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NMG threatens to sue government advertising agency over Ksh123m debt



In an unprecedented move, Nation Media Group has threatened to sue the national government to compel it to pay Ksh123 million in advertising dues. In a letter from debt collecting agency Serigraphics Company Ltd, dated July 6, 2016, to the Government Advertising Agency (GAA), the media house gave the government seven days to pay the money or face unspecified action.

The debt was incurred in the just-ended government financial year. The letter is addressed to Dennis Chebitwey, the Director of the Department of Public Information under which GAA falls, and is an indicator of frustration on the part of NMG in trying to get the money from an agency created last year to centralised public advertising.

The letter signed by the company’s Managing Director Paul Semenye says the Government Advertising Agency has not even bothered to make proposals on how the debt will be settled.

SEE ALSO >> Prof Obonyo: Why media must always boot-lick government

The agency processes all advertising bookings by budgeting and costing advert placement across the different departments and ministries – a move meant cut costs. It has also standardised rates and enabled better negotiation power – generating savings as well as eliminating duplication.

The GAA was set up following approval by Cabinet on April 22, 2015. Media houses are facing revenue challenges especially reduced advertising brought about by the centralisation. The government is one of the biggest advertisers.

“For long, the industry had treated big corporate advertisers well because of their advertising spend. But the big hitter has always been the government. Thus when the government pooled its advertising under one roof, the media found itself in a fix. I doubt that the intention was to cripple the media, but that seems to be the outcome,” says Prof Levi Obonyo, who lectures journalism and communication at Daystar University.

Previously, individual ministries, departments and parastatals used to handle their own media buying but this was consolidated in a bid to rein in wasteful spending. The government is, however, said to owe media houses nearly Ksh1 billion.

Standard Group is owed Ksh190 million. Sources said GAA had earlier paid Nation Media Ksh70 million leaving the balance of Ksh23 million. It is understood that treasury gave GAA only Ksh309 million, less than half of the Ksh800 million the agency owes media houses for advertising.

At the same time, the government has moved a huge chunk of its advertising to its own digital platforms, hitting the media hard.

READ >> TV stations hire sign language interpreters

President Uhuru Kenyatta, who issued the order in March last year, said digital platforms are cheaper and more effective, given their wide reach. He said this at the Kenyatta International Convention Centre in Nairobi during the inaugural Kenya ICT Innovation Forum.

At the conference, the president also launched MyGov.go.ke, an online portal where citizens now access news and information about government.

Media houses facing cash-flow issues

“We are spending hundreds of millions of shillings in advertising through the media. Let the ministries and other public bodies advertise through the digital platform we just launched and save that money for use in other things,” said Mr Kenyatta.

“Those targeting government jobs and contracts can get that information on the new portal,” he added.

Mr Chebitwey later said media houses should not expect a significant cut on their revenues since the government would also spend on their existing online platforms. However, while previously the government used to spend Sh2.8 billion a year on advertising, it now spends about Sh1 billion.

Prof Obonyo says that as a result of dwindling revenues, media houses have been forced to retrench staff impacting negatively on family finances.

Nation Media Group last week closed its radio stations in Kenya and Rwanda, Nation FM, QFM and KFM, and merged QTV with NTV resulting in hundreds of redundancies.

Group CEO Joe Muganda said the radios will broadcast online. Radio Africa Group is the latest to restructure sacking several radio presenters.

NEXT READ >> Why Radio Africa sacked Kalekye Mumo and other radio presenters

Business Today is the leading independent online business website in Kenya. Started in 2012 by a veteran business journalist, it has a huge following both in Kenya and abroad. It covers various business and related issues. Email editor at: [email protected]

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