Pakistan Media Industry Shakeout underway
By Riaz Haq
CA
Pakistan's 88-billion-rupee media industry is in the midst of a major shakeout after a long period of rapid double-digit growth since the turn of the century. Hundreds of journalists and other staff have lost their jobs. At least one TV channel, Waqt News, has closed down while several others are downsizing.
While such consolidation was long overdue after a nearly two-decade period of explosive growth, the PTI government's decision to reduce advertising budget, which constitutes nearly a quarter of all ad spending in the country, appears to be the main trigger. Those affected by consolidation are accusing the government of exercising press censorship by cutting its ad spending.
Rapid Growth
Rising buying power of a rapidly expanding middle class in Pakistan drove the nation's media advertising revenue up 14% to a record Rs 76.2 billion 2016 and another 12% to Rs 88 billion in 2017, making the country's media market among the world's fastest growing media markets.
Industry Shakeout
Massive commercial media growth in Pakistan has been most apparent in terms of private TV channels growing from just one in Year 2000 to over 100 today after President Musharraf's deregulation of electronic and other media.
Explosive growth with many new entrants is the fundamental business reason for the recent wave of consolidation and shakeout. Shakeout is a business term used to describe the consolidation of an industry or sector after it has experienced a period of rapid growth in demand followed by oversupply.
At least one TV channel, Waqt News owned by Nawai-Waqt Media Group, has closed down while several others are downsizing. “We are trying to compile the exact figures of the affected media persons. So far, we can say that around 1,000-1,500 workers have lost their jobs or faced cuts in salaries in the past few weeks,” Muhammad Afzal Butt, president of one the main factions of Pakistan Federal Union of Journalists (PFUJ) told The News Sunday (TNS) last week.
Government Spending
About a quarter of the Rs. 80-billion ad revenue comes from federal and provincial government ads in the media. Some of the TV channels receive as much as 50% of their revenue from the government.
"The government has cut its media spend by more than 70% and companies by almost 50%", according to a leading advertising agency owner who spoke to Dawn.
"The (federal) government used to spend some Rs 10 billion on advertisements annually, which was increased up to Rs35 billion in the last years of the (Nawaz Sharif's PML-N) government," Fawad Chaudhry, Federal Minister Of Information, told The News Sunday (TNS). This tax-payers’ money, says the Minister, was used by the previous government to bribe the media for favorable coverage.
Digital Advertising
A growing slice of the media ad spend is being claimed by online advertising with accelerating broadband penetration in Pakistan. Most recent data from Pakistan Telecommunications Authority shows that 62 million Pakistanis now subscribe to mobile broadband and this number is increasing by one to two million new subscribers each month.
Digital media spending rose 27% in 2015-16 over the previous year, the fastest of all the media platforms. It was followed by a 20% increase in radio, 13% in television, 12% in print and 6% in outdoor advertising, according to data published by Aurora media market research.
Summary
Significant reduction in government spending on advertising has triggered a long-overdue shakeout after almost two decades of rapid media growth in Pakistan. About a quarter of the Rs. 80 billion ad revenue comes from federal and provincial government ads. Some of the TV channels receive as much as 50% of their revenue from the government. Hundreds of journalists and other staff have lost their jobs. At least one TV channel, Waqt, has closed down while several others are downsizing. Those affected by consolidation are accusing the government of exercising press censorship by cutting its ad spending.
(Riaz Haq is a Silicon Valley-based Pakistani-American analyst and writer. He blogs at www.riazhaq.com)
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