After Guzzling NMG’s Millions, Business Daily Got Off To a False Start

LAUNCHING BD PART III

In the second half of 2006, as Wilfred Kiboro served his last months as Nation Media Group CEO, the Business Daily was taking shape, with plans to launch it gaining momentum. It was no longer a matter of if, but when it will hit the streets. Yet even as CEO, Mr Kiboro had surprisingly, kept his hands off this project, silently watching from his office – perhaps keen not to hinge his legacy on a product whose performance he wasn’t too sure about.

Management Pitches Project

The project was left in the hands of NMG Editorial Director Wangethi Mwangi, who had become its strongest proponent after initial cold-feet, and Nick Wachira, who had now been appointed the Managing Editor of the Business Daily. These two guys, especially Wachira, spent sleepless nights worrying more about how the product will be received in the market than the work that was going into it and the money it was gobbling up. An editor’s biggest frustration, by the way, is seeing no one read a newspaper s/he has produced.

Meanwhile, at the Nation Media boardroom, headhunters had settled on Mr Linus Gitahi, from GlaxoSmithKline West Africa, to take over from Kiboro due to retire in October 2006.

Mr Gitahi was excited to join the Nation Media and heard about Business Daily through briefings after being selected. He joked at one meeting that his first goal was to “kìll” it. It’s not clear whose briefing he relied upon to come to that very telling joke, but most likely he was understudying his predecessor, Wilfred Kiboro.

It is Mr Kiboro who hired Nick Wachira from Standard to help turnaround business journalism for Nation newspapers. But when Business Daily issue cropped up, he did not believe in the idea, according to those who keenly observed his body language.

While he liked Nick’s products development record at NMG, he did not support the introduction of Business Daily. With the clock ticking away on his tenure at the twin towers, Kiboro had little leeway, as he waited for his retirement in October 2006.

It is understood that Linus Gitahi changed his mind after reviewing the business and editorial plans and “became one the biggest supporters,” of BD, said Wachira.

Missed Launch Date

The launch of Business Daily was scheduled for early 2007. In the intervening months, Gitahi and Wangethi Mwangi accompanied Wachira to meet major advertising and PR agencies in Nairobi “to test the viability of a business paper as well as to convince them to support it,” Wangethi Mwangi recollected in the INSEAD Business School case study, the source of this information.

Though Wachira did the talking during these meetings, Mwangi felt responsible for the product. “It’s the first time we did that. We went to a number of agencies and breweries, banks, oil companies, making the same pitch. You always felt awkward meeting advertisers, making commitments to support them. The barriers (between editorial and advertising) are flimsier here than the west,” Wachira said.

The meetings were crucial to get access to news powerful business news sources, in particular with Ogilvy and Mather’s (now Ogilvy Africa) Nairobi office. “They (Ogilvy) also acted as a big clearing house on the PR front; they handled most of the blue chip firms on the Nairobi Stock Exchange. If you wanted to talk to the CEO of a big Kenyan firm, you’d have to make a call to Ogilvy.”

Business Daily Jostles For Space

The NMG owned its own printing plant in Nairobi. Business Daily could use it, but that meant adhering to strict conditions to ensure Daily Nation’s deadlines are not interfered with. The Nation starts printing at 7pm or thereabouts and it should be on the streets countrywide at 5am. The newspaper market in Kenya is driven mainly by single copy sales. If you are late in printing you don’t get to the vendors on time, or at all, and you goose is as good as cooked.

Thus Business Daily had to be printed before the Nation’s run began. This meant Business Daily could not compete on breaking news. Instead it had to rely on columnists and feature articles that could be written, edited and designed on camera-ready pages the night it went to press. Only the front page and page four would remain to be finished by 4pm, just before printing.

To differentiate it from the Daily Nation, the Business Daily would be printed on special paper. This included giving it the salmon pink colour adopted from the UK-based Financial Times, which in 1893, decided to start printing its articles on light salmon-pink paper. The pink background was meant to distinguish the paper from the Financial and Mining News, its market rivals then.

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So to provide outward features which would distinguish the Business Daily from other newspapers such as Daily Nation, The Standard, The East Africa and The People Daily, the paper had to be slightly tinted.

This special paper required reconfiguring the press for each run and six weeks was needed to master the process. The first projected launch date was missed of early January 2007 was missed.

False Start For Business Daily

On 13^th March 2007, Business Daily was launched. On its first day on the newsstands, despite heavy promotion, it sold just 300 copies. “People didn’t want to look me in the face,” says Wachira, who was managing editor and face of the new paper.

He was aware that a good number of people – mainly those at the Daily Nation – liked the false start. Some actually celebrated, projecting that NMG would not spare a nonstarter. Wachira was also aware that NGM is a sales and profit driven enterprise which often pulled all stops to push up sales and advertising. It would halt any product that didn’t fit in.

NMG was not used to failure which, according to initial sales of the Business Daily, was knocking at the door. The advertising department began telling clients that Business Daily was going to shut down.

This was a sort of self-fulfilling prophesy. NMG sales people were rewarded for maximum turnover whatever the media space they sold and so had an interest in focusing on their best selling products. To qualify for government advertising expenditure – for example, public tender offers – the newspaper would have to be in business for at least one year.

There were a few early advertisers, including internet and telecoms providers such as Access Kenya (now Dimension Data) and Safaricom. In its first year, Business Daily sold an average of two pages of advertising per issue, way below the projected 10. And every week Nation insiders kept writing eulogies for the new paper, with rumours always swirling around about its imminent closure due to poor circulation and low advertising volumes.

The editorial department struggled to fill the holes in the paper almost daily. “We stayed with 32 pages even when we had little advertising,” Wachira said. He bought two pages from the Wall Street Journal for $10,000 (Ksh1 million) per month, even though the material was never related to Africa.

BD Makes Friends and Enemies

According to Wachira, Business Daily was trying to produce information of  a level that financial analysts could rely on. He instructed reporters to treat PR releases as “a tip that a story is happening” rather than a story itself. “We didn’t run the stories the way (PR agencies ) intended. We could get other sources, and maybe change the meaning of a press release).”

At the time, there was a new generation of analysts in their 20s who wanted to curry favour with this newspaper. “We were calling all these analyst and quoting them. We were creating a community of people in each industry who were commenting on the industry,” he says.

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The paper also exploited “open” sources that were freely accessible to anyone. Though the Kenyan government regularly published statistics and other information on various industries, Business Daily looked at the data more closely than others. Firms listed on the Nairobi Securities Exchange and international exchanges got particular scrutiny; Business Daily invested in Thomson Reuters terminal and the Factiva news database to monitor them.

Wachira’s dream was a business-friendly newspaper, but to his surprise they became unpopular with some business leaders. CEOs of large companies were ruffled when Business Daily reporters called for comment several times a week. Nor were they accustomed to the depth of details that it published about their firms, he says.

“One day a CEO came and we had this meeting; he said, ‘I don’t know why you put together a consumer advocacy newspaper.’ The conversation was getting nasty. After we published about mismanagement or other problems, they’d say, ‘We’ll never advertise with you again.’ Sometimes they would extend the threat to the rest of the group.”

There were constant arguments with the advertising department, and even with senior editors at the NMG over how Business Daily was “scaring away advertising” through its coverage.

For Wachira, “it was very painful.”

PART I >> How Nation Media Stole Business Daily Idea From South Africans

PART II >> Mind Games And Boardroom Wars That Birthed Business Daily

The case study on which this coverage is based was written by Mark Lee Hunter, Adjunct Professor, and Luk N. Van Wassenhove, the Henry Ford Chaired Professor of Manufacturing and Professor of Operations Management, both at INSEAD. It was written as a basis for class discussion.