ANALYSIS | Associated Media Publishing's closure rounds off nightmare month for media firms
Association Media Publishing's closure, announced on Thursday afternoon by the magazine publisher, was one more indication that the economic impact of the novel coronavirus has hastened the financial troubles of South Africa's mainstream media sector.
In a statement released on Thursday, the glossy magazine publisher announced that it would close on Friday. Associated Media's magazine brands include Cosmopolitan, Women on Wheels, and House and Leisure.
For at least a decade, media houses have faced numerous challenges. The rise of the internet and social media platforms resulted in something of an information overload for many consumers, sometimes at the expense of credible news agencies.
Major media houses in SA, including Naspers, Independent Newspapers and Arena Holdings (formally known as Tiso Blackstar) changed their business model to monetise online news. However, the immediate impact of the digital age for print media was on their advertising revenue.
As fast as media houses could adapt, tech giants like Facebook and Google began eating into advertising revenue that was meant to be the saviour of newsrooms migrating from print to a digital platform.
Then, in April of 2020, along with the worst global pandemic since before the Great Depression, media houses took a final, devastating hit to revenue streams. Lockdown measures across the globe in general – and in South Africa in particular – brought entire industries to a halt, sparking crippling declines in ad sales and preventing the hosting of events that would otherwise bring in income.
Losing out on a month of business, companies are bound to emerge out of the lockdown the worse for wear, with no money to advertise in media outlets, physical or digital.
Yet at the same time, research suggests, mainstream media still has a crucial role to play in combating a disproportionate engagement with "fake news" on social media. A recent study by Oxford University's Reuters Institute on Covid-19 "fake news" found that so-called "influencers" – politicians, celebrities and other figures – were responsible for the spread or production of 20% of false claims about the coronavirus.
However, it also found, their posts accounted for nearly 70% of total social media engagement.
The link: advertising
Economist Mike Schussler said advertising ties the media industry to the rest of the South African economy, and the impact of the national lockdown would certainly be felt by media houses going forward, if it had not been felt already.
"[M]edia are going to be affected by what's happening in the economy. If businesses close, they lose money. If they lose money, they don't have enough money to spend on things like advertising," said Schussler.
Professor of economics at University of Stellenbosch and Media24 director Rachel Jafta said the closure of Associated Media was a wholly negative development for mainstream media in South Africa, at a time when the industry had already been struggling for years.
"On the digital side, the most money goes to Google and Facebook. In the local industry, there is no point in advertising in some spheres, because there are no buyers. Advertisers are pulling back, and it is having a major impact on the magazine business," said Jafta.
Media and marketing analyst, Chris Moerdyk, said the print media sector had "generally been a death's door for many years", mostly as a result of rapidly increasing production costs and the impact of the internet. He said Associated Media Publishers would be just one of many print media closures in the future.
Digital move 'inevitable'
"Frankly, it might be too late for print media houses to ward off the inevitable, but there is still time for many to start understanding the digital world and to use online platforms as means to generate revenue. It is not rocket science but for many of those in the print industry it remains a mystery," said Moerdyk.
Media outlets and their employees are already feeling the blow of the coronavirus, which economists expect to have a long-term impact on South Africa's already beleaguered economy for the rest of the year.
Arena Holdings deputy managing director Moshoeshoe Monare stressed that the company does not discuss internal matters publicly but confirmed that staff were asked to take a 30% pay cut for three months, after the coronavirus dealt a blow to the company’s advertising revenue.
"We do not communicate publicly our communications between ourselves and staff. However, we can confirm that this business, like any other business, has been affected by the impact of Covid-19. We urge all staff to take a 30% pay cut, except those earning under R10 000 a month," said Monare.
Caxton national editor Irma Green said a lack of advertising had had an impact on the community newspaper owner, as the company’s "hyper-local" publications had mostly had SMMEs as advertisers.
"We ceased printing operations in the Gauteng area, but we are still printing in a few of our regional areas. We are still operating in all 72 digital platforms and social media platforms and running with content for our readers," said Green.
Earlier in the month investigative weekly newspaper, Mail & Guardian, said restrictions linked to the Covid-19 novel coronavirus plunged the award-winning publication into financial uncertainty to the point where its ability to pay staff in April was in doubt.
Also, earlier this month, both Independent Media and African News Agency announced that due to the impact of the coronavirus pandemic on advertising and circulation revenue, they would be implementing salary cuts.