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Nelson Gahadza – Senior Business Reporter

Zimbabwe Newspapers (Zimpapers), the country’s largest media group, says it has made good progress on its quest to maintain sustainable profitability through a revenue diversification strategy anchored on the vision of becoming a fully integrated media house.

Group chairman, Mr Tommy Sithole, told shareholders during the company’s annual general meeting yesterday that the country’s only listed media group was aware of growth opportunities that still exist in the media landscape, especially in the television and digital spaces.

“In line with our vision of becoming a fully integrated media house, we launched ZTN Prime on the MultiChoice DStv platform channel 294. 

This strengthens our revenue diversification strategy, whose pillars already include print, radio and digital,” he said.

Mr Sithole noted that according to the World Association of News report published last year, global digital revenue grew by 10,7 percent year-on-year and the growth should be sustained this year.

“We continue to invest in digital storytelling training, new technologies and audience development to take full advantage of this growth,” he said.

According to Mr Sithole, printed newspapers remain the mainstay of the group’s business; as a result print revenues at 67 percent of group total revenue for the five months period to May 2022 were in line with global trends.

“The World Association of News report as I mentioned before, shows that while revenues coming from print activities continue to decline gradually, print advertising and print circulation combined still generate over half of most publishers’ total income.”

The chairman indicated that the operating environment has been difficult as the economy continued to suffer from the negative impact of the Covid-19 pandemic that created unprecedented global challenges.

However, he said the Government responded swiftly and introduced measures that mitigated the impact of the pandemic.

“In this regard, Zimpapers has done extremely well by achieving 99 percent vaccinations with no Covid-19 fatality. The management of Covid-19, amongst other health issues, remains a critical agenda for the business,” said Mr Sithole.

He also noted that the global supply chain challenges arising from the Russia-Ukraine conflict and global warming continue to pose operational difficulties resulting in energy price increases, shortage of raw materials and prolonged dry spells that have affected agricultural yields, but adding that despite these challenges the company performed relatively well.

Mr Sithole also indicated that during the peak of the Covid-19 pandemic, the company was challenged to provide digital reader solutions for both individuals and institutions that required news and services in digital form which resulted in the availing of the “Zimpapers PressReader App”, which enables readers to access all group’s newspapers through third party intranet.

“We primarily developed this solution for hotels but universities and Government institutions are also warming up to this innovation. In the same vein, our newspapers are available on a global platform

“Docsend recently added new analytical features to give us more insights into ‘what the readers want’ and how we can improve customer experience.”

Mr Sithole said good governance was the epitome of the business as it continues to look at opportunities of making the company a benchmark of sustainable governance.  

Giving a trading update for the five months period to May 2022, group chief executive Mr Pikirayi Deketeke said the group’s operating divisions were all profitable over the period under review with the exception of the new baby, ZTN that  was launched last month.

Mr Deketeke said that during the five months period under review, the topline grew by 209 percent over the same period last year while the bottomline grew by 143 percent compared to the same period last year.

“The launch of ZTN on May 24 this year is set to propel Zimpapers on a new revenue trajectory, which we expect will add shareholder value to the media group. This is a culmination of several years of hard work as we sought to fully diversify our media operations.” 

Mr Deketeke said that the long awaited entry into the television space was expected to stimulate growth in this sector, which had been dominated by a single player for several decades.

“Television ads spend in regional economies like South Africa and Kenya accounts for billions of dollars while print revenues in similar markets have been waning due to dwindling circulations.

“With a diversified media portfolio, our investors are assured that their investment continues to be protected against possible headwinds associated with the migration from print to digital,.

He said after the euphoria of the launch and the build-up to going live, the ZTNPrime team hit the ground running to ensure that it gives the audiences the best television viewing experience in Zimbabwe with  diversified content offering that ranges from news, sports, lifestyle and magazine shows to captivating local dramas and features.

“We are expecting to grow Television audiences substantially, thereby attracting the much needed advertising dollars that will buttress our revenues going into the future.” 

While a lot of effort was being put into ensuring that ZTN becomes a commercial success, the group had not neglected its legacy media business, the newspapers.

Mr Deketeke said the company continued to invest in print newsrooms through equipping journalists with current digital skills and tools as well as developing cutting edge digital apps.

As a result, the company has seen encouraging growth on the digital platforms that include e-papers, websites and newsletters in terms of both audiences and the revenues even though the bulk of the revenue and profit still comes from the printed newspapers. Even though digital transformation was moving at a very fast pace, the company believes that newspapers are going to be around for the foreseeable future and has started programmes to engage young and future readers in schools to encourage them to read the group’s publications, among other strategies.

“All our publications are still in circulation despite the negative challenges of Covid-19 and the newsprint supply chain disruptions caused by the Russia-Ukraine conflict,” he said.

On the radio business, Mr Deketeke said that the company’s investment continued to bear fruit with positive contribution to both revenue and bottom-line, especially by Star FM and Diamond FM while more work still needs to be done to improve the fortunes of Capitalk and NyamiNyami FM.

He said StarFM and The Herald continued to dominate the Superbrands Awards, confirming listeners and readers trust in the group’s content and brands.

On commercial printing operations, Mr Deketeke said the group, in order to improve the printing and processing capacity at Natprint, invested in a new and additional guillotine that will ensure jobs are processed faster, thereby drastically reducing the turnaround time for printing orders.

“However, this business operation continues to be hamstrung by severe shortages of imported stocks such as specialised paper substrates due to difficulties in accessing foreign currency.” 

Mr Deketeke said in the digital space, the company was a strong believer in the fourth industrial revolution and continued to pursue digital agility in the deployment of current and new products in order to gain digital advantage by availing new platforms and services for customers and stakeholders across business divisions.

He noted that the group’s television network’s presence on the digital satellite platform, in collaboration with MultiChoice, has enabled the company to reach viewers across Zimbabwe.

“Similarly, all our four radio stations are accessible to the whole world via a reliable 24/7 audio streaming digital platform, IONO, with advanced features that allow us to analyse the consumption patterns and customize our programming to improve our services.” 

Mr Deketeke said over the past six months, the company had grown its digital presence both on all websites and all social media platforms to a combined seven million viewers and followers from just over three million at the end of last year and the next step is monetizing these numbers to improve the digital revenues from the current contribution to a target of 10 percent to total revenues.

The company, Mr Deketeke said, firmly believes that the future looked bright and the opportunities in both the media and print and packaging industries were  limitless.

In his update at the AGM, group chief finance officer Mr Farai Matanhire, said volumes for the newspapers and radio broadcasting divisions for the period under review grew whilst volumes for the commercial printing division were lower when compared to the same period last year.

He said that in historical terms, the group revenue at $2,5 billion and profit of $241 million, improved by 209 percent and 143 percent, respectively while in hyperinflation terms, the group’s revenue for the period under review increased by 62 percent to $3,1 billion compared to $1,9 billion for the same period last year.

“All the operational divisions recorded revenue growth with DAP (Digital and Publishing) growing by 61 percent, broadcasting division 74 percent, commercial printing 53 percent and ZTN for 79 percent.” 

Mr Matanhire said the group’s net profit before monetary gains/(loses) increased by 24 percent to $296 million compared to $239 million for 2021.

“Due to high operating costs mainly on fuel, energy, repairs and maintenance, borrowing costs and utilities, net profit margin declined to 9.5 percent compared to 12.5 percent for the same period last year,” he said.

He said that during the period under review, all the operational divisions were profitable as the newspapers division recorded a 67 percent profit growth to $349 million, broadcasting division increased by 115 percent to $97 million and the Commercial Printing division went up to $30 million from a loss of $1,7 million.

Mr Matanhire also said that the newly launched ZTN channel was expected to continue to make losses in the short to medium term as the station is now being weaned off from the project status.

During the period under review, the division made a loss of $181 million.

Mr Matanhire indicated that owing to serious liquidity challenges during the period under review, trade receivables increased by 104 percent to $829 million and although the increase was below the historical revenue growth of 209 percent, the business remains exposed to value erosion arising from late payments in a hyperinflationary environment.

“Management is making good progress on efforts to improve collections to reduce this risk.”

He noted that in historical terms, capital expenditure investments of $72 million were made during the period compared to $105,5 million for the same period last year.

Mr Matanhire said that the board and management will continually assess the ability of the group to continue as a going concern in light of the operational challenges that include Covid-19, global supply chain constraints, foreign currency shortages and other environmental challenges.

He noted that key issues remain on delivering on company priorities and ensuring sustainable growth of the business to secure its future existence.