XNews in financial trouble, salaries delay for three months

BUSINESS TODAYApr 6, 20162 Mins read1.2k

The hard times facing media companies have not spared even the newest entrants in the market. XNews, the free evening newspaper published by Xtra Publishing, has hit a rough patch after two years of smooth running.

The publication is facing cash-flow problems and is now unable to pay its staff on time. The company has not paid its staff, mainly journalists and sales executives, for the last three months and is faced with a rebellion if the situation continues.

The financial troubles are said to stem from delayed payments for government advertising and a general drop in ad revenues from other organisations.

Since January most journalists on the payroll have been paid only Ksh10,000 with occasional handouts of Ksh1,000 to Ksh2,000 to cater for transport. Things are so serious that there are no finances for journalists transport to cover functions, while the morning and afternoon tea has been scrapped.

“We are so broke,” said an XNews editor. “We would buy mandazi to take with tea, but that has gone too so many guys are working on empty stomachs. People are using the Xnews as tissue in the toilets.” It’s that bad.

Management has been making false promises to pay staff, whose patience is thinning out. Vendors, too, have protested by refusing to distribute the newspaper. The company is said to owe millions of shillings in rent arrears and printing costs with the Star newspapers.

See also: Ruto eyes stake in XNews newspaper

The company’s CEO Peter Marshall held a meeting recently with Fusion Capital, a strategic investor that pumped in over Ksh100 million two years ago, which has threatened to pull out due to the financial crunch. “Advertisers are not paying. In fact there’s a lady who got DoD adverts that ran but were never paid,” said an insider. The freelance sales lady is said to have used the adverts without an LSO or approval, which DoD declined to pay.

Launched in March 2014, Xnews has been on a roll, backed by Fusion Capital, the private equity and investment firm, which bought into the media house by acquiring a 40% stake in Xtra Publishing Limited for Ksh125 million. This elevated the company’s value at the time to Ksh313 million.

XNews has been bold enough to poach from mainstream media, enticing journalists with better salaries. But that brave face appears to be fading as it has also declined to renew lapsing contracts for some editors.

There was talk of Deputy President William Ruto seeking to buy a stake in the company, but the management has denied it, though insiders say it’s still an option that’s being considered to save it from collapse.