No, tax breaks can’t save news publications

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By Emmanuel Samarathisa

IT’S official: the media sector is in the gutter. Blighted by losses, newsrooms have been trimming staff. “The inevitable cull,” says an acquaintance. At the time of writing, 543 journalists from the New Straits Times will be jobless. The overall tally is expected to rise threefold as this concerns the entire media group, Media Prima Bhd, which owns the NST, amongst others.

For those 543 men and women, unemployment can either be familiar or foreign territory, depending on who you ask. Rationalisation or rightsizing – as how business people call it to mask the ugly term, layoffs – has been par for the course for a long time, especially in newsrooms.

Even this publication has cut a sizeable chunk of its workforce. I do know what it means to be laid off though when The Malaysian Insider got shut down. Back then I was lucky as I secured a full-time job in a matter of months. Circumstances have changed and I feel luck may not strike twice for me.

But during these harrowing moments, I’d love some comic relief. For that, I look to the government. This time it’s Finance Minister Lim Guan Eng, who brilliantly mooted tax breaks for media companies that can hold onto their staff.

“We don’t interfere in the marketplace but I had a meeting with the corporate bosses of media companies last week (and) they were basically asking about some tax measures and some tax exemptions. Even though we may have our differences, we were very receptive.

“I said in the event we give them tax exemptions, we want them to give us assurances that they will take every step possible not to retrench media employees. No matter our differences, we want to argue based on facts. Let’s argue it out. We do not want to see any loss of jobs,” Lim told the press on Dec 16.

Sure, not having the unemployment index tick slightly higher amounts to a handsome dose of humblebrag. But one can only wonder whether Lim understands the limits of tax exemptions in an industry which many have labelled “sunset” since time immemorial. Business models cannot be sustained by tax breaks.

One might argue that these struggling publications have had their luck run out due to shoddy editorial standards and regime change. True, the mainstream media were vehicles of Barisan Nasional (BN), from Star Media Group Bhd to Berjaya Media Bhd (which owns free daily theSun and now a PN17 firm) to defunct Utusan Melayu (M) Bhd to Media Chinese International Ltd.

BN’s defeat to Pakatan Harapan (PH) at the 14th general election meant that the landscape would see some changes. That is what befell Utusan. BN lynchpin party Umno could only fork out RM1.6 mil to Utusan when the Malay-language paper failed to pay its staff salaries. This would not have been the case if BN had continued to cling on to power. The flipside is tycoon Tan Sri Syed Mokhtar Albukhary now controls Utusan and Media Prima, making him the most influential man in the sector.

The Star, controlled by the MCA, also a party under BN, might have posted a net profit of RM250,000 for the third quarter ended Sept 30, 2019. But that was an 84% year-on-year drop. Revenue has been thinning too.

The good old days
Ironically, during the heydays of mainstream media, these outlets paid handsomely. Former staff speak of perks unheard of today: two months’ contractual bonuses, overtime claims, opportunities to earn extra income and, for some higher up in the newsroom chain of command – retirement. The Star routinely used to pay six months’ bonus. In its heydays, NST paid two months more on top of its contractual two months’ bonus.

To a certain degree, many of these entities will have to reinvent themselves and serve a different master – PH. This is not to say other outlets are fine, too. Instead of politics, some are the vehicles of business tycoons. Media is part of their diversification programme. Listed company Astro Malaysia Holdings Bhd and business publications the Malaysian Reserve, The Edge and the one that you are reading come to mind.

And all business-driven entities have to be, well, sustainable. Once a tycoon feels that such an outlet is not bringing in its fair share of profits and dividends, that person will execute cost-cutting strategies. This is normal in business. But can a profit-driven publication, regardless of the niche it operates in, speak truth to power?

Speaking of business, so far all these entities, save for Astro, have one similarity: they are primarily in print. Sure, all of them have made the digital transition (including us), but the flagship products have been that physical roll of paper you peruse at the nearest bookshop or grocery store.

But pulp, seemingly, is in decline. If Star Media and Media Prima are benchmarks, that sentiment may be true since sales figures have been down for a while. But from my engagement with friends and acquaintances, seemingly the consensus is mixed with most preferring online on weekdays and print on weekends.

Like it or not, the technological disruption is here to stay. Digital natives such as Malaysiakini, Free Malaysia Today and The Malaysian Insight have mined more eyeballs than any of the print giants mentioned above. The Star is an exception with its huge following; it also owns a sizeable online machinery.

That leads media practitioners to that difficult question of monetisation. No one has cracked the code on how to sustain digital media. With Facebook and Google, companies need not fork out hefty sums to place their ads in front of thousands or even millions of customers. But hosting these ads on a news portal is not exactly profitable. Blogs may earn a paltry sum but that is a pittance in running a newsroom.

This is certainly not a problem unique to Malaysian media. Even in the US, where the media scene is broader and deeper, digital pioneers such as Buzzfeed have been struggling to break even and has laid off staff.

Social media platforms such as YouTube have proven to be a goldmine not for money, but reach. Qatari outfit Al Jazeera hosts its English news on YouTube and this is available free, 24 hours a day, seven days a week. YouTube, too, pays peanuts to its “creators,” the jargon used for users who create and upload videos on the platform.

How about a paywall?
Running a paywall might prove profitable? “Might” being the keyword here. Malaysiakini swears by that model, and so has The Malaysian Insight. But whether they are minting money is still up for debate. British newspaper The Guardian recently came out to say that it finally broke even in 2018 after decades of losses. It cut down printing costs and decided to focus on its digital interface through its website and news application. More importantly, it asked (and still does) for donations from its readers. Whether this is workable in the long run, only time will tell.

Problem is, Malaysians surely love their news portals to be, “Free, free, free!” And that leaves publications to be heavily reliant on advertising or patronage. Such a relationship can only mean that sustainability is out the window. Some would even argue that subscriptions aren’t worth the money because only a handful of articles are interesting. What they fail to highlight is that these subscriptions are dirt cheap – the price of an Americano at Starbucks.

Maybe that is what we need: a change of culture. If Malaysians held their news publications accountable through subscriptions, then perhaps there will be a situation where a newsroom can truly perform their fiduciary duty: speak truth to power.

Holding the influential, powerful and wealthy means upsetting stakeholders with heavy purses and is a “crime” news portal can commit if they are funded not by tycoons or large-cap companies, but by readers who want quality reads every day.

This is not a marketing plug-in for my publication. In fact, if we bore you to death, feel free to spend your time elsewhere. But that is precisely the point: subscriptions give newsrooms a tangible benchmark to either improve or fold.

But what do I know? I’m not a businessman and a reader-driven newsroom is a journalist’s fetish, not that of an investor. – Dec 18, 2019