Run it like a business

Amanyehun R. Sisay is executive editor at Ethiopian Business Review (EBR), a monthly English magazine published by Champion Communications PLC. Established three years ago with a capital of just 15,000 birr, the magazine has enjoyed a relative success with 5,000 subscribers and a circulation of 8,000 copies. In a gloomy business climate where new print media houses go defunct shortly after start up, EBR aspires to grow big. In connection with the 21st World Press Freedom Day celebration, Mikias Sebsibe of The Reporter sat down with Amanyehun to talk about the challenges of starting up a magazine as well as the prospects and threats posed against joining the print media industry. Excerpts:

The Reporter: Tell us briefly about your magazine

Amanyehun R. Sisay: EBR is founded to promote private sector development and help it become competitive in the international market by providing research and evidence based on an in-depth reporting. We have a 70 percent market share from magazines published in English. We mainly work on a subscription or membership basis. From 70 to 85 percent of our publication is directly sent to our subscribers and the remaining is sold in supermarkets. We have 15 permanent staff but it reaches up to 25 during distribution, sales and marketing. We generate 40 percent of our revenue from the sale of the magazine. Our policy is to always maintain 70/30 content and advertisement ratio. I believe our performance is beyond our expectation. Within two years we have achieved what we set out to do in five years. We are also receiving encouraging feedback.

Who do you say are your competitors?

This is not boasting but we say we do not have domestic competitors in terms of an English magazine. Our competitors come from Paris and London such as New African, African Business and The Africa Report.

What was your motive in joining the media industry, particularly the print media?

We have the passion for something good to read. And business-wise we have seen a gap that we can fill – a gap which was not filled by the existing print media either due to lack of capacity or other reasons. There is no magazine that focuses on business and economics issues. We come across magazines that offer less than what the reader already knows. If you cannot offer a product which gives the reader something more, then there is no reason for the readership to spend their time or money to buy your product. The product should inform and help the reader make productive decisions. So, we decided to establish a magazine covering business and economic issues.

Why limit your magazine to covering only business and economic issues? Are you saying that is where the gap is?

True, a media can also contribute to the flourishing of democracy. But in our view, media should survive first as a business. To survive it has to be ethical, professional and responsible. The information the media provides should be accurate and reliable. The media is in the business of selling information. But what sort of information is needed in the market? How should that information be crafted so that it appeals to the reader? In our view, although there are gaps in other areas as well, focusing on business and economic issues will give our product a better market opportunity. Secondly, we want to promote economic development in the country. And for that to happen, the private sector should be encouraged. And we wanted to assist the development of the private sector by identifying policy bottlenecks and pointing out the weaknesses of the private sector. If we can offer that then the private sector, which has the purchasing power, will buy our product. So, it is a business decision. We do not hold the position that we need to cover democratic or human rights issues for these values to flourish in the country.

What were the major obstacles you faced during the formative stages? 

There were a number of challenges – external and internal. But 90 percent of the challenges were internal. Finding qualified staff, including journalists, designers, IT experts, researchers, promotional, sales and marketing experts, was a major challenge. We expect our journalists to deliver three articles per month. There is plenty of time but we often find journalists who struggle to deliver. There is also a problem finding qualified and willing external contributors who will meet our standard. Data gathering is another challenge and sometimes when you crosscheck the same data gathered from different government agencies they are irreconcilable. The cost of printing is also a headache. Our printing quantity is increasing and the printers are struggling to cope. When I think of the potential for growth, I feel very happy but when I think of the printing challenge I feel very sad. The government should encourage more investors to join the sector by providing incentives accorded to other sectors.

How about raising capital?

Well, we started the company with an only 15,000 birr capital. Raising capital was a challenge but if you are determined enough you can make it. When we started, we contacted a lot of journalists in the country to have shares and launch the business together. I lean towards the business side of the activity. My interest is in the packaging of the product, making the service delivery excellent as well as marketing and promotion. I do not wish to be involved in content development. So, I tried to mobilize journalists in the country. But, I guess, most have found their comfort zone. As any aspiring media organization, we want to offer our product to the US and European markets. We also know we have the potential to offer the product to South Africa, Egypt, Nigeria and Ghana. Ethiopia is now becoming an investment destination. So, there are a lot of people residing abroad who want to know about Ethiopia. The potential is big. But for us to grow, we need to be strong financially, in human capital and technology to ensure a sustained growth.

We often see new magazines and newspapers spring up only to go defunct prematurely. You have been in the business for three years now. What would you say is the success behind your magazine?

In Ethiopia, when the print media goes defunct it is usually attributed to the government. That is simply to cover up one’s own weaknesses. Despite the challenges, we became successful because we run the company as a business. It is a company and it is a business. Running a business company requires business expertise. It requires decision-making abilities based on business reasons. You need to be able to sale your product once you produce it by using your journalistic skills. For that, you need to have sales and marketing expertise. Recently, there was a new magazine which failed to sell their first issue for three months. Their focus was on coming out with their first issue, but what good is it if you do not know how to market and distribute it. Some join the industry simply with a passion for journalism and without the business model. These are post-production issues that have to be dealt with from the start. A media needs to have focused vision, mission, goal and strategy. We were chasing our vision. We were chasing our readers. It is a very tiresome work.

Earlier you said it was a business decision to cover only business and economic issues. In line with that, the English newspapers that has been in the industry the longest mostly cover business issues. It is often argued that covering political issues poses a threat to the survival of a magazine or a newspaper and hence English newspapers tend to avoid political coverage. Do you agree?

Why don’t you look at The Reporter newspaper? The Amharic Reporter is two decades old and employs the biggest staff. There is also the English. If covering political issues was a problem, the newspaper would not have survived. For us, the reason we chose to develop our contents in English language is that we also target the international market. You cannot do that by writing your contents in Amharic. Our vision is not limited to the market in the country but it goes beyond that.

From a business prospective would you say the sector is attractive?

To tell you of our experience, we were in loss during the first year. It was a promotional year. In the second year, we became profitable. Profitable in very good terms. And now we are in the third year and profitable. We have sweated a lot and maybe if we invested our energy and resource in a different sector, we might have been more profitable. We have been able to establish a recognized brand. When you add the brand value to the profits generated, I would say it is quite a rewarding industry. But there are a lot of challenges.

If that is the case, why are we not seeing more and more investors in the industry?

There are three reasons why investors are not drawn into the sector. Firstly, there is no incentive provided by the government for the sector. In fact, what you often hear about the sector is journalists being persecuted. Journalism as a profession and media as an investment is not attractive. The incentives provided in other sectors are not provided for the media. For instance, books which usually cost 500 to 600 birr are exempt from value added tax (VAT) but newspapers that do not cost more than seven birr each pay 15 percent VAT. There is no tax-break in the sector whereas in other sectors there are ones that extend as much as ten years. We pay 30 percent profit tax and 10 percent dividend tax from the first year. In addition, investment in the printing press, while it is technically a manufacturing sector, is considered as service provision. And hence there is no incentive. As a result, the number and capacity of printing press in the country is very limited. In fact, the Ministry of Education spends huge amounts of foreign currency for the publication of student textbooks in countries like Malaysia and India. If investors were encouraged to set up printing press companies in the country it will not only be a relief for the print media but will also save foreign currency. The government should also do more to initiate the establishment of a pulp industry. The former Prime Minister [the late Meles Zenawi] once said a pulp industry will be set up within the first GTP period. And now they are saying that it will happen during GTP II. The government should demonstrate its commitment with action and not words.

Secondly, you do not see the professional and ethical media houses being rewarded for the good work they do. On the other hand, we often hear about media houses at fault being sued and jailed. I believe media institutions like that have been in the business the longest should be rewarded. They offer jobs, pay taxes and inform the public.

Thirdly, the business is very tiring. Why not invest in restaurant and cafeteria business where you can make millions easily. The media sector is very demanding, which requires not only passion but also the necessary knowhow. You need qualified personnel, which has been a major challenge.

Political challenges are often cited as deterring factors when one wishes to join the industry. Limits to freedom of expression and access to information as well as the anti-terrorism laws are considered the major ones. Apart from the business challenges, how much of the share do these factors contribute to the fragmented media industry?

Again from our experience, impact-wise I do not know the difference between writing in Amharic and English. We write critical pieces as well. I have been approached, in particular by western diplomats in the country. They ask me if we ever faced any harassment from the government for our very critical pieces. We have never faced anything like that. We have never received any complaints. We have not been sued so far. But we are operating in the same environment where journalists talk of being persecuted. I do not know why there is such disparity between us and them. I do not know if we would have faced such things if we had covered political issues. But then again you see medias like Reporter that cover political issues.

In the face of these challenges plus printing cost, which cripples the number of circulation and distribution of magazines and newspapers, how can the print media industry cope and thrive?

Distribution is a very big challenge. For example, we approached an international courier service provider to help us distribute our magazine. The service per copy was very expensive. So, we thought it would be cheaper to use domestic courier service providers and approached the Ethiopian Mailing Service (EMS). The price we were asked was 43 birr per magazine. Imagine, the unit price of our magazine is 30 birr. The cheapest door-to-door delivery EMS offered us was 28.5 birr per unit. It was a take-it-or-leave-it kind of offer. You can imagine how expensive it would be for newspapers which are sold for five birr. So, distribution is a very big challenge. This calls for Ethiopian media houses to come together and set up an institution that deals with distribution issues. We would be happy to take the initiative. But in the absence of that, we would set up a courier service provider that can take care of distribution service of not only of our product but also others’.

The Ethiopian media is also characterized as being too polarized. Do you agree with such characterizations? If you do, how much of that has affected the growth of the media industry?

Yes it is polarized. There are papers that lean towards the opposition and there are others that portray everything as very comfy. The motto of the state TV broadcaster goes as ‘The Voice of Ethiopian Diversity and Renaissance’ but you do not see diversity of opinion being reflected. The industry is politically charged, the views reflected are mostly either the country is on the right track or it is going downhill. This is dangerous. But the blame also lies in the readership. If you write something that seems to favour the government, then you would be labelled as pro government. Some readers are, surprisingly, excited to read about reports that portray the country being in a deep mess. Until recently, highly sensationalized newspapers and magazines had huge readership with circulations as high as 30,000.

Have you conducted your assessment about the readership before joining the industry?

Yes. We knew we should not go down that path because, clearly, that is not sustainable. They had a big circulation once but they are no longer in the business. We follow the principle of letting the facts on the ground tell the reality.

On that note, where do you see the future of the country’s media industry going?

I fear the cost of printing would continue to rise. The stakes would be high. It might even threaten the existence of the media houses that have survived so far. There is a new challenge now. Look at the technology. Online media is growing very fast. Because of social media, the concept of citizen journalism is emerging. In the face of this, reporting on an event days after its occurrence may no longer appeal to the reader. There is also lack of qualified human resource. In this country, 18 universities offer journalism courses but the majority of the graduates do not meet the standard.

How about in terms of prospects?

Poor readership is often cited as a challenge. But today there are over 27 million students enrolled in this country. There are over 800,000 students who are doing graduate and post graduate studies in private and public higher institutions. So there you have that amount of people who can at least read and understand English. Poor readership is no more an excuse. All there is, is to do our homework and find these readers. And for business magazines like ours, the demand for the kind of service we provide will increase as the country’s economy grows and business and investment expands. So, I say we and other media houses have good prospects.

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