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NMG New Business Model Pushes Out More Employees

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The Nation Media Group, reeling from the effects of Covid-19 and market shifts, is today set to announce a major restructuring of its business operations that will largely hinge on laying off employees.

NMG, which recently issued a profit warning for the current financial year, is understood to be hemorrhaging cash with circulation and advertising having dipped sharply over the last three or so months. The company’s board is currently holding a zoom meeting before the announcement is made to staff.

In a cautionary statement on 22nd May 2020, the company’s board of directors said profit for 2020 financial year would drop by at least 25%, piling pressure on a company seen as the barometer for the media industry in Kenya.

Newspapers & TV targeted

Business Today has been told that the reorganization is a response to the slowdown caused by Covid-19 pandemic and is geared at re-engineering the NGM business across its various platforms – print, broadcast and digital. The restructuring is anchored on accelerating digital transformation, according to inside information, and will see over 50 employees pushed out, among newspaper and TV journalists as well as senior managers.

The layoff will target both permanent and contract staff. Those whose contracts are ending are likely to be easy targets.

The company is adopting a new business model that moves away from relying on its traditional print flagship newspaper, having learnt painful lessons from Covid-19 movement restrictions that have hit circulation and increased consumption of digital media.

This new direction is among a raft of options explored by the NMG board of directors at its AGM held last week. In the new strategy, NMG is looking at monetizing its digital platforms including introducing subscription for its online content and selling advertising on the digital paper, modeled along global leaders such as The New York Times.

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This will mean “redeploying and retooling” its human resource, a person familiar with the strategy said, adding that a good number will be pushed out, some of whom will be rehired on new different terms.

The NMG restructuring, which seemed inevitable once Covid-19 hit home, follows a pay cut of 5% for the lower end of the target group and 35% for the high-end effected from May 2020. The staggered pay cut was intended to cushion those who earn less from deep financial pain.

“Management has so far undertaken several cost-saving interventions to keep the business running and continue to deliver services to our customers. As part of these measures, the Board of Directors have taken a reduction on their directors’ fees,” said NMG CEO Stephen Gitagama on 26th April.

Two months later, the going is certainly getting tougher for Kenya’s biggest and most profitable media house. Revenues from circulation and advertising have dropped by over 50%, insiders say.

Royal Media Services, which runs Citizen TV and other radio stations, was the first to cut staff salaries by 20-30%, followed by Radio Africa Group and Standard with a similar scale. Mediamax stretched it further by slashing salaries by up to 50%.

Mediamax has gone ahead and laid off 100 employees, pushing out big names and sweeping its TV section clean. Royal Media Services has adopted a below-the-radar style of laying off while Standard seems to have recalculated its steps even after issuing a redundancy notice.

More updates coming…

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BT Correspondent
BT Correspondenthttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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