The Media Market

A major sized economy in the global numbers game

Pakistan was a middle class and predominantly agricultural country when it gained independence in 1947 from India. Its average economic growth rate in its first five decades (1947–1997) was higher than the growth rate of world economy in the same period. Average annual real GDP growth rates were 6.8% in 1960s, 4.8% in 1970s, 6.5% in 1980s and 4.6% in 1990s. In the new millennium post 2000, the GDP growth rates have hovered between 3.5% and 4.2%. Agriculture accounted for over 50% of Pakistan’s GDP in 1947. While per-capita agricultural output has grown since then, it has been outpaced by the growth of the non-agricultural sectors, and the share of agriculture has dropped to roughly one-fifth of Pakistan's economy. Since 2000 Pakistan has seen rapid growth in industries (such as apparel, textiles, and cement) and services (such as telecommunications, transportation, advertising and finance).

Pakistan has made substantial economic reforms since 2000 and medium-term prospects for job creation and poverty reduction are the best in nearly a decade. In 2005, the World Bank reported that “Pakistan was the top reformer in the region and the number 10 reformer globally – making it easier to start a business, reducing the cost to register property, increasing penalties for violating corporate governance rules, and replacing a requirement to license every shipment with two-year duration licenses for traders.” The World Bank and International Finance Corporation’s flagship report ‘Ease of Doing Business Index 2019’ ranked Pakistan 136 among 190 countries around the globe, indicating a continuous improvement and taking a jump from 147 from 2018. According to its latest national census concluded in late 2017, Pakistan’s population is 207m (world’s sixth largest) with a labor force of 57.2m (world’s ninth largest) but an unemployment rate of 5.9%.

A media industry that seems to be plateauing

The new millennium saw a radical transformation in the landscape of Pakistani media in terms of size. From one state-owned TV channel and one radio station – both state-owned – in 2002, before the country opened up the broadcasting sector for commercial players, it now, at the start of 2019, boasted close to 100 TV channels (including news and entertainment channels) and nearly 150 radio stations. The numbers of journalists in the same period ballooned from about 2,000 to over 20,000 and the overall number of people associated with the media industry to about 250,000. This expansion in the size of the media industry came off the back of improving economic fundamentals, an increase in per capita income and a rise in consumer economy with growing surplus in private incomes accompanied by an expanding advertising sector.

Pakistan’s official news agency Associated Press of Pakistan (APP) reported[i] in 2017 that there has been a cumulative investment of USD 4 billion in the electronic media industry in Pakistan between 2002 and 2017 and was estimated to touch USD 5 billion by end of 2018. It said the overall national growth contributed significantly to the development of the electronic media industry in the private sector and helped expand work of media groups, content production houses, advertising agencies and proliferation of the performing arts.

However, 2018 brought bad tidings. Pakistan’s media industry, once viewed as among the most vibrant in South Asia, started contracting with close to 2,000 journalists and media workers reportedly laid off and several outlets shut down. Partly affected by the outcome of July 2018 elections that brought a government to power headed by a party not seen as friendly to business and partly by the ailing economy, coupled with the withdrawal of government subsidies and dwindling advertising revenue, forced even big and stable media groups to shutter their publications and lay off journalists. The Jang Group -- the country’s largest media group -- shut down its three publications and two bureau offices, leaving more than 1,400 journalists and related staff jobless in one single day. Express Media Group and Dunya Media Group – the third and fourth largest media groups – also laid off over 200 journalists apart from cutting the salaries of remaining workers by 15 to 35 percent.

The previous media boom had benefited a certain class of journalists, mainly TV hosts, who earned huge salaries and attracted thousands of young people to the profession of journalism. Dozens of universities established media science departments since 2005 to cope with the needs of the then-booming media industry. But currently, only a few channels manage to pay salaries on time – so much so that the largest, Geo TV, now often runs in arrears for several months in payment of salaries to its staff, shifting the blame to the curtailment of government and private advertising. As 2018 closed, the media industry was looking shaky.

Falling budgets in a shifting economy adversely affects media industry

In the initial years of its growth, from 2002 onwards when the broadcast sector was opened up for private ownership for the first time in Pakistan’s history, it was greatly dependent on advertisement revenues from big telecom firms but then shifted to government support for their primary earnings. The situation has changed now, however. Beginning with 2018, dwindling advertisement revenues for print and electronic media brought several news organisations on the verge of closure or staff layoffs in thousands. The private sector – including banks, textile industry and telecom firms – has slashed their advertisement budget by 50% in the last few years.

According to Dawn newspaper, the print media industry has its own demons to overcome. Watching resignedly as companies took a substantial portion of their advertising spend away from print to digital platforms to reach out to their target audiences, newspapers are now faced with a mortal threat as incomes fall drastically. Starved of resources, newspapers and magazines have shed pages and created redundancies of their own. Some are finding it hard to pay salaries to their retained employees, contributing to the unrest and the increasingly vocal protest among journalists and other workers in the industry.

Fading state patronage of private media affects business models

Even since the liberalization in 2002, the State has long remained one of the most important sources of funding for the country’s private media sector as for both broadcasting and the printed press in Pakistan, government advertisements have historically acted as the backbone of their finances. The federal and provincial governments have often bought airtime on leading TV channels during primetime hours, subsidizing their financial operations. Similarly, governments have also traditionally subsidized operations of leading newspapers by providing them with advertisement revenues. According to Dawn newspaper, the advertising market size in Pakistan grew from PKR66.9 billion (USD583.3 million) in financial year 2015 to PKR87.7 billion (USD733.3 million) in 2017. In August 2018, the Senate was informed that the government provided advertisements worth PKR15.7 billion (USD133.3 million) to print and electronic media from 2013 to 2017.

Additionally, particularly after the July 2018 elections, the provincial governments of Punjab, Sindh – the main contributors of advertisement revenues for print and electronic media – and the federal government in Islamabad, have slashed their advertisement budget by 70% leaving the media industry in a bad financial situation.

Industry sources say this isn’t a crisis out of the blue but over the better part of the second decade of this century the newspaper industry in Pakistan has recorded a 15% to 20% decrease in sales. A major chunk of print media market in Pakistan comprises Urdu-language newspapers while the market for English-language newspaper is small by comparison. Since 2010, mid-ranking newspapers have undergone a substantial reduction in advertisement revenues forcing the lay-off of hundreds of staff. Because of declining readership of English-language newspapers, the telecom companies are diverting their remaining ad-spends to Urdu-language TV channels. This also explains the closure of two English language news channels since 2015. Although Dawn TV (English) and Express 24/7 (English) belonged to two of the largest media houses in Pakistan, they were forced to shutter them following a steep decline in ad-spreads.

Many journalists in Pakistan now think that this business model – of ownership being concentrated in the hands of a sole investor or single family – deciding the fate journalists and journalism as a whole in Pakistan has failed and the implications have not just been restricted to closure of business but also to quality of journalism and the rise of censorship. Failing financials have forced the media owners and managements to cave in to rising pressure from the state machinery, including not just the political government but also the security establishment both of which are losing their appetites for criticism of their policies by a freewheeling media. The falling advertisement revenues are matched by many of the finest journalists and journalism shows being subdued or downright silenced. Financial squeeze of a few key media titles has had a ripple effect, especially since 2018, on most of the remaining media to become significantly less critical on the authority and the executive compared to the past few years.

While the country has a big consumer base and annual media advertisement spread at the end of the fiscal year 2017-18 was PKR 81.6 billion (USD 680 million), the TV market is mostly bankrolled by the private sector with even large government spending not figuring in the top 10 ad-spends of TV media. This allows the TV news media to adopt and pursue relatively independent journalism with the last few years this medium showcasing oftentimes scathing critique of various governments at both the federal and provincial levels. Pakistan’s print media sector, however, has been majorly dependent on government advertising and since 2016 has seen the federal government its biggest advertiser.

While the print media often continue adopting hardline stance against governments, their news reporting, in general, is not equally independent, perhaps reflecting this over-dependence on government advertising. Things have, however, been changing since the elections in July 2018 brought the Pakistan Tehrik-e-Insaf party of Imran Khan to power which has shown hostility in its dealings with all media and has heavily slashed government ad-spend forcing the media to cut over 2,000 jobs while some TV channels and newspapers have even been shut down. The digital media in Pakistan is not supported by the government and therefore exhibits a totally independent streak in its editorial positions being sustained by the private sector rather than the public sector.

Falling but still robust advertisement revenues for Pakistani media

At the start of 2019, Pakistan had close to 100 TV channels, about 40 of which were news channels, mostly dominated by political news. With 2018 being an election year, Pakistan’s polarized, noisy politics was reflected on the news channels with very little public interest journalism or human-interest stories focusing on social issues and economic issues. The non-news channels mostly focused on entertainment with soap operas, films, sports, music and shopping. The country also had about 150 FM stations, four-fifths of which focus on entertainment including light community gossip and lots of music. Only a few radio stations are known for their news and current affairs bent on a regular basis although 2018 as election year saw a spike in electoral campaigns and focus on local contestants and their promises as well as campaigns to mobilize voters.

Over the course of 2016 to 2018, Pakistan’s overall advertisement spending on media has shown an overall declining trend. The total media advertising market in Pakistan at the end of the fiscal year 2017-18 was PKR 81.6 billion (USD 680 million), which included TV, print, radio, digital, out-of-home, brand activation and cinema categories, according to quarterly Aurora[v] magazine’s print edition (which had not been uploaded by end January 2019) issued in last quarter of 2018. Of this, ad-spend on TV comprised a mammoth 46% at PKR 38 billion (USD 316.6 million) with print coming second at 24% with PKR 19.5 billion (USD 162.5 million), digital third at 8% with PKR 8 billion (USD 66.6 million) and radio sixth at 3% with PKR 2.5 billion (USD 20.8 million). The overall annual media ad-spend for 2017-18 at PKR 81.6 billion (USD 680 million) was 7% lower than the preceding fiscal year 2016-17 at PKR 87.7 billion (USD 730.8 million).  

How did the 7% decrease in overall media ad-spend in Pakistan in 2017-18 translate for total advertising revenue per medium and percentage share per medium? According to Aurora, the ad revenue for TV decreased by PKR 4 billion (USD 33.3 million), a decrease of 9.5% in revenue and 2% in share; for print it decreased by PKR 500 million (USD 4.1 million), a decrease of 2.5% in revenue and 1% in share; for digital it decreased by PKR 2.5 billion (USD 20.8 million), a whopping of decrease of 46% in revenue and 4% in share; while for radio it decreased by PKR 500 million (USD 4.1 million), a fall of 17% in revenue but no change by share. 

According to Aurora figures, of the top 10 advertisers (as product category) of print media in 2017-18, the federal government was the biggest spender, up from fourth position the previous fiscal year. In the second position was the real estate sector (first in the previous year), educational institutions at third (second in the previous year), financial services at fourth (third in the previous year) and big pharma at fifth (same position in previous year).

Among the top 10 advertisers (as product category) of TV media in 2017-18, the private sector, particularly the consumer goods and telecom industries, dominated, both on the news channels as well as the non-news channels.

Among the top 10 advertisers (as product category) of radio media in 2017-18, again the private sector, particularly consumer goods, real estate, telecom and appliances industries, dominated.

Influence peddling through cross-media reach

The list of top 40 news media entities according to audience share, according to Gallup Pakistan 2018 data, indicates that several of the media companies own more than one media – including TV, radio, print and internet. This horizontal cross-media concentration expands audience outreach as well as influence for these companies.  

TV channels – big winners: In terms of advertising revenue in the fiscal year 2017-18, according to Aurora figures, of the top 15 biggest TV channel earners, seven were news channels and the rest entertainment channels. Of these the news channels of Geo and Dunya were among the top five earners raking in nearly PKR 4.5 billion (USD 37.5 million) of the total PKR 26 billion (USD 216 million) top 15 ad revenue of the entire TV sector. Of these, the biggest single winner was Geo with its news (Geo News) and entertainment (Geo Entertainment) channels figuring in the top 5 and taking home PKR 5 billion (USD 41.6 million).

Newspapers – big winners: In terms of advertising revenue in the fiscal year 2017-18, according to Aurora figures, of the top 15 biggest newspaper earners, the top five newspapers raked in PKR 9.7 billion (USD 80.8 million) or 56% of the entire revenue of PKR 17.3 billion (USD 144.1 million). Of these the biggest winner was the Jang Media Group with two of its publications, the Urdu-language Jang daily and English-language The News daily, snapping up over half of this revenue at PKR 5 billion (USD41.6 million).  

Influential media: Arguably the single most influential news media group in Pakistan is the Jang Media Group, which has the most popular TV news channel Geo News, the most popular TV entertainment channel Geo Entertainment, the largest circulated Urdu daily Jang and Urdu magazine Akhbar-e-Jahan and the second largest circulated English daily The News and English magazine Mag. Based on its cross-media ownership profile and spread, Jang Media Group has perhaps the greatest combined reach to policymakers, business community and social circles. This is both reflected in the largest market share of advertising for both its electronic and print media titles. Because of its massive audience reach, the Jang Media Group manages to cater to both conservative (its overall Urdu media spectrum) and progressive (its overall English media spectrum) audiences by accommodating both religious and free thinkers amongst its journalists and other content contributors.

The runner up among the influential news media is the Dawn media group with its generally progressive, pluralistic bent in terms of ideology ensuring that the intelligentsia and policymakers remain engaged with its news and entertainment TV and radio channels as well as newspaper and magazines.

A close third would be the Express Media group with its mix of conservatism in its Urdu media enterprises including news and entertainment channels and Urdu newspaper as well as the progressive classes with its English newspaper title.

Digital media: While virtually all offline media in Pakistan have online mirror presence, including some that have strong digital footprint, the online-only media landscape in Pakistan has been steadily growing in recent years catering to the entire ideological spectrum from the religious right to the progressive left. Some of the most inventive and popular current affairs online media in Pakistan include Humsub (a wildly popular opinion and blog site with a massive public generated content that gets a mediated journalistic editorial touch by its administrators), Sujag (an expanding news lens on the mainly Punjab province with a focus on news and human interest stories from its populous districts, which are otherwise generally ignored by mainstream media; and NayaDaur (a news-and-features text-and-video focus on current affairs with a progressive ideological bent. These online platforms are drawing in and influencing a new generation of digital-savvy information consumers and practitioners who are increasingly being ignored by the mainstream media due to a rising regime of censorship offline. However, getting information about the business sustainability and financial landscape of these digital news stars is difficult. None of them, however, have any paywalls and all appear to be at least partly financed by private sector advertisement.

Strong advertisement market seen as driving media sector

According to Magna, Pakistan’s advertising market was expected to grow[ix] by 13.7% in 2018, reaching USD916 million with 73% of media spends concentrated on the TV sector with spending projected to grow by 14% in 2018. According to the report, the 2017 International Cricket Championship (ICC) Champions Trophy and Pakistan’s surprise win over India contributed towards strong media ratings, as did the Pakistan Super League in cricket initiated by Habib Bank Limited and Spark/Blitz of Publicis Groupe. The 2018 elections were expected to create inventory shortage and generate double-digit inflation, according to the report while in 2019 the Cricket World Cup will be a massive driver, yet again, of media advertisement spending on Pakistani media. Digital media in the country is under-developed with just 3% of total media revenues but growing quickly (it grew 47% in 2018 alone). Social media sphere in Pakistan is expanding exponentially, growing a mammoth 70% in 2018.