The threat of social media to traditional media companies has been steadily increasing over the last 10 years. The major source of news is no longer the Washington Post or the local observer. Facebook, Instagram, and YouTube have democratized the media landscape. Think about it, where do you get most of your news from today? These platforms have enabled the everyday man to compete with the learnt News Anchor. This phenomena is expected to increase over the coming years. Indeed there will be a tremendous opportunity for those who aspire to fame and fortune. The story might read the other way for traditional media companies emphasising the main point of this article. Traditional media companies must adapt…and FAST!
Slipping Ad Revenue
We have been monitoring the financial performance of two of the Caribbean’s largest media houses. The Jamaica Stock Exchange Listed, RJRGleaner Group Limited (JSE: RJR) and the Trinidad and Tobago Stock Exchange Listed, One Caribbean Media (TTSE: OCM)
suggested reading: TOP 10 Companies Listed on the Trinidad and Tobago Stock Exchange
have both been struggling with protracted declines in revenue as major advertisers increase their spend on social media. Naturally, this has resulted in a simultaneous decline in the amount budgeted for traditional media. Both companies have responded to the declines in top line revenues and bottom line net profits. However, Caribbean Value Investor is of the opinion that the response is one that will mitigate the problem but for a short time.
Downsizing and Job Cuts
In response to declining revenues, One Caribbean Media has implemented job cuts. One Caribbean Media reported TT$72.4 million (One TT dollar=US$0.15) in profit before taxes for the 2017 financial year ending December 31, 2017. The figure reported for 2016 was TT$86.5 million. In April, the company made 13 positions redundant. One Caribbean has admitted in a letter to the Barbados Workers’ Union (BWU) that “the challenges posed by the various social media platforms for dwindling newspaper revenues over the past 10 years. ” was the major reason for the layoffs.
Transitioning to Digital
The Jamaica based RJRGleaner Group has approached the problem in a more or less the same manner with one notable exception. RJR spent over 420 million Jamaican dollars (One J$ = US$0.0077 or TT$0.052 ) to transition to digital HD in 2017. It is important to note however, that the funds were largely sourced through debt. The company reported in November of 2017 that it had taken a loan of J$400 million. RJRGleaner also reported job cuts in its second quarter results. Similarly to One Caribbean, RJR highlighted “The Group’s results were impacted by the continued softness in spend from Major Advertisers…”
Who Moved My Cheese
Guy Kawasaki in one of my favourite talks on Innovation highlighted the fact that in the refrigeration age, none of the Ice Harvesters became Ice Factories and likewise, none of the Ice Factories became Refrigerator Manufacturers. Traditional media companies have also gone this way, in that, none of the huge print media companies became social media platforms. What’s even worse is that traditional media companies have been extremely slow to adapt to the change.
In Part 2 of this article we will investigate what traditional media companies might do to save themselves in the changing face of media and advertising.
-We will investigate how traditional media might take advantage of the evolution of voice and how
-Retooling Employees and repositioning could turn around these companies.