NMG partners with Knut, Safaricom to boost digital newspaper sales


Nation Media Group PLC (NMG) has partnered with the Kenya National Union of Teachers (Knut) and Safaricom PLC (SCOM) on digital newspaper distribution. The publisher of Daily Nation counts on the pair of partnerships to boost its digital newspaper sales.

Moreover, the group hopes the arrangements will help it ride out the coronavirus pandemic that has dealt a heavy blow to the advertising industry, which is the main revenue source for media companies.

Knut pact gives NMG access to over 180,000 potential subscribers
NMG’s arrangement with Knut will initially allow Knut members access to the group’s collection of digital newspapers free of charge for 30 days. After that, teachers will be able to subscribe to NMG’s digital newspapers at a half price of Ksh20 per copy.

Knut is Kenya’s leading teachers union. It has more than 180,000 members across the country. Knut Secretary General Wilson Sossion said the deal with NMG will benefit all Kenyan teachers, including members or rival unions like KUPPET.

NMG to distribute digital newspapers through Safaricom
NMG has entered an arrangement that allows it to distribute digital replica of its print newspapers through Safaricom.

Under the agreement, Safaricom customers with smartphones and tablets will be able to access NMG’s collection of digital English newspapers at reduced price of Ksh20 per copy. NMG’s digital English newspaper subscriptions normally cost Ksh40 a copy per day. Safaricom customers can pay for the newspaper subscription with their phone airtime.

Safaricom is Kenya’s top wireless operator with about 36 million customers. Although the vast majority of Safaricom customers are currently on feature phones that cannot access digital content, the company has partnered with Google on a program to bring more smartphones to its network, which could be a boon for NMG down the road.

NMG counts on digital business to survive industry headwinds
The digital newspaper distribution deals with Knut and Safaricom come as NMG bets on digital products to turn around its fortunes. The coronavirus outbreak and the resulting restriction on movements have hit print newspaper sales, worsening an already tough environment for media publishers.

Moreover, the virus pandemic has led to cuts in marketing budgets, hurting advertising sales at media companies.

But the virus pandemic is not the only headwind media companies are grappling with now. Legacy media operators have long been struggling with shrinking revenue and falling profit amid digital disruption.

For example, the shift in media content consumption from print newspapers and broadcast television to online has resulted in advertising revenue loss for traditional media companies.

To survive the digital disruption, NMG has turned to building its own digital products and promoting them aggressively. The group, which runs newspapers and operates broadcast television and radio stations across East Africa, has launched several digital products to take advantage of the risen in digital media consumption.

However, digital sales currently contribute only a small fraction of revenue at NMG, leaving it relying on the struggling legacy operations. NMG’s revenue fell 6.3% to Ksh9.1 billion in 2019. Profit dropped 23.4% to Ksh856 million.

The chars below illustrates NMG’s revenue and profit trends for the past five years.

Finally, NMG shares fell 13% in May to close the month at Ksh18.60. At this point, the stock trades 68% below its 52-week high of Ksh57.50.

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