SA newspapers hanging on

High-profile news stories like the trial of Oscar Pistorius and the death of former President Nelson Mandela resulted in a spike in total newspaper circulation in the fourth quarter of 2013, as consumers chose print newspapers as a key source for information and reflection.

South Africa’s newspaper industry remains buoyant and diverse showing continued growth. High-profile news stories such as the trial of Paralympian Oscar Pistorius and the death of former President Nelson Mandela resulted in a spike in total newspaper circulation in the fourth quarter of 2013, as consumers chose print newspapers as a key source for information and reflection. Advertising revenue is expected to grow from R8.2 million in 2013 to R11bn in 2018, a CAGR of 6%. These are some of the highlights from PwC’s ‚ÄòEntertainment & Media Outlook: 2014-2018′ report.

Vicki Myburgh, Entertainment and Media Industries Leader for PwC South Africa, says: “Improving education, consumer spending power and an increasing thirst for ‚Äòneed-to-know’ news are driving the steadily growing demand for newspapers, as well as providing encouragement for investment in new advertising campaigns.

With digital technology still out of reach for the majority of the population even in urban areas, print newspapers fill the time for commuters using public transport. This has led to small growth in the circulations of tabloid newspapers, focusing on issues or events that affect specific geographical areas.

The fifth edition of PwC’s ‚ÄòEntertainment and Media Outlook’ presents annual historical data for 2009-2013 and provides annual forecasts for 2014-2018 in 12 entertainment and media segments. The Outlook also includes detailed information for South Africa, Nigeria and Kenya in each of the 12 industry segments.

Myburgh goes on to comment: “The low level of broadband penetration in South Africa also means that publishers are less affected by the digital disruption seen elsewhere. For many consumers, print remains the first news medium, which will ensure that print revenue will grow for years to come.

The future of newspapers will vary significantly by region. While the Asia-Pacific market is set to grow at a CAGR of 3.4% through to 2018 based on increased consumer and advertiser demand, newspaper publishing revenues will fall by a CAGR of -2.4% in Western Europe and -4.2% in North America.

South Africa’s total newspaper publishing market grew at a CAGR of 6.2% in 2013 to generate revenues of almost R11bn, up from R10.3bn in 2012. Most of the growth came from advertising, which rose to R8.2bn in 2013 from R7.7bn in 2012, with print still accounting for nearly 98% of the total. Revenues from digital remain low but a growing number of titles have now created paywalls to try and maximise revenue from digital content.

Newspapers revenues will also benefit to a large extent from South Africa’s expanding and urbanising economy. As seen in other countries (notably Peru), a combination of increasing levels of urbanisation, increasing literacy levels and growing GDP can boost the demand for news, even if projected GDP growth is now less strong than was previously anticipated. “This expansion will provide a boost to the newspaper publishing market as reaching rural audiences remains a challenge, both in terms of the distances involved in getting the newspapers to the areas and finding outlets to sell the newspapers,” adds Myburgh.

Tablets and mobile devices are among the biggest change drivers for the industry. Costs cuts and the restructuring of newsrooms, often implemented to maintain profit margins, have forced publishers to ‚Äòright-size’ their businesses for new digital ways of working. According to the report, cuts can only go so far before quality levels start to fall to the point at which readers can find the equivalent content free elsewhere on the web.

Although print will dominate revenues in the near term, the shift to digital will have an impact. In order to remain relevant newspapers will need to incorporate social media for picking up and breaking news or reacting to an event and then use the digital/print coverage for features, analytical insights and/or long-term investigations. This type of workflow was exemplified by the initial coverage of the Oscar Pistorius saga, with the news breaking on Twitter but more in-depth coverage following in printed newspapers over the following weeks and months.

Nigeria

Nigeria’s newspaper industry saw no growth in 2013, with digital revenues proving elusive. The newspaper publishing market is forecast to see a slight improvement to an estimated US$207 million in 2018, up from US$205 million in 2013.

Kenya

Kenya’s newspaper revenues are more robust than Nigeria and are set to expand. Kenya’s newspaper industry grew 8.5% in 2013 to generate revenues of US$178 million. Advertising revenue is the main driver, growing from US$37 million in 2009 to an estimated US$130 million in 2013, and will reach US$167 million in 2018.

Myburgh concludes: “Newspaper publishers in emerging economies, such as South Africa, should not be complacent and sit back satisfied with their print boom They must heed the experience, in particular that of developed economies, as an example from which to learn, preparing for the same eventual pattern of digital disruption as the adoption of smartphones and other smart devices gathers pace.

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