- The Kenyan government owes media companies $10.8 million (Sh1.7 billion) in pending media bills.
- Kenyan media companies have, however, been challenged to become innovative during the tough economic times and reinvent their operating models to remain competitive.
- Kenya’s media industry is among the sectors worst hit with the changing business models according a 2023 report by Oxford university and Reuters Institute for the Study of Journalism.
The Kenyan government has offered to pay media organizations $10.8 million (Sh1.7 billion) which it owes in pending media bills, a move that will significantly help them address financial struggles within the sector brought about by the changing media landscape.
Media organizations in Kenya have been grappling with cash flow challenges due to outstanding payments from the State, leading some companies to resort to employee layoffs and substantial budget cuts as a consequence of mounting financial difficulties.
This situation arises at a time when the media industry stands out as one of the sectors worst affected by the evolving business models post-Covid-19.
The income from Over-The-Top media services is expected to grow rapidly over the next five years, with revenue growth projected to surpass increases in TV subscription revenue across Kenya, South Africa, and Nigeria by 2026.
Ballooning pending media bills in Kenya
However, Kenya’s Cabinet Secretary for Information and Digital Economy Eliud Owalo now says offsetting the debt owed to media companies in Kenya will be the priority in the short term.
“And we have agreed with the media houses that we will clear this debt progressively. The amount we have collected in Appropriations in Aid we will start to pay media houses,” said Owalo during an interview on Citizen TV.
Further, the CS challenged Kenyan media companies to become innovative during the tough economic times and reinvent their operating models to remain competitive. Traditionally, media companies in Kenya have faced challenges such as political interference, economic constraints, and occasional threats to press freedom.
According to PwC Africa Entertainment and Media Outlook 2022-2026, the revenue from Internet advertising is projected to overtake traditional TV and newspapers starting 2026.
In Kenya, rapid gains in internet advertising will mean that, by 2026, this segment will be just US$1.2 million behind traditional television and home video, paving the way for internet advertising to overtake this segment in later years.
But this is from a relatively small base, meaning that revenue itself will remain low. In Kenya, Over The Top (OTT) revenue will total just $8.9 million in 2026, whereas TV subscription revenue will total $420 million.
Impact of Covid-19 on media revenues
Kenya’s media industry is among the sectors worst hit by changing business models, according to a 2023 report by Oxford University and the Reuters Institute for the Study of Journalism.
The report anticipates that more newspapers are expected to cease daily print production due to rising print costs and a weakening distribution network.
“The biggest concerns relate to rising costs, lower interest from advertisers, and the softening of subscriptions,” the report states.
The 2023 study reveals that even those who expressed optimism in the poll expect to witness layoffs and other cost-cutting measures by media organizations in the next year.
According to the report, TV and broadcast news will be at the forefront of journalistic layoffs as audiences are affected by news fatigue and face competition from streamers.
More TV broadcasters will talk openly about a time when linear transmissions might be turned off.
In the report titled Journalism, Media, and Technology Trends and Predictions 2023, the prevailing mood in the news industry is one of uncertainty and some concern about what the next year might have in store.
“Elsewhere we can expect extensive layoffs as well as a spate of mergers, acquisitions, and partnerships as industry tries to cut costs and bundle value in new ways,” the report reads in part.
However, Industry consolidation sometimes creates more problems than it solves, but at its most effective.
“We will find companies looking to run portfolios of distinctive and complementary brands with a greater focus on specific audience needs and segments.”
Read also: Africa Business Media Innovators forum to explore AI’s role in newsrooms
Way Forward for the media industry in Kenya
To diversify revenue streams, the study points out that more publishers are investing in subscriptions and memberships in 2023. Eighty percent of those surveyed indicate that this will be one of their most important revenue priorities, surpassing both display and native advertising.
Despite the pressure on consumer spending, over 68 percent still anticipate some growth in subscriptions and other paid content as income this year.
The survey further reveals that publishers are much less confident about their business prospects compared to last year. Less than 44 percent of the sampled editors, CEOs, and digital leaders express confidence about the year ahead, while around 19 percent express low confidence.
“The economic indicators do not look good; issues such as news avoidance and news fatigue are widespread, and, at the same time, some social platforms seem to be imploding or turning away from news, while emerging platforms appear largely uninterested in it. This makes it even harder to attract new customers.”
However, they have also demonstrated resilience and adaptability in the face of these challenges.
