Sat | Jun 12, 2021

RJR-Gleaner merger: media consolidation and competition

Published:Friday | August 21, 2015 | 10:40 AM
Ruth Howard (seated), subeditor at The Gleaner Company. explains the role of the subs desk to students from Shortwood Primary and Junior High School during a tour of The Gleaner's newsroom in central Kingston on April 22.
Marcia Forbes
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Jobs will be lost! This is how mergers work when there are overlaps or duplication of skill sets. With their proposed merger, there will be no way around this, given that both RJR and Gleaner are primarily known, respected and trusted for their news products. With a merger, economies of scale are designed to help to drive down operating costs. Continuing to run two separate news centres would, therefore, fly in the face of the logic of this merger.

Consolidating news gathering and then formatting/repurposing content to suit the various platforms - whether radio, TV, print, online 'newspaper' or via social media sites in 140 character bites to Twitter, or somewhat longer to Facebook - will likely take place from a centralised unit - if not in the short term, definitely in the medium term, as RJR and Gleaner staff settle and get accustomed to the idea that they are on the same team. How else could this merger deliver on its promise of increased value to shareholders if profits did not increase? Furthermore, RJR knows this well, having had the experience of merging the radio and TV newsrooms.

As highlighted in a previous article (Part 2 on Friday, August 21, 2015), revenues and profits for both RJR and The Gleaner have been pretty stagnant despite the massive market shares commanded by Television Jamaica (TVJ), on behalf of it parent, RJR Communications Group, and by The Gleaner. Clearly, there will be a great thrust to positively impact the bottom line so that the merger can be seen as a success. Already shareholders are expectant since, on the first real business day after the announcement, Monday, August 10, shares for both companies moved up in a demonstration of investor confidence and continued to do so in the days thereafter.

New Jobs will be Created

While some wring their hands about job losses, make no mistake, new jobs will be created. The rub is that new jobs will require new or different skill sets and those to staff them will not be as many as the number of persons who will lose their jobs. The three unions (NWU, UTASP, and BITU) across RJR-Gleaner won't like this. They make money when there are more bodies to pay union dues. Word on the road is that both RJR and The Gleaner are overstaffed. One can, therefore, only hope that good sense will prevail and that union leaders will take the time to educate themselves regarding global and regional media trends so they better understand the RJR-Gleaner survival strategies.

Note, too, that with its impending digital switchover (DSO), as required by the Broadcasting Commission of Jamaica, RJR has said that it will need about J$800 million. That would entirely wipe out its stash of retained earnings. But we know there will be a role for the banks. Still, even with best offer, it's likely to be at interest rates of about 10 per cent. Free-to-air broadcasting is not cheap and advertising dollars are stretched. Operating cost-effectively must be a major goal of all broadcasters.

Digital Domain

Online services will be a huge part of RJR-Gleaner going forward. News will have to be cut up into even more bite-size pieces and delivered across an even wider variety of platforms, many of which may not exist today but will come. Look at Instagram, which is not yet even five years old. Recently, this social-media mobile platform announced that it plans to monetise by taking advertising. We watched this happen on Twitter. And, of course, Facebook is the leader.

Then, too, media content must be formatted for delivery via different digital devices. The way the same content 'reads' across one's laptop is different from via one's smartphone and even one's tablet. Intrepid media and technology trends tracker, Mary Meeker, highlighted the growth of media consumption via mobile devices moving from eight per cent in 2011 to 24 per cent in 2015. This is where both Digicel and LIME-Flow may hold advantage over the merged RJR-Gleaner as monolithic media entities.

Monetising Online Offerings

Monetising its online offering has not been easy for The Gleaner. I've seen the number of emails prodding for payment - only US$9.99 per month, with a special offer of US$7.99 if one signs up now, was their most recent. I've seen similar ongoing pleas from The New York Times as it bombards me with emails regarding its digital offerings: "Try a digital subscription and pay 505 off for one year. You can cancel anytime."

Although online advertising spend has been showing steady increases worldwide, moving from US$55.2 billion in 2009 to US$96.8 billion in 2014 (www.eMarketer.com), growth has slowed and much more was anticipated. Note, though, that in 2011, Internet spend outstripped print spend in the USA for the first time and has maintained this lead.

Reports out of the World Association of Newspapers and News Publishers reveal that Latin America (the Caribbean is usually included in this region) is bucking global trends, with print newspaper continuing to hold strong in terms of advertising revenues. Still, one can't ignore the rest of the world, and moving to merge when they did is a demonstration of the foresight of The Gleaner and RJR.

What about TV?

TV is doing just fine, CBS execs say. "The TV industry is more than holding its own in the face of multiplatform competition, despite some dire warnings," said David Poltrack, CBS's chief research officer. The rise of online media platforms has not killed network TV." (NAB Smart Brief, Aug 11, 2015). And so it is for free-to-air TV in Jamaica so far, at least for TVJ, a fully owned subsidiary of the RJR Communications Group.

As previously highlighted in two earlier articles on the proposed RJR-Gleaner merger, free-to-air TV stacks up well against cable TV in Jamaica. For now! There is no doubt, however, that the entry of telecommunications companies on to the television landscape will shake things up. Additionally, everyone expects something to happen with the Michael Lee-Chin-owned CVM TV - eventually.

The LIME-Flow merger poses one threat to free-to-air TV stations, TVJ and CVM, with cable channels Flow 100 and, more recently, Business Access TV, looking to make their mark. The Digicel buyout of regional cablecaster and sports rights holder, SportsMax, and Digicel's gobbling up of several local cable systems demonstrates that this dominant player in the mobile phone market means to also make TV its business. Remember Mary Meeker's finding regarding growth in media consumption via mobile devices, highlighted earlier, and, too, that mobile penetration in Jamaica is above 110 per cent.

Based on the foregoing, it is clear that significant market changes in television can be expected within the next five years. Note as well that in being proactive, TVJ has been insistent on selling some of its offerings online via One Spot Media. Those in the diaspora must be attracted to it, given a report of twenty seven thousand (27,000) subscribers to this platform.

Media Mergers

Nothing New

What is happening in Jamaica with the announced proposed merger of two traditional media companies - The RJR Communications Group and The Gleaner Company - is nothing new. It is a feature of media across the Caribbean and the wider world. As media consumers, it behoves us to pay attention when biases become evident or voices become silenced. We have social media, blogs and websites to make our voices heard. Let's be vigilant and use them.

n Marcia Forbes, PhD, is executive chairperson of Phase 3 Productions and a former general manager of TVJ. Email feedback to columns@gleanerjm.com and marcia.forbes@phase3prod.com.