The Sunday Mail
Business Reporter
To diversify or not to diversify is one of the most challenging decisions for any company as there is a thin line between risk and return.
History has many success stories and failures, too.
But such risks and high stakes have not deterred Zimpapers from diversifying its revenue streams by establishing a television channel – Zimpapers Television Network (ZTN) – that has already made an impression in the market.
The latest offering makes the Zimbabwe Stock Exchange-listed company a fully-fledged integrated media house.
Zimpapers chief executive officer Mr Pikirayi Deketeke said diversifying into television was motivated by “the movement of audiences from purely print formats to new formats”.
“We realised that there was a lot of interest in television, radio and digital. We have done radio and digital, and the final leg for us was television,” said Mr Deketeke at ZTN’s launch last month.
ZTN is positive it will write its own success story and increase shareholder value.
“We believe that our content is good enough,” ZTN Prime general manager Ms Nomsa Nkala said in an interview with The Sunday Mail Business.
The station, which is now showing on DStv channel 294, plans to make most of its money from dramas, just as they do in South Africa, where soaps bring the bulk of revenue.
The world over, soaps or dramas endear themselves to viewers, which makes them the target for advertisements and sponsorship.
“People associate a lot with dramas and their (SA television stations) revenue is purely from dramas; 99 percent is sponsorship as opposed to airtime sales.
“So we are adopting that model and from what we have seen, the indication so far is that will move us forward.”
She said the response since the station was launched has been “very encouraging, although we still have a long way to go”.
“In terms of our projections, now that we have launched, we are looking at making a profit at least by year three; the second year we expect to start to break even.”
ZTN’s revenue model is advertising “but leaning more on sponsorship of programming”.
Impact
Across the world, drama earns its money from advertisements.
Dramas that are able to emotionally connect to an audience are more likely to attract sponsors willing to place their advertising billboards.
Worldwide, they are evaluated by number of views per second.
This also determines popularity.
The higher the Television Rating Point (TRP), the higher the profit TV channels earn.
According to Ms Nkala, television is a high-cost business as stations invest more in production of dramas, which, if and when sponsored, will also generate the bulk of revenue. It is believed ZTN can naturally leverage on the Zimpapers group, which has scale and reach to make the investment meaningful.
Despite the world being home to a plethora of digital marketing channels, TV remains the most trusted and powerful method of advertising.
It also has the largest impact on sales.
A study by Professor Karen Nelson-Field from Australia-based Amplified Intelligence found that across multiple channels (YouTube, Instagram and Facebook), the impact of a TV advert is relatively bigger than other digital channels.
According to data from Thinkbox, broadcast TV makes up 68 percent of the average person’s day in video – beating all online content, YouTube and Facebook.
The television business thus remains lucrative.
According to Statista, in 2019, the traditional television revenue worldwide amounted to US$243 billion.
“After a decline in 2020, the market seems to recover again and is expected to slowly increase, reaching a value of US$231 billion.”
In South Africa, television revenue is expected to grow to over R40 billion (US$2,5 billion) next year.
SABC reported a R43 million profit for the month of April 2021 alone.
Overall, TV advertisement spending in SA was 68 percent of the total advertising spend in 2021, reflecting TV’s dominance.
In Kenya, TV spend in 2021 was 58 percent of the total advertising spend of KS60,5 billion (US$516 million), according to Betting Companies Africa.
Recently, eMedia, which runs e.TV, said its headline earnings (per share) were up by as much as 301 percent in its trading year to the end of March 2022.
