Media Consolidation & Competition - RJR/Gleaner Merger Part 3
Media Consolidation & Competition - RJR/Gleaner Merger Part 3
Holding a Line about Jobs
Jobs will be lost! This is how mergers work when there are overlaps or duplication of skill sets. With their proposed merger there will be no way around this, given that both RJR and Gleaner are primarily known, respected and trusted for their news products. With a merger, economies of scale are designed to help to drive down operating costs. Continuing to run two separate news centers would therefore fly in the face of the logic of this merger.
Consolidating news gathering and then formatting/repurposing content to suit the various platforms - whether radio, TV, print, online ‘newspaper’ or via social media sites in 140 character bites to Twitter, or somewhat longer to Facebook - will likely take place from a centralized centre. If not in the short term then definitely in the medium term as RJR and Gleaner staff settle and get accustomed to the idea that they are on the same team. How else could this merger deliver on its promise of increased value to shareholders if profits did not increase? Furthermore, RJR knows this well, having had the experience of merging its radio and TV newsrooms.
As highlighted in a previous article (part 2), revenues and profits for both RJR and The Gleaner have been pretty stagnant despite the massive market shares commanded by Television Jamaica (TVJ) on behalf of it parent RJR Communications Group and by The Gleaner. Clearly there will be a great thrust to positively impact the bottom line so that the merger can be seen as a success. Already shareholders are expectant since, on the first real business day after the announcement, Monday, August 10th, shares for both companies moved up in a demonstration of investor confidence and continued to do so in the days thereafter.
New Jobs will be Created
While some wring their hands about job losses, make no mistake, new jobs will be created. The rub is that new jobs will require new/different skill sets and those to staff them will not be as many as the number of persons who will lose their job. The three Unions (NWU, UTASP & BITU) across RJR/Gleaner won’t like this. They make money when there are more bodies to pay union dues. Word on the road is that both RJR and The Gleaner are overstaffed. One can therefore, only hope that good sense will prevail and that Union leaders will take the time to educate themselves re global and regional media trends so they better understand the RJR/Gleaner survival strategies.
Note too that with its impending Digital Switchover (DSO), as required by the Broadcasting Commission of Jamaica, RJR has said that it will need about J$800 Million. That would entirely wipe out its stash of retained earnings. But we know there will be a role for the Banks. Still, even with best offer, it’s likely to be at interest rates of about 10%. Free-to-air broadcasting is not cheap and advertising dollars are stretched. Operating cost-effectively must be one goal of all broadcasters.
Online services will be a huge part of RJR/Gleaner’s going forward. News will have to be cut up into even more bite-sized pieces and delivered across an even wider variety of platforms, many of which may not exist today but will come. Look at Instagram that is not yet even 5 years old, recently this social media mobile platform announced that it plans to monetize by taking advertising. We watched this happen on Twitter. And of course Facebook is the leader.
Then too media content must be formatted for delivery via different digital devices. The way the same content ‘reads’ across one’s laptop is different from via one’s smartphone and even one’s Tablet. Intrepid media and technology trends tracker, Mary Meeker, highlighted the growth of media consumption via mobile devices moving from 8% in 2011 to 24% in 2015. This is where both Digicel and LIME/FLOW may hold competitive advantage over the merged RJR/Gleaner as monolithic media entities.
Monetizing Online Offerings
Monetizing its online offering has not been easy for the Gleaner. I’ve seen the number of emails prodding for payment – Only $9.99 per month, with a special offer of $7.99 if one signs up now, was their most recent. I’ve seen similar on-going pleas from The New York Times as it bombards me with emails regarding its digital offerings, “Try a digital subscription and pay 50% off for one year. You can cancel anytime.”
Although online advertising spend has been showing steady increases worldwide, moving from $55.2 Billion in 2009 to $96.8 Billion in 2014 (www.eMarketer.com), growth has slowed and much more was anticipated. Note though that in 2011 Internet spend outstripped print spend in the USA for the first time and has maintained this lead.
Reports out of the World Association of Newspapers and News Publishers reveal that Latin America (the Caribbean is usually included in this region) is bucking global trends, with print newspaper continuing to hold strong in terms of advertising revenues. Still, one can’t ignore the rest of the world, and moving to merge when they did is a demonstration of the foresight of The Gleaner and RJR.
What about TV?
“TV is doing just fine, CBS execs say”. “The TV industry is more than holding its own in the face of multiplatform competition, despite some dire warnings, said David Poltrack, CBS' chief research officer. The rise of online media platforms have not killed network TV.” (NAB Smart Brief, Aug. 11, 2015). And so it is for free-to-air TV in Jamaica so far, at least for Television Jamaica (TVJ), a fully owned subsidiary of the RJR Communications Group.
As previously highlighted in two earlier articles on the proposed RJR/Gleaner merger, free-to-air TV stacks up well against cable TV in Jamaica. For now! There is no doubt, however, that the entry of telecommunications company onto the television landscape will shake things up. Additionally, everyone expects something to happen with the Michael Lee-Chin owned CVM TV, eventually.
The LIME/Flow merger poses one threat to free-to-air TV stations, TVJ and CVM, with cable channels FLOW 100, and more recently Business Access TV, looking to make their mark. The mobile phone giant Digicel has been on a buying spree. Its buyout of cable systems in several Caribbean territories as well as regional cablecaster and sports rights holder, Sportsmax, plus its gobbling up of Jamaica’s cable system Telstar, demonstrate that Digicel intends to make TV its business. Remember Mary Meeker’s finding re growth in media consumption via mobile devices, highlighted earlier. Remember too that mobile penetration in Jamaica is over 100%.
Based on the foregoing, it is clear that significant market changes in television can be expected within the next five years. Note as well that in being proactive, TVJ has been insistent on selling some of its offerings online via One Spot Media. Those in the Diaspora must be attracted to it, given a report of twenty seven thousand (27,000) subscribers to this platform.
Media Mergers Nothing New
What is happening in Jamaica with the announced proposed merger of two traditional media companies – The RJR Communications Group and The Gleaner Company is nothing new. It is a feature of media across the Caribbean region and the wider world.
‘One Caribbean Media’ out of T&T has been particularly aggressive it its acquisitions across about ten (10) Caribbean countries. Its holding boasts about 12 radio stations, outright ownership or large shareholdings in four newspapers and in two television stations.
Voices via Social Media
As media consumers it behoves us to pay attention when biases become evident or voices become silenced. We have social media, blogs and websites to make our voices heard. Let’s be vigilant and use them.