from the pie.

Aurora, a Dawn Media Group publication on marketing, which annually compiles advertising spend collected from multiple sources, estimates that the market size has grown by a little less than a third from Rs66.9 billion in FY2015 to Rs87.7bn in FY2017, with almost half of the total revenues flowing in the way of TV channels and less than a quarter in the way of newspapers. The rest is divided among radio, Out of Home (OOH), digital formats, etc.

The keyword in the (electronic) media these days is ‘rightsizing’. From camerapersons to producers to programme hosts — everyone’s job is on the line

Some Karachi-based advertising firm executives, however, believe that the combined media spend of government and the private sector has grown to Rs90.5bn during CY2017, not very far from the Aurora estimates. But they insist television’s share in the market stands at 66.4pc compared with the print media share of 10.7pc.

On the basis of their popularity among viewers, the top six channels grabbed 45pc of the total television advertising spend of Rs42bn in FY2017. ARY Digital and Hum TV topped the industry with a 10pc share each followed by Geo News with eight per cent, Geo Entertainment with seven per cent, and Urdu1 and PTV Home with five per cent each. The rest left for scores of other channels to share between them.

Similarly, the top three newspapers captured 47pc of the total print advertising revenue of Rs20bn with Jang topping the list with 26pc share followed by Dawn with 12pc and The Express Tribune with nine per cent.

The information minister accused the previous government of using advertising as a ‘political tool’, saying the PTI administration will “bring a balance” in the (news) industry through a transparent, merit-based policy for future distribution of the government’s media campaigns. He has repeatedly said the government wasn’t interested in bailing out media outlets with taxpayers’ money.

Many news industry analysts argue that if the PML-N used government advertising to ‘bribe’ channels and newspapers, the PTI is employing the same tool to muzzle them.

“In recent months, we’ve seen the state and its different organs bring pressure on media owners… to put them on the mat. Public sector advertisement that contributes 22-23pc to the total media revenue is being used to impose the government’s own agenda on the media,” asserts Adnan Rehmat, an Islamabad-based media analyst.

“The proposal to replace the existing separate electronic and print regulators with a new body, Pakistan Media Regulatory Authority (PMRA), to regulate print, electronic and social media without consulting the owners and journalists is an attempt to control the content (produced by the news media). The pitch is being laid against the content producers,” he argues.

Seemi Naghmana, a professor of mass communication at the University of Karachi, agrees with him. But she says the present crisis was long overdue because of mushroom growth in the television industry.

“We’re still watching new TV channels being launched in spite of the financial crunch gripping the industry. Our economy isn’t strong enough to support such mushroom growth of TV channels. So when the crunch came in the wake of cuts in government advertisement, many started retrenching their employees to hedge against potential losses,” she elaborates.

A Karachi-based senior journalist blames media consumers for their unwillingness to pay for the content produced by the television they watch, and newspapers and magazines they read.

“Because media consumers aren’t ready to pay for the content, the owners have built organisations that mainly depend on government and commercial advertisement revenue for sustenance. Reliance on the government increases when the economy is not performing. This is a fragile business model. Little wonder if governments take advantage of this fragility to control the content produced and gag free expression,” he explains.

Whatever little fee consumers pay to watch more than 100 channels at home goes to the distributors instead of content producers. Similarly, up to 40pc of the cost of a newspaper is pocketed by hawkers-distributors and another 10-20pc is lost in bad debts and unrecovered costs. While the television industry gets nothing from distributors, newspapers recover only a small fraction of their cost from sales.

Further, there is a general agreement among media professionals that the rise of internet and emergence of new means for advertisers to reach their target audience has diverted advertisement from the conventional TV and print media. The size of the advertising spend has increased over the years, but so has the number of claimants. The competition for advertising income has increased sharply.

“Many competing channels and newspapers are ready to become an extension of government propaganda,” says the Karachi-based journalist. “And these media houses are ready to do the bidding of businesses prepared to pay for the content of [these businesses’] liking to protect and increase their market share.”

Some principles it seems remain unchanged, even when the ‘turmoil’ has taken away many jobs and left everyone else in the media insecure.

Representatives of the Pakistan Broadcasters Association and the All Pakistan Newspapers Society were not available for comment.

Published in Dawn, The Business and Finance Weekly, November 19th, 2018



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