Shrinking Government Advertisements: Is the Media Industry’s Plaint Justified

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Hamid Raza Khan*

*The author is a civil servant currently heading the public relations department of a public sector organization.

Introduction

In the recent months, Pakistan’s media industry and the government have been locked into a drawn-out controversy over complaints by the former that the volume of government advertising which historically served as a lifeline for the print and electronic media of the country, has been drastically reduced by the government. The media industry’s complaint was echoed in a lead editorial by Daily Business Recorder (1 March 2019, p.18) which stated that “government advertising has been cruelly slashed both in quantum and rates under the Pakistan Tehreek-i- Insaaf (PTI) government” and “whatever financial difficulties the media houses had been experiencing before, this ‘gift’ from the PTI government has led to thousands of journalists and media workers losing their jobs throughout the country as a result of the shrinking earnings of all media houses”.

As the financial crisis blamed on plunging advertising revenues lingers on, its effects have also been felt by the electronic media where one 24/7 news channel has closed down and many others, big or small, have been left struggling to keep their operations going. The media industry believes the government is “accentuating the financial crisis the newspapers and TV channels are facing” because of its “failure to release the outstanding government advertisement arrears of the past several years” (Jamal 2019).

Reacting to the issue, All Pakistan Newspaper Society (APNS),  the governing body of the country’s print media, has also publicly accused the government of curtailing the volume of advertising and thereby contributing to the closure of media houses and loss of jobs in the industry (Jang 16 March 2019, p. 1). In a separate statement, the Society has further alleged that the financial woes of the print media are an outcome of the “the policies of the government” which “intends to control the media” (‘APNS assails minister’s controversial remarks about print media’ 2019).

While the media industry sees the government as  the villain   of the peace, the latter has rejected the media industry’s stance by arguing that the financial crunch hurting the media industry is largely an outcome of its flawed business model which needs an urgent revamp to make it more profitable, sustainable and independent of reliance on government advertisements (‘Govt. wants to regulate social media: Fawad’ 2018). The government further opines that the crisis afflicting the media industry is essentially linked with technology because media houses are lagging behind in using modern technology while advertisement platforms are moving from formal media to digital media, forcing the government to allocate one-third of its advertisements to digital media (‘Government to release Rs 7 billion advertisements: minister’ 2019).

Taking a moral view of the situation, the government has contended that it is neither the government’s business to subsidize private media houses, nor is it in the interest of the media industry to depend on government advertisements, as any dependence on external funding compromises the media’s independence (‘Media must revamp models to remain independent: Fawad Chaudhry’ 2019).

Statement of the Problem

As the media industry and the government stick to their respective standpoints on the role of government advertising in the economic wellbeing of the media, this paper critically examines the issue to evaluate how far the media industry’s complaint vis-à-vis shrinking government advertisements is justified and what is the way forward for both sides stuck in this imbroglio.

Historical Background of the Issue

Governments all over the world subsidize their media industries to enable them to produce media content that enhances the quality of public sphere and helps keep a check on the wrongdoings of the government and private sector. Successive governments in Pakistan have also subsidized the media industry in the form of 25% quota in government advertisements for regional newspapers as well as cash grants, which in one case amounted to Rs 300 million given to APNS (Baig, M 2017). The government has also generously rewarded news channels by buying air time at a much higher rate – “around three times higher than the rate charged by the channels from a private company for the same duration and slot” (Jamal 2018). Similarly, the print media has also regularly benefited from 10 to 15% periodical hikes in the rates of government advertisements with the last raise of 15 % granted in February 2017 (Shaikh, 2017).

The media industry’s complaint vis-à-vis curtailed government advertising also stems from the government’s patronage of the media industry which peaked during the last regime when government advertisements worth Rs15.74 billion were given to the media in four years from 2013 to 2017 (‘PML-N govt. gave Rs15.74 billion worth  of ads in four years, Senate told’ 2018). The trend was arrested only   in February 2018 when the Supreme Court of Pakistan, taking notice of “self-promotion at the nation’s expense,” disallowed the use of politicians’ pictures in government-sponsored advertisements (‘Use of politicians’ pictures prohibited in govt-sponsored ads, rules CJP’ 2018). Later, the apex court in separate cases also forced Punjab Chief Minister Shahbaz Sharif to shell out Rs 5.5 million spent on a Punjab government advertisement featuring his picture (‘SC orders Shahbaz to reimburse Rs5.5m to kitty for Punjab govt ad carrying his picture’ 2018) as well as KP Chief Minister Pervez Khattak to deposit Rs 1.35 million for     a similar offence (‘Advertisement case: SC directs Pervaiz Khattak to deposit Rs1.35 million’ 2018).

It was amid this scenario that the PTI government took over in August 2018. The priorities of the new regime vis-à-vis government advertising were clearly spelt out on 28 August 2018 when former Information Minister Fawad Chaudhry told a group of media-persons gathered outside the Parliament House that “the previous government was being run on the basis of self-projecting advertisement campaigns” and “the present government has imposed ban on advertisement campaigns projecting personalities” (‘PTI govt. mulls new body to regulate all media’ 2018).On 17 September 2018, the government set up a ‘Content Committee’ headed by Federal Information Minister and including his counterparts from Punjab and KP to oversee the release of government advertisements to avoid “wastage of national wealth”. Reacting strongly to the Committee, the APNS called it a “surgical strike” on the independence and viability of media and further accused the government of initiating “a policy to control print and electronic media through over-centralization of advertisements which is the backbone of the media’s economy”. It also used the occasion to claim for the first time that “ever since the induction of the PTI government, the quantum of the advertisements released by the federal and provincial governments has drastically declined, causing acute financial crunch and dent to the economy of newspapers, particularly the regional and smaller press” (‘APNS sees govt ‘ad body’ as attack on press freedom, devolution of power’ 2018).

Shrinking    Government    Advertisements:    Analysis    of    Media Industry’s Plaint

 Since voicing its complaint for the first time in September 2018, the media industry has been consistently reminding the government that the declining government advertising revenues lie at the root of the current suffering of the media industry. The issue has also been covered in the national press as well as the social media, including Twitter, with prominent media persons and government ministers exchanging views on the issue.

A close examination of the media issue reveals changing advertising patterns over the last couple of decades in Pakistan, which is mostly led by the explosive growth of electronic media and the emergence of alternative media platforms in recent years. In terms of their share in the advertising spend, the television-print break-up at one point used to be about 50-50. However, the advertising revenues of the print media have been going down, and those of the electronic media going up, since the 90s and the print media share has now come down to 25 to 30% (Shaikh, A 2017). Some Karachi-based advertising firm executives insist that television’s share in the market now stands at 66.4pc compared with the print media share of 10.7pc (Jamal, N 2018). These declining advertising revenues are a real cause of concern for the country’s print media which is represented by APNS which believes that the governments have shown a preference for advertising on television at the expense of print. In view of this, the APNS has long desired for a 50-40-10 proportion for electronic, print and digital (Shaikh, A 2017).

For the print media already looking for ways to increase its advertising revenues, large-scale political advertising used by governments and politicians in power was a chief source of revenue. The industry benefited from this kind of advertising during the PML-N regime. However, the intervention of the apex court in the realm of government advertising and its restriction of the use of politicians’ pictures in government-sponsored advertisements brought the trend of political advertising considerably down.

The assumption of power by the PTI government, which in the  run up to the election had criticized the then government for spending precious taxpayers’ money on “self-projection” was invariably a setback. An examination of the advertising patterns during the last eight months of PTI shows that the PTI government has been very careful   in its spending on display advertising of political nature and most of the government advertisements one sees in the media are classified advertisements consisting of time-bound classified advertising including tender notices, expressions of interest, vacancy announcements, hiring of consultancy services, etc. whose placement in the media is mandated by PPRA rules. This has apparently led to a general resentment within the media industry which feels the government has deliberately reduced the quantum of advertising.

However, while it is apparent that political advertising from the PTI government has suffered a slump, the media industry’s argument that  it has been done by the government to punish or discipline the media requires a careful analysis as the governments follow certain patterns in advertising after coming into power. A clear pattern was visible during the PML-N government as well when the government of Prime Minister Nawaz Sharif chose to spend merely Rs 426 million in the first year   of its rule. However, the volume was raised to Rs 1,095 million in the second year before being further hiked to Rs 2,469 million and Rs 2,119 million in the third and fourth year respectively. The steady increase in government advertisements by the past government does lend credence to the claim made by the present government that the advertisement market was artificially increased between Rs35 billion to Rs40 billion, instead of its actual size of Rs12 billion during the previous regime (‘Govt wants to regulate social media: Fawad’ 2018).

The advertising patterns adopted by the outgoing PML-N government suggest that political  governments  tend  to  spend  less  on advertising when they are in the process of settling in. The PTI government has also barely settled in  its  office  and  it  is  possible that in the coming years, the trend of advertising may pick up with   the government using display advertising ahead of or after launching mega projects or large development projects requiring wider public dissemination and awareness. A statement by the former Information Minister, Mr. Fawad Chaudhry, announcing that the government advertisement budget would touch Rs. 7 billion this year indicates that the government is not shying away from its responsibility of keeping the citizenry informed of vital policy measures (‘Government to release Rs. 7 billion advertisements: minister’ 2019). In view of the above, accusing the government of slashing advertising budgets or expecting it to immediately start indiscriminate display advertising merely to feed media houses falls short of reason.

Similarly, the announcement by Mr. Fawad Chaudhry of banning government advertising aimed at “self-projection” or projection of personalities should be seen in the backdrop of the precarious economic condition of the country and the overall resource constraints the government is facing, as well as the restrictions placed by the Supreme Court of Pakistan of use of politicians’ pictures in “government- sponsored” advertisements.

The media industry needs to admit that it has been lagging behind in using modern technology and building digital platforms that are grabbing a considerable share of advertising nowadays. In Pakistan’s case, digital media was nowhere a few years ago but it took away Rs.  8 billion from the advertising pie in the FY 2016-17. Global forecasts by eMarketer firm show that digital media is estimated to overtake traditional advertising by the end of 2019 (Ha, A 2019). Digital media is also set to grow in Pakistan despite a low penetration of Internet. Given it being cheap and cost-effective, the tendency of organisations, including the government, to use digital media for advertising is understandable. It is probably for this reason that the federal government has announced to divert one-third of its advertising budget to the digital media this year. This should be seen by the media industry not as a discrimination but as an admission of a reality the media industry has failed to see coming.

The media industry has repeatedly complained that the new PTI government has deliberately and “cruelly” compounded the problems of the media industry by scaling down government advertising. However, there is no evidence to suggest that the advertisement budgets allocated to the government departments and ministries in the Federal Budget 2018-19, announced by the outgoing PML-N government, have been withdrawn or scaled down arbitrarily. On the contrary, the ministries and government departments have carried out routine advertising as per assigned budgets without any intervention from the government.

Ever since the media industry first highlighted its financial difficulties, the government has interacted closely with the media industry with Prime Minister Imran Khan giving instruction for the payment of all outstanding government dues following a meeting with APNS office-bearers in October 2018. Later, the government also withdrew 5 % customs duty on the import of news print quota in the Finance Supplementary (Second Amendment) Bill 2019. Similarly, government rates for television channels were also amicably resolved in consultation with and subsequent satisfaction of the Pakistan Broadcasters Association (PBC) even though the new rates resulted in 70% savings for the government (‘Ad rates for broadcast media settled: ministry’ 2019).

At a certain level, the media industry’s complaint regarding plunging advertising revenues rests on the notion that the government funding  of the media is a democratic norm practised all around the world. However, the industry does not realise that the government’s subsidy to the private media is mostly rolled out in the form of tax cuts or reduced licence fees, while direct funding assembled through taxpayers money is channelled mostly towards state-owned public broadcasters. In view of this, the media industry asking the government to double or triple its advertising budgets, is going against the norms. Ironically, while APNS seeks liberal government advertising to buttress up its finances, some sections in the media have already started realising that “the days when government advertising represented the bread and butter of newspapers are arguably over” and private sector advertising, which has grown, if not overtaken, government advertising entirely, can keep print media afloat (‘Imran Khan and the media’ 2018).

Conclusion

In view of cross-examination and analysis of the views on the role of government advertising in the economic well-being of the media, it appears that while the media industry’s complaint vis-à-vis shrinking government advertisements may be justified to the extent of an ongoing slump in the political advertising, however, holding the government unilaterally responsible for drastically reducing the quantum and rates of government advertisements without factoring in the changing media dynamics, the rise of digital media and its increasing encroachment    in the advertising shares of press as well as the court curbs placed on political advertising, is unfair and cannot be entirely justified.

In view of the situation as it prevails, it is important for the media industry to make a realistic assessment of the changing media and advertising dynamics as well as the political economy of media in Pakistan, and pursue a wise and practical course of action that helps it steer out of the ongoing economic crisis. In this regard, the following recommendations are suggested. The media industry must revisit and revamp its financial model to make it more profitable and sustainable. The media industry should leverage latest communication technologies to build alternative media platforms, including digital, to offer more options to the advertisers. The industry should shun its dependency culture as overdependence on government advertising tends to compromise media freedom in view of an advertiser’s desire to extract favourable coverage from the beneficiary media outlets. The media industry should also realise that rather than looking for cash grants or enhanced advertising revenues, it should make a case for justifiable tax cuts or other incentives as offered to growing or underserved sectors from the government. As for the government, it must provide a level-playing field to all media groups by avoiding using government advertisements as a tool to discipline the media. The government should continue to support regional media and adopt a spirit of accommodation in addressing all contentious issues to enable the media industry to achieve its full potential in an enabling and healthy atmosphere.

References

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– ‘Advertisement case: SC directs Pervaiz Khattak to deposit Rs1.35 million’ 2018, The News, 14 December, viewed 13 March 2018, https://www.thenews.com. pk/latest/405847-advertisement-case-sc-directs-pervaiz-khattak-to-deposit- rs135-million

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– ‘Use of politicians’ pictures prohibited in govt-sponsored ads, rules CJP’ 2018, Dawn, 4 April, viewed 13 March 2019,  https://www.dawn.com/news/1399535