Kenya: NMG invests in broadcasting and digital media

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The Nation Media Group (NMG) is diversifying its business across East Africa as part of the strategy to tap into the expected rise in demand for media services as the region's economy gains momentum.

East Africa's largest media house, which recently launched a Rwanda edition of its regional newspaper the East African, said it will be exploring avenues for growth in broadcasting and digital media to strengthen its position in the regional market of more than 120 million people. The firm, however, warned that rising cost of production driven by high energy costs and a weak shilling could slow down profits in the near term.

"Rising cost of energy is driving transport costs up since we rely on road transport to deliver newspapers to the market," said Wilfred Kiboro, the Chairman of Nation Media Group board. "A weakening shilling is also impacting on the cost of news print," he said.

NMG, which cross-listed in Tanzania, Uganda and Rwanda, reported a 37.8 per cent growth in profits after tax to Sh1.5 billion in 2010 compared to Sh1.1 billion in the previous year. Linus Gitahi, the company's chief executive, said the group has prepared a raft of measures to confront the emerging business environment.

"We have re-evaluated group wide risks and recommended suitable counter measures," he said. "Going forward, we will continue to optimise stable operations as a top priority," he said. Gitahi told shareholders at a meeting last Thursday that a large proportion of the group's capital expenditure was in 2010 used to refurbish the printing press infrastructure, support distribution and to invest in broadcasting and digital media.

NMG has hired a research firm, Consumer Insight, to collect consumer trends data across Africa for use in content improvement and is also counting on its investments in new printing presses to improve print quality and increase circulation, Gitahi said.

"We put in place advanced measures to take advantage of emerging opportunities with the installation and commissioning of a new printing presses in Tanzania and Uganda," he said.

Shareholders approved a special dividend of Sh2.5 as part of the company's Golden Jubilee celebrations, pushing the total dividend for the year to Sh8. The board had earlier declared an interim dividend of Sh1.5 and a final dividend of Sh4.

Nation Media Group has been aggressively diversifying its product range in the recent past, aiming to meet the needs of different market segments. In Kenya, NMG publishes the Daily Nation, The East African, Taifa Leo, and the Business Daily newspapers and runs two radio stations, Easy FM and QFM and two TV stations, NTV and e-Africa.

NMG trades in Tanzania through a subsidiary Mwananchi Communications Ltd, which publishes Mwananchi, Mwanaspoti and The Citizen newspapers.

In Uganda, the group operates a television station, NTV Uganda, while the company's subsidiary Monitor Publications publishes The Monitor, My Wedding Magazine and the Monitor Telephone Directory as well as KFM - a radio station.

NMG, which is East Africa's largest media house, has been listed on the Nairobi Stock Exchange (NSE) since 1973 and has been posting profits year-on-year