Newspapers collapse in tough economy

via Newspapers collapse in tough economy – New Zimbabwe 30/03/2015

THE prevailing harsh economic environment in Zimbabwe which has resulted in the closure of scores of companies and loss of thousands of jobs has not spared the country’s media with at least three newspaper stables have become the latest casualties.

The country’s biggest newspaper stable Zimbabwe Newspapers (1980) Limited (Zimpapers) is retrenching, the second biggest Alpha Media Holdings, has already done so and gone further by closing down one of its titles, Southern Eye, effective April 1, while the Zimbabwe Mail closed down on March 18.

A source at the closed Zimbabwe Mail said the owner, Transport and Infrastructural Development Minister Obert Mpofu, decided to shut down the paper due to financial constraints.

“From day one the paper was not properly capitalized. It was operating on a shoe-string budget. Workers are owed four-and-half month salaries. It’s tough,” he said.

Reacting to the closure of the newspaper, Media, Information and Broadcasting Services Minister Jonathan Moyo said the operating environment had become very difficult for the sector.

“The truth of the matter is that the environment is very harsh for the entire sector without exceptions. Only those with institutional depth, history and committed audiences are likely to survive,” he said.

Prior to the closure, the Zimbabwe Mail’s frequency had been changed from daily to weekly as the company sought to remain afloat in the newspaper business currently dominated by the state- controlled Zimpapers.

The Zimbabwe Union of Journalists (ZUJ) this week expressed alarm over the closure and urged media organizations to implement viable business models.

ZUJ Secretary-General Foster Dongozi said the closure was worrisome as it affected job security of journalists and media workers.

“The closure of newspapers is of great concern to us as many of our members are facing uncertain future. We are not only concerned about the newspapers shutting down but also worried if they will be able to pay what is owed to journalists,” he said in a statement.

Zimpapers is retrenching more than 100 employees to cope with a contraction in its revenue base caused by low advertising and diminishing readership.

After initially inviting employees to go on voluntary retrenchment, the company will soon institute a compulsory exercise under which it will identify those who have to go.

Some workers also had to endure a 20 percent salary cut and further reduction of other benefits in 2014.

Zimpapers publishes at least seven titles including its flagship The Herald and runs a commercial radio station, but most of the entities are not generating enough money to keep the company in the black.

Apart from closing down one of its titles and retrenching, Alpha Media Holdings has also had to relocate its offices from the Central Business District to the light industrial area to cut down on rental costs.

Need to allow foreign investment

Former head of mass communication at Harare Polytechnic Reward Mushayabasa said for the newspaper industry to remain viable, the authorities should deregulate the media and open more opportunities for outside investors.

“The media in Zimbabwe is over regulated and it is very difficult for the industry to survive under such conditions. The threshold for entry of foreign investors into the media industry should be changed.

“I do not have the figures, but I understand the laws are very strict on foreign investment in the media and this serves as a disincentive,” he said.

Zimbabwean law prohibits foreigners from owning or investing in media services.

He said the government could also offer incentives in the form of tax concessions to players in the media industry. For instance, it could reduce duty on newsprint and spare parts for the printing industry.

Journalist Kamurai Mudzingwa said while the economic climate was partly to blame, the major factor was poor corporate governance with the owner of the newspaper being the editor, marketing executive, operations officer, finance manager and human resources manager.

He added that roles between shareholders and executive management were not clearly defined in some media houses and publications, some of which were set up for political reasons to prop up the owners’ images.

Media analyst Takura Zhangazha said it was disheartening that media houses were failing to cope in the harsh economic environment.

“It is not really the fault of the media itself but has more to do with the fact that companies are no longer advertising as much and readers are no longer purchasing newspapers as much as they used to in the past,” he said.

He said to mitigate the problem, media stakeholders ought to at least find common ground as to the structural framework of their industry and its sustainable way forward in relation to viability.

“This would include negotiating with government for tax concessions, establishing a media support fund for struggling media houses, and better labour relations with journalists,” he said.

Former journalist and now director of the Zimbabwe Democracy Institute Pedzisai Ruhanya said the closure of newspapers and the retrenching of workers was a reflection of the deepening crisis in the economy.

“The economy is in recession and every sector is being affected. Businesses are closing and even government is failing to pay its workers.

“Until the government sorts out the macro-economic fundamentals of the economy we are likely to see further newspapers closures in a similar manner companies are closing down, ” he said.

According to the Reserve Bank of Zimbabwe, about 4,000 workers lost their jobs in 2014, while Finance and Economic Development Minister Patrick Chinamasa said 4,600 companies closed down between 2011 and October 2014, resulting in 64,000 job losses.