Last week, Vision Group, released its results for the 6 months leading to December 2022, reporting that overall turnover declined by 25.80%⏤ from UGX61.1 billion in the 6 months to December 2021 to UGX45.4 billion.
This, they attributed to reduced publishing orders that led to a 77.71% reduction in publishing revenue, as well as a 12.5% reduction in print circulation revenue and a 3.15% reduction in overall advertising revenue. The Group said that radio advertising, fell the biggest⏤ by 23.2%, while television advertising and print advertising declined by 4.53% and 2.86% respectively from the same period last year.
However, commercial printing revenue registered a growth of 29.90%.
The cost of sales decreased by 31.77% due to a reduction in the volume of especially publishing business. Administrative expenses however increased by 10.02% due to increased costs of running the business, particularly fuel and transportation costs.
As a result, the net profit for the period reduced from UGX396.5 million to just UGX57.4 million.
The Group said that it wouldn’t declare any dividends yet, “in accordance with the company’s practice of only paying dividends at the end of the financial year”.
Regardless of the lukewarm performance the company, in a statement said, it “remains resilient with high business potential in new ventures in publishing and packaging” and that “focus on traditional media business will be maintained”.
“Management is keen to increase efficiencies and expects to conclude the Financial Year 2022/23 with a much better outcome,” the company said.
Deepening focus on radio and television, but in a crowded market
Vision Group has 5 business lines, namely the print business composed of The New Vision and Bukedde, a Luganda daily as well as a number of niche magazines. Print revenue is derived from newspaper and magazine sales (circulation) and advertising revenue.
The electronic media segment relies on advertising revenue, from the 6 television stations⏤Bukedde 1, Bukedde 2, TV West, Urban TV, Wan Luo TV and TV East, as well as 6 radio stations⏤XFM, Bukedde FM, Radio West, Etop FM, Arua One, Radio Rupiny, and Etop Radio. The commercial printing unit deals with on-demand and tailored printing solutions while the publishing segment deals with the publication of government and open-market books.
Other minor sources of revenue include events.
For quite a long time, the Group’s revenue was largely reliant on the print segment. For example, in 2015, print revenue (from advertising and circulation) was UGX54.9 billion and constituted 63.3% of overall revenue. But in the 12 months to June 2022, print revenue had shrunk by 32% to UGX37.5 billion and only 33.2% of group revenue.
Worse still the print segment made UGX4.8 billion in net losses.
Electronic media, according to the 2022 annual report, is the second-best source of revenue, fetching some UGX30 billion (26.5%) followed by publishing at UGX26.9 billion or 23.8% and commercial printing at UGX15.9 billion or 14%.
However, publishing and commercial printing were the only profitable ones, bringing in UGX2.1 billion and UGX2.4 billion respectively in net profit.
With the rising potential of electronic media, it is therefore not surprising that the Group recently ramped up investments in radio and TVs.
In a media briefing contained in the 2022 Annual report, Moses Ateng, Head of Content Distribution, said that in FY 22/23, Vision Group plans to “unveil its 7th radio station that will serve the audience in the Bunyoro subregion and also acquire a hybrid license for Wan Luo TV for our Luo audience”. Wan Luo TV follows the launch of TV East last year.
“With this, we are optimistic the group will serve more customers, generate more revenue and improve return on investment for the shareholder,” Ateng said.
The challenge though is while electronic media is the second biggest source of turnover revenue- it, too is a huge cost centre. For example of the UGX30 billion turnover in 2022,⏤ UGX22 billion went towards the cost of sales and UGX8 billion to administrative costs. Adding another UGX700 million in other costs, electronic media as a segment made a loss of UGX674.3 million.
The other challenge and possibly the reason for poor margins for especially radio is that industry-wise, according to Ipsos, a media research company, the power of radio as the most-consumed media, is falling- from 95% in 2014 to 87% in 2022; and there are over 290 radio stations in the country. Advertising spending on radio as a medium as a fraction of total spend has also fallen from 56% in 2018 to 51% in 2022 and continues to fall especially in the face of the internet and social media.
We asked Rogers Anguzu the Vision Group Head of Marketing why the Group needed to invest in a 7th radio station in an already crowded Bunyoro region when the existing 6 were all loss-making, and moreover, between 2017 and 2021, radio revenue has lazily grown at a compounded growth rate of 4.8%.
What is it that Vision Group wants to do with the 7th station that they have failed to achieve with the 6 radio stations,? we asked.
“The Vision Group Radio in Bunyoro region is based on a solid business analysis and projections internally that show good potential for growth in that area with the widely known commercial potential in the Bunyoro area occasioned by the Oil and Gas drilling coming up there,” he said.
“We are confident with our value proposition based on Vision Group’s excellence in the core of the media business (journalism) our radio station in Bunyoro will soon grow to be a market leader from the pack in that region. We are optimising our operations to enjoy more of the synergies with our other media platforms through the convergence of media resources so that the cost of operations for these arms of the business can be optimised,” Anguzu added.