Can papers maintain circulations?

Zimbabwe has reached that stage when newspaper circulations should start falling. The country had all along had one of the highest newspaper circulations per capita, largely because its people were highly literate, they wanted to read, and newspapers were affordable. Now it is a different story. The Zimbabwe dollar has fallen drastically, but wages have not risen proportionally forcing more and more people to make critical choices.

One or two meals a day. Beef or vegetables, and how many times a week. Going to work by bus or on foot, or perhaps by bicycle in you are lucky. You can always buy a mountain bike and claim you are exercising. And there is now a third choice, newspaper or not, and how many times a week. For those who can afford a paper a day, there is another critical choice, which one: The Herald or Chronicle – government propaganda (some people in Bulawayo are now calling Chronicle, Manga Moyo’s paper); The Daily News– privately owned but very pro-Movement for Democratic Change; and then the Daily Mirror – supposedly middle of the road, but failing to shake off the stigma associated with the owner.

While in the past, the popularity of newspapers was based on audited circulation which was verified by the audit bureau of circulation, it now seems popularity is increasingly being based on readership, which can be misleading to some extent as it is based on assumptions while circulation is based on actual figures. And from the time popularity began to be based on readership, there have been arguments about which is the best as each newspaper interprets the figures to best position itself.

One of the best measures would, of course, be profitability but this does not depend on circulation alone. It might even be misleading as some small circulation publications could make more money because of the advertising they get and they might not even be popular. In a country where a lot depends on patronisation, some good publications have failed to attract advertising simply because of who owns them while some mediocre ones at times fail to accommodate advertising coming their way because those who back them want to keep them on the streets.

Financial results would go a long way in giving a picture of the company’s operations but private companies are not likely to volunteer their results. That leaves Zimpapers, a publicly listed company in the open, not just to the public but to some of its competitors as some employees, or owners, of other publications can own shares in Zimpapers and therefore be entitled to attend its annual general meetings. Even if they do not own any shares they have a right to its results.

The company, a blue chip before the arrival of serious competition in the form of the Daily News, is now a pale shadow of its former self but chairman Enock Kamushinda, a very optimistic guy indeed, believes the company is now out of the woods, though it suffered a loss of $32.3 million in the first half of this year. At least the company managed to produce its results on time, this time. It was suspended for a couple of days in July after it failed to produce its results for the year ending December on time. And even in the latest results it gives unaudited results for its year-end.

Turnover was impressive, increasing by 143 percent from $887.1 million last year to $2.2 billion but operating costs rose sharply from $347.6 million to $1.4 billion. Coupled with distribution costs, administrative expenses and retrenchment costs, operating profit was down 65 percent form $80.1 million to $28.4 million. Revenue for the newspaper division increased by 126 percent from $586 million to $1.3 billion but the astronomical cost of newsprint saw the company drop from a profit of $32 million to a loss of $48 million.

The commercial printing division, however, did much better its operating profit more than doubling from $33 million to $73 million. The company launched a new publication, The New Farmer, which it says should increase the newspaper division’s revenue base. It also hired a new chief executive in July, Justin Mutasa who it says has already made an impact as he was able to collect some $467 million in debt from the beginning of August to mid-September.

Kamushinda is optimistic that results for the second half ending December will exceed those for the first half. Ironically, his optimism is based on the land issue which most people blame for the current economic crisis. With land now in the hands of the indigenous people, he says, agricultural production will increase dramatically. A recovery in agriculture will drive Zimbabwe to economic prosperity, he says. He also says the land reform programme has opened vast business opportunities. Foreign currency shortages which have dogged the country will ease soon as efforts are now being intensified to boost the country’s exports.

Kamushinda is also optimistic that the new management will turn the newspaper division around. He says that despite the entrance of new players, the publishing company has maintained its leading position in all titles. Very difficult to prove indeed, unless this was accompanied by independent figures. But no one seems to be challenging the statement.

The market tells a different story though. The Zimpapers share price has only gone up by 75 percent since the beginning of the year, a very poor performance judging by the fact that some companies have seen their prices surge by more than 2000 percent.

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