With several media houses still restructuring and reducing staffing levels and remuneration, the terrain seems not smoothing out yet, four years since the outbreak of COVID-19 and two years since the full reopening of the economy.
The Vision Group, the largest and most diversified media house in the country says the financial statements for the half-year ending December 2023 are likely to show a loss.
“Based on the preliminary assessment of the Company’s performance, the results of the Company’s earnings for the half year ending December 31, 2023, will be a loss position,” the company says in a communication to the stock market.
The National Association of Broadcasters says the advertising market has never recovered from the pandemic shutdown of the economy, with companies either yet to increase their budgets to the pre-pandemic days or reprioritizing their expenses to the detriment of media houses.
Having made a loss in the year 2022/23, as announced in November, Don Wanyama, the Group’s Chief Executive Officer said they had hoped that the year would mark a full recovery from the effects of the pandemic.
“So, whereas we had posted a profit in the previous 2021/2022 Financial Year and had hoped the challenges were in the past, it is clear that the environment I have painted for you has lingered on and is still affecting our business. Our markets are yet to fully recover from the negative impacts of the COVID-19 pandemic. We have also seen disruptions in the supply chain, while the government, our key business partner, has also reduced spending,” he said.
He blamed the poor performance on the rise in prices of most of the printing inputs, especially newsprint, mainly due to global inflation and the war in Ukraine.
The company’s revenues are dominated by print which accounts for almost half, followed by broadcasting (radio and television) outlets, commercial printing and others.
“The main contributor to this performance is the challenging business environment due to slow business recovery from the COVID-19 impact on newspaper sales and advertising revenue spend across the different platforms,” he says.
The state-majority-owned company also blamed its loss on the delay by the government to clear the arrears arising from the printing of educational materials meant for children during the lockdown.
In the listed company’s latest profit warning, the slow business recovery from the COVID-19 Pandemic is noted as the main cause of the challenging environment.
“The main contributor to this performance is the challenging business environment due to slow business recovery from the COVID-19 impact on newspaper sales and advertising revenue spend across the different platforms,” Wanyama says regarding the 2023/2024 expected performance.
The increase in prices of newsprint and other raw material inputs resulting from global supply chain disruptions has also adversely affected Company performance, he adds.
In November, Patrick Ayota, the Board Chairman said their strategy for 2023/24 was returning to profitability, proving staff welfare and productivity and enhancing customer engagement and satisfaction.
These goals are, according to CEO Wanyama, expected to return fruits this year. “The benefits and advantages of several investments made in the past year are likely to materialise in the next financial year which we are certain will bring in new revenue and enhance the growth of the company,” he said hoping for a “full recovery in the year ahead.”