An internal memo dated December 2 paints a dire financial picture of 98.4 Capital FM, a once vibrant radio station favored by the Kenyan elite.
“from 2018 to date, the company has been making loses, and our liabilities far exceed the revenues we have generated,” Director Mary-Ann Musangi said. “The situation is so dire that were are not able to meet some of our critical financial obligations.”
Musangi, the daughter of the late Capital FM owner Chris Kirubi, revealed the station had seen the signs of hard times ahead.
In July 2020, management asked employees to accept a salary reduction to avoid a “company restructuring.”
“The preference of salary reduction instead of company restructuring was to ensure that no member of staff was left without a job,” Musangi said in the memo.
After the salary reduction, the company’s finances stabilized, and Musangi said in early 2022, Capital FM reinstated full pay to all employees.
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The good times did not last. Musangi blames the slide back to the red on employee laxity.
“Unfortunately, this action of reinstating 100% salary did not motivate the staff to continue driving the revenue targets, and we have since witnessed a further slump in revenues which has put the company deeper in the red,” Musangi said.
Attempts to get the employees to accept salary cuts once again have not gone down well. Musangi said only 7 out of 112 employees have consented to the proposal.
“We’re left with no option but to defer the proposal and radically rethink the future of our business,” Musangi said.
“The fact remains the company is in huge financial difficulty and cannot continue to operate under the current conditions. The options moving forward will involve a restructuring of the business,” Mary-Ann Musangi, Director 98.4 Capital FM
Frustrated Capital FM director Mary-Ann Musangi has resorted to mass sacking after employees rejected a pay cut that was meant to reduce the media house’s financial burden. pic.twitter.com/Rz2QBd1SSg
— Veronica Hope (@VeronicaHope_) December 10, 2022
Employees’ refusal to accept a salary shave forces the company to seek alternative ways to cut costs and save the company from bankruptcy.
Musangi’s parting shot gave little hope that the quarter-century-old company had any good options to navigate the situation.
“The fact remains the company is in huge financial difficulty and cannot continue to operate under the current conditions,” Musangi said. “The options moving forward will involve a restructuring of the business.”
She did not provide a timeline or specify how the restructuring would be conducted but promised to get back to the employees once they determined the way forward.
Running under the slogan “The Best Mix Of Music, News, and Entertainment,” Nairobi’s 98.4 Capital FM first went on air in 1996 under the management of Lynda Holt as the first privately-owned radio station in Kenya. It quickly became Nairobi’s favorite radio station because of its popular programming, hip DJs, and production quality.
Holt said she chose the radio frequency because 98.4 degrees Fahrenheit is the average blood temperature, and she wanted the station to become the heartbeat of Nairobi.
Capital FM’s woes come more than a year after the death of owner billionaire Chris Kirubi.
Change is Coming to The Star
“We may declare numerous positions redundant based on the new structure,” Patrick Quarcoo, CEO Radio Africa.
Capital FM is not the only station evaluating its business outlook.
Radio Africa Limited, also known as RAG, which owns The Star Newspaper, sent out an internal memorandum to its staff on December 9, letting them know change is coming.
RAG group CEO Patrick Quarcoo sent a memo saying recent changes in the media landscape have forced a review of how the company conducts business to maintain a competitive edge.
“As management, we have been faced with a situation that require critical business decisions to be made to ensure business continuity,” Quarcoo said. “We will therefore be reorganizing our internal operations to the process.”
He warned layoff is on the table.
“We may declare numerous positions redundant based on the new structure,” Quarcoo said.
The impending cuts are not the first time Radio Africa looked to employees to manage costs. In 2020 during the heart of Covid 19, the company slashed salaries between 20 and 30 percent.
Major media companies have struggled to maintain profitability as demand for news has decreased partly because of modern technology.
More people are ditching traditional media and gaining access to news from social media and other non-traditional forms of news and entertainment.
It’s not bad news just for Kenyan journalists. Major news and entertainment organizations in the US, such as CNN, have also announced layoffs or hiring freezes in what Vanity described as a bad winter for journalists.
According to Vanity Magazine, “nearly 3,000 media jobs have been cut this year, with more than one-third (1100) coming from the news media industry.”
Lack of advertisement revenue and loss of money in not-yet-profitable ventures such as streaming services are partly to blame for the downturn.
The uncertain environment comes when journalism credibility in the US is at an all-time low, according to a Gallup Poll, and press freedom is declining worldwide.