Kenyan media houses have taken the road less travelled by many employers and could pay a high price for it. With the Coronavirus pandemic pummeling the economy, a number of employers, more so media houses, have resorted to pay cuts instead of messy layoffs in an effort to save jobs.
Turns out, it’s easier to sack employees than reduce their salaries! The move seems to be generating more problems than the most sought-after relief for managers in media companies.
Journalists fight back
Media companies that have announced pay cuts include Royal Media Services (20-30%), Radio Africa Group (20-30%), Standard Group (20-30%) and Mediamax (20-50%). Seeking consent for these pay cuts has become a hard nut for Standard and Mediamax, though, where silent employee revolts have ended up in court.
Royal Media Services (RMS) and Radio Africa Group (RAG) appear to have achieved it easily. At Standard and Mediamax, however, journalists have refused to sign consent letters cutting their salaries, seeking more clarifications.
At Standard Group, journalists affiliated to the Kenya Union of Journalists sued the company seeking to stop it from slashing their salaries. Indeed, they managed to have the Employment and Labour Relations Court at Milimani Law Courts bar Standard Group from slashing their salaries.
Most journalists at Standard, including senior editors, have declined to sign consent letters, leaving Standard with a delicate matter in its hands that would end up full-blown court cases or even a go-slow.
Business Today understands that Standard, in fact, paid April salaries unusually early this month, through cheques instead of normal bank transfers, after effecting the pay cut. The pay left out KUJ journalists covered by the court injunction.
KUJ Secretary General Eric Oduor says the union warned Standard Group and its members against any activity that violates the court order, saying they would be held individually responsible for contempt of court.
As it deals with KUJ on one side, Standard Group is cajoling the rest of the journalists employed under management terms to sign the new terms. Standard Editor in Chief Ochieng Rapuro has been forced to intervene to arm-twist editors into signing the letters, hoping to sway the rest, according to a circular we have seen.
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“Your prompt response to this mail is of essence,” Mr Ochieng Rapuro writes in the circular 21st April 2020 and addressed to heads of departments. “What is expected of us is a response indicating receipt of the same and whether we agree with its contents or not. Let us act so that we may move on to deal with other equally important matters during this crisis.”
The tone of the statement is unmistakable: sign the dotted line or something unpleasant happens to you. By last evening none of the editors had come out publicly to sign the document, which would legalize the announced pay cut.
Mediamax protest
Meanwhile, at Mediamax, employees led by a section of K24 TV presenters are waiting for the court to decide their fate today. The journalists declined to sign the letters capturing the 20-50% pay cut, saying it lacked crucial such as the period within which the salary cut would apply.
Excerpts from one of the letters show the ambiguity:
“Your current monthly pay before taxes and other deductions is KES******. The proposal is to reduce it by 50% before tax and other deductions. Your new gross monthly pay will be KES*******. The proposal further is to effect these changes in your April, 2020 pay. Please be advised that we shall review the situation periodically based on revenue, cash flow and the state of the business going forward.”
The employees have until 27th April to sign the letters. A section of them had been on a go-slow before moving to court. Mediamax management led by CEO Ken Ngaruiya is yet to officially respond to the new development.
These are clearly lean times for media houses, which have stated similar justification in cutting pay for their employees. Advertising has dropped while for newspapers circulation, which is a key revenue stream, has shrunk.
Falling profits
Media business is projected to drop further as the government enhances measures to stop the spread of Covid-19. Eventually, pay cuts will no longer hold and layoffs will inevitably kick in.
Nation Media Group is still putting on a brave face, mainly focusing on working at home and social distancing and having employees take up their leave during the crisis time. Insiders at NMG say business has fallen by over 40%, which will hit its bottomline in a big way.
Unlike other media houses struggling with revenues, Nation Media remains the most profitable, but with dwindling earnings. While its profits have fallen, it remains firmly in safe territory and can afford to burn its reserves for sometime without effecting pay cuts.
Nation Media Group reported a 23% reduction in profit after tax for the full year ended December 2019 to Ksh856 million down from Ksh1.1 billion the previous year. That’s still good money by Kenyan Standards that could take the company through the crisis before it gets into the red.
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Standard, on the other hand, recorded a loss of Ksh484 million, putting it in a tight corner when it comes to handling the current situation.
Mediamax, Radio Africa Group and Royal Media Services are privately held and do not disclose their finances. But indications are that RAG and Mediamax have been struggling financially and recently laid-off employees to remain afloat. Covid-19 could be the final blow for some of these media companies, forcing them to scale down operations by dropping unprofitable units.
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