Government blitz wipes out 40% ad revenue for newspaper group

Raphael Khumalo, the chief executive officer of Zimind Publishers, which publishes the Zimbabwe Independent and The Standard weekly newspapers, said government policies had hurt newspaper operations, triggering a “financial predicament in the context of Zimbabwe's economic crisis”.

“(This) has been compounded by the following: price controls targeted at newspapers, loss of advertising revenue, high operating costs, cost of machine breakdowns, foot dragging by authorities in granting price increases even in the face of spiralling hyperinflation as well as reduced newspaper circulation figures due to unavailability of cash,” Khumalo said.

The statement was issued after journalists at the group's two newspapers last week embarked on a strike, the first ever industrial action by newspaper staff since a 2002 strike by journalists that crippled operations at the now-banned Daily News newspaper.

Khumalo said the group had an obligation to “keep the company functioning to provide our readers and advertisers with news whilst addressing the needs of our employees and their families”.

The Ministry of Industry and International Trade ordered all providers of goods and services on June 25, 2007 to reduce prices by half or revert to prices in place on the June 18, 2007.

Khumalo said this “ill-advised policy directive” had triggered “looting of retail outlets, (and) we had lost 40% of advertising revenue as major retailers had either run out of stock, scaled down operations or simply closed shop”.

“In the period after Christmas our traditional advertisers could not even put up ‘sale' signs that are the norm for this period,” he said.
He said the government order on price increases did not apply to wages and salaries.

“It was only after the establishment of the National Incomes and Pricing Commission in August that it became possible to vary prices after submitting an application and providing suppliers' invoices,” he said, insisting that even with that arrangement in place, the maximum mark-up businesses are permitted to add to input costs was “way below the inflation rate”.

He said while the order was enforced on “goods that are visible to authorities” like newspapers, importers of fuel, film, inks, plates and other service providers like garages and commuter omnibuses continued to hike prices with reckless abandon, making newspaper operations unviable.

“Thus, on the 9th of November 2007, the authorities had no difficulty arresting myself and Jacob Chisese, chief executive officer of The Financial Gazette, for violating price control regulations after increasing cover prices of our newspapers in an attempt to recover costs so that we could remain in business and allow our employees to earn fair returns,” Khumalo said.