Standard Media group is gearing up for the biggest loss in its history. According to an inside source, the media company, which issued a profit warning in August last year, is on course to report a loss of up to Ksh400 million for the full-year ending December 31st, 2015.
The loss has been occasioned by a drop in business on its various platforms such as newspapers, television, radio and the near collapse of Publishers Distribution Services (PDS), its magazine distribution arm. Also, the media house financed a major staff rationalisation, which dug a huge dent into its revenues, even after it had already recorded a 90% drop in half-year profits to just Ksh21 million.
In its profit warning the company said the financial results for the year ending 31st December 2015 would be materially affected by adverse market conditions experienced during the year compared to the same period in 2014.
Standard Group CEO Sam Shollei said specific challenges that adversely affected the listed media company in the first half of the year included business disruptions that resulted from the analogue to digital migration process, which resulted to lower viewership and a decline in TV revenues.
The disruption was also largely responsible for Nation Media Group’s Ksh130 million drop in pretax profit for the first-half of 2015 from Ksh1.56 billion to Ksh1.43 billion. “The migration from analogue to digital TV broadcasting negatively impacted viewership due to low penetration of set top boxes (STBs) at the time of migrations,” said Mr Shollei.
Media houses had to invest in new equipment and discard the analogue ones.
Read Also >> Aga Khan University to train journalists for NMG
Standard Group’s restructuring, which pushed out more than 50 employees mainly journalists, is said to have cost the company a fortune. The retrenchment was combined with voluntary early retirement, which attracted many takers and expanded the company’s expenses. The company was forced to take a loan to settle retrenchment dues.
The company also invested in starting a new TV station, KTN News, a 24-hour news channel which is running alongside the old KTN.
The loss will return focus on former human resources director Pauline Kiraithe, who is being blamed for ballooning the company’s payroll without commensurate return. When she joined Standard Group from Nation, Ms Kiraithe poached journalists at inflated salaries, which unfortunately did not pay back, forcing the company to have her f**e some of them during the restructuring. She was soon sent parking before year end.
The company is said to have also spent big on the Germany firm that provided the current newspaper design. As it plans to re-design ahead of the elections, it has approached the less-expensive US design veteran Ron Reason.
It is also leaving Mombasa Road Standard Centre to rent space at ICEA Building in the city centre in what is seen as cost-cutting measure.
Next Read >> How Citizen TV replaced reporters before firing them