Media business on well-deserved path of recovery

The Covid-19 pandemic has been described as a ‘tipping point’ for the media industry. The pandemic wreaked untold economic havoc in newsrooms globally, but it also stimulated deep introspection on the strategic priorities of media companies. Media businesses were forced to fast-track their digital strategies to cater to an audience yearning for reliable news and information on the virus.

With things now somewhat settled, the media business is on a well-deserved path to recovery. The investments in digital technologies are yielding promising results. For instance, in the recently released financial results for the year 2021, the Nation Media Group posted a 331 per cent increase in net income to Sh584.7 million, signalling possible industrywide recovery.

Part of this rebound is attributed to the recovery of print advertising revenue by 14 per cent, a 25 per cent growth in television advertising revenue, a 20 per cent growth in digital revenue and an eight per cent growth in e-paper subscriptions. While it might take a while to snap back to the pre-Covid performance, this is an encouraging development that validates key strategic decisions made before and after the pandemic.

Organisational ambidexterity

NMG’s annual results reaffirm the company’s overall strategy of ‘organisational ambidexterity’. Management scholars Charles O’Reilly and Michael Tushman explain organisational ambidexterity as “the ability of an organisation to both explore and exploit, to compete in mature technologies and markets where efficiency, control and incremental improvement are prized and to also to compete in new technologies and markets where flexibility, autonomy and experimentation are needed.” The ambidextrous organisation strategy basically involves two things: exploiting the present and exploring the future. 

To understand the first plank of this strategy, exploiting the present, we must appreciate that even in this era of ubiquitous digital technologies and disruptions, print advertising still remains a major source of revenue for media across the world. According to the World Press Trends 2021-2022 report, published by the World Association of News Publishers (WAN-Ifra), most of publishers’ revenue still comes from the print newspaper, either in the form of advertising or reader revenue. The advertising-based business model might be increasingly undermined by the Internet and the platforms, but it remains the cornerstone of many publishers. Put simply, the newspaper still pays salaries. 

The second plank involves exploring the future, as evidenced from the aggressive investments by NMG in digital technologies such as digital publishing and the paywall. While these investments may not break even in the short term, they provide opportunities for the group to be more experimental and even ‘fail forward’. 

In the current uncertain macroeconomic environment, the media business is increasingly about the delicate balancing act, managing short-term goals such as keeping the shareholders happy in the interim and investing in long-term goals such as transforming the business into a profitable digital content company.

The writer is the director, Innovation Centre, at Aga Khan University; [email protected]