The media landscape is undergoing tremendous change globally, with household names shutting down and those still operating forced to make drastically difficult financial decisions.
The impact of Covid-19 has been severe on a lot of industries, with the media being the hardest hit. At least two magazine publishing outlets in the country have indicated that they will be stopping production indefinitely as advertising dwindles and they are unable to keep up with their costs.
Newspaper houses have also indicated they are struggling and staff have had to take pay cuts to avoid retrenchments and save jobs. Arena Holdings, Independent Media and the Mail & Guardian, some of the country’s biggest media houses, have implemented salary cuts to keep operations going.
In a letter addressed to staff, Arena Holdings' Andy Gill revealed that their two main sources of revenue, advertising and circulation, had been hard-hit by the lockdown. “Our other businesses have also been adversely impacted, from TV production to films and music, and will face tough challenges when the market finally reopens post the lockdown," Gill said.
"The extended lockdown, albeit downgraded to a level 4 past April 30, means that there will continue to be economic hardship across the board in South Africa, and many businesses will not survive its impact. We are committed to ensuring this business remains sustainable through this period and beyond.”
Gill said management planned to ensure the company maintained liquidity to meet its obligations, especially to the staff. The company said it had made significant inroads into cutting printing and distribution costs and reducing all non-critical spend where possible. "These cost-cutting measures, while significant, are insufficient to balance the decline in revenues we have experienced and are set to continue experiencing during this unpredictable crisis," Gill said.
"We want to protect jobs and ensure the business emerges healthy and poised for recovery post the Covid-19 pandemic. After much deliberation, we have taken the unavoidable decision to propose that all staff, including management... take a 30% salary reduction for the months of May, June and July.”
That decision followed Independent Media's announcement in April that staff would have to take pay cuts of up to 45% in the case of senior executives, to ensure the sustainability of the company.
Chief operating officer Takudzwa Hove at the time said there had been a drop in advertising revenue as clients scaled down on spending or cancelled bookings.
“Over the last week, we have seen an increase in the rate of cancellation of advertising bookings that had been previously committed. Our payroll bill is one of our highest expenditures. Unfortunately, we are left with no alternative but to take the extreme measure of applying a salary reduction,” Hove said.
The magazine sector appears to be the hardest hit. Last week, Associated Media Publishing (AMP), one of South Africa’s most well-known independent media houses, announced it would be shutting down for good. AMP chief executive Julia Raphaely said the 38-year-old company, which publishes Cosmopolitan, House & Leisure and Women on Wheels, would not be operational from May 1.
She said the unexpected and devastating impact of Covid-19, causing the closure of printing and distribution channels, a global freeze in advertising spend as well as the inability to host events for the foreseeable future, had made it impossible to continue trading.
“This is the most difficult decision I have ever had to make. For the past 38 years, AMP has been one of South Africa’s leading publishers and our titles have been part of many people’s lives. It’s a big blow for magazine media brands in South Africa as they hold a special place in our country," Raphaely said.
"We never thought this day would come, but we are left with no choice."
That was followed by an announcement by Caxton and CTP Publishers & Printers that it would “in principle", close its magazine division. The move will affect at least 10 titles, which include Bona, Country Life, Essentials, Food & Home, Garden & Home, People, Rooi Rose, Vrouekeur, Woman & Home and Your Family.
The board said the steady and continuous reduction in advertising spend in the magazine sector, as well as the decline in circulation revenues, had over several years significantly reduced the viability of the magazine business.
“Further, the negative impact of the Covid-19 lockdown on general economic activity and, as a consequence, on the ability of the business to trade normally in what were already difficult trading conditions for magazine publishers, has made this decision unavoidable,” the company said.
The picture is also not pretty globally. The New York Times reports that roughly 36000 workers at news companies in the US have been laid off, furloughed or had their pay reduced. Some publications that rely on ads have shut down.
The publisher of Vogue, Vanity Fair and The New Yorker is cutting the pay of staff earning more than $100000 (R1,8 million) - just over half of the workforce - by 10 to 20% for five months beginning in May.
The Guardian in the UK reports that the British newspaper industry is facing an existential threat, with the National Union of Journalists warning many papers will close permanently as a result of the pandemic, and thousands of journalists will lose their jobs.
The publication adds that print advertising revenue has collapsed - down by about 80% since the start of the pandemic. Almost every major UK publisher, including the Guardian, has retrenched some staff in an attempt to weather the storm.
The situation at local newspapers, which rely on small local businesses for ads, and were struggling before the crisis, is worse. Economist Mike Schussler said media outlets' reliance on advertising tied them to the rest of the South African economy, and the impact of the lockdown would be felt by media houses going forward.
“Media houses 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.
For the record:
In a previous version of the above article we included Naspers, the company that owns Media24, in the list of companies that had made salary cuts, when in fact this was inaccurate. Media24 had not implemented salary cuts to its employees, but only stopped printing the Daily Sun in some parts of the country. We apologise for the error and any embarrassment this article may have caused to Naspers.