The Nation Media Group (NMG) is reshaping its business model to accelerate its digital transformation to raise revenues in the wake of reduced sales due to the coronavirus pandemic.
Group chairman Wilfred Kiboro said the business disruption brought by the pandemic had provided the company with important lessons. They include recognition of the urgent need for radical and revolutionary change in its business model.
The company will move away from the legacy one of advertising and physical reader copy to one of advertising and reader revenue from content delivered digitally, including exploring new revenue streams in the events and technology space.
In a tough year that saw most listed firms issue profit warnings, NMG posted a Sh856 million profit for the year ended December 31, 2019.
Shareholders will, however, not enjoy a final dividend for the past financial year as the group seeks to preserve cash and invest in its digital transformation initiatives in the wake of reduced earnings due to the pandemic. Last year, NMG paid an interim dividend of Sh1.50 per share.
“We are living in unprecedented times and there is a need to conserve cash during this time. The group is also making substantive investment in the digital platforms because that will be the new normal,” Dr Kiboro told shareholders.
On the other hand, NMG shareholders had reason to celebrate.
The board had listened to shareholders and following their approval had recommended a bonus share issue of one new fully paid ordinary share for every 10 shares held in the capital of the company, subject to approval by the Capital Markets Authority and the Nairobi Securities Exchange.
Dr Kiboro said that going forward, the company will build from the ground up an entirely new business that produces quality, differentiated and engaging content that can be monetised digitally on mobile devices.
This was echoed by Group Chief Executive Officer Stephen Gitagama, who said that increased investment in paid digital content presents one of the best avenues to turn around fortunes at a time when the pandemic has hurt circulation and advertising revenue.
Mr Gitagama said NMG is eyeing a bigger share of the Content Service Provision (CSP) sector whose annual revenues are estimated at more than Sh10 billion.
The group has already started an in-house content service platform with a view to developing new revenue streams.
Additionally, it launched TAG Brand Studio, an in-house digital marketing agency last August with eyes on diversifying revenue streams besides the legacy platforms of print and television.
“NMG’s strategic objective is to assume leadership of the mobile publishing landscape in a fashion similar to our past dominance of the print business in Kenya… In this respect, the Group has embarked on a number of key initiatives to accelerate its digital transformation journey,” Mr Gitagama said on Friday at the group virtual annual general meeting.
NMG has been instrumental in boosting the country’s war against the coronavirus pandemic and donated to the Covid-19 emergency fund.
The group gave free e-papers for 30 days to medical workers who are at the forefront of fighting the pandemic.
It extended the free e-paper deal for a month to more than 300,000 registered teachers.