By Litfeed Writer
The Nation Media Group has announced that it will from July 3 lay off some of its staff as a result of the tough economic conditions brought about by the Covid-19 pandemic, in a clear indication of the difficult challenges facing the media industry.
In a letter seen by litkenya.com, which was addressed to all staff of NMG-Kenya, dated July 1, 2020, citing the consequences of the pandemic on the business, Group Chief Executive Officer Stephen Gitagama said: “Regrettably, this will result in a reduction of our workforce effective Friday, July 3, 2020. It is an extremely difficult decision in view of the prevailing circumstances and we understand the impact this will have on those affected and their families.”
However, he assured the employees that the “exercise will be carried out with utmost respect to our affected colleagues and in adherence to the Kenyan labour laws. We will strive to provide the necessary support to help exiting staff manage this difficult transition. We have made special arrangements for those affected to receive counselling support”.
Without disclosing how many employees would be shown the door, Gitagama said: “The affected staff will receive medical cover for a period of two months until August 31, 2020. Thereafter, the company has negotiated a medical insurance scheme through its current provider, which those affected may opt to individually join.”
However, reliable sources have confirmed that more than 100 employees will be axed in what Group CEO Gitagama described in his statement as a “reorganisation”, meant to realign the business in response to the new challenges.
Gitagama recalled that in his last staff communication, he explained how the Covid-19 pandemic “has resulted in global uncertainty and unprecedented challenges impacting most businesses adversely”.
He added: “As you are aware, many companies have either shut down, substantially scaled down operations or re-engineered themselves due to the drastic decline in revenues. Globally, the media sector has not been spared by the pandemic and media houses, including NMG, having been severely impacted.”
The management, he said, had “undertaken several cost-saving interventions to enable business continuity, ensure sustenance of livelihoods of staff and their dependents and continue delivery of services to our customers. However, despite taking these key actions, the business has continued bearing the brunt of the pandemic”.
The company has also extended the staff salary reductions to December 31.
In his statement, Gitagama said the Group’s re-engineering for its digital transformation had started. “In this journey, the Group seeks to radically change its business model from print advertising and physical reader copy to digital advertising, ePaper subscription and content-driven reader revenue with the objective of establishing leadership in the mobile publishing landscape in Africa, while exploring other new revenue streams in the experiential and technology space. This will require re-tooling and resourcing the Group with relevant skill sets critical for success in the new business environment.”
This is the continuation of a tough spell for East Africa’s biggest media house, which in late April, implemented salary reductions for staff as part of the austerity measures in response to the coronavirus-related economic woes. A pay cut of between five and 35 percent, depending on their gross pay, was effected.
Gitagama said in a statement then: “We have taken a painful but necessary decision to temporarily reduce the gross pay effective from 1st May 2020. The pay reduction depends on your gross pay and ranges between five per cent and 35 per cent,” he said.
The downward trend has been evident since Nation Media Group Plc announced its audited financial results for the year ended 31st December 2019, indicating a huge drop in profits.
The group’s turnover at Ksh9.1 billion was 6.3 percent lower than the previous year, while profit before tax at Ksh1.3 billion was 20.7 percent lower. Total comprehensive income for the year at Ksh0.9 billion was 18.4 per cent below the previous year.
In a really bad period for most businesses, NMG posted a Sh856 million profit for the year ended December 31, 2019. Shareholders were, however, denied a final dividend. But they will get a bonus share issue of one new fully paid ordinary share for every 10 held, subject to approval by the Capital Markets Authority and the Nairobi Securities Exchange. Last year, NMG paid an interim dividend of Sh1.50 per share.
Chairman Wilfred Kiboro told the group’s digital AGM held last week: “We are living in unprecedented times and there is a need to conserve cash during this time. The group is also making a substantive investment in the digital platforms because that will be the new normal.”
Things have not been any better for the NMG’s biggest competitor, the Standard Group. After registering a profit in 2018, in 2019, things went south for the oldest media group in the country. The firm, which was founded in 1902, has blamed the decline in earnings on increased investment costs and a drop in advertising.
The company closed 2019 with a loss after tax of Ksh484 million compared to a profit after tax of Ksh261 million in 2018, having rebounded from a loss of Ksh210 million in 2017.
Mediamax Network Limited, which owns People Daily, K24 and some radio stations, also recently laid off nearly 100 employees in an effort to cut costs in an increasingly difficult business environment.