Recession hits media funding, hurts press freedom

However, as the global recession hits the media industry hard, hurts small and big players alike and compromises press freedom, MDLF said recently that it has reprogrammed loans to news outlets in the worst affected countries, and launched a Crisis Fund to provide new financing to clients where credit is simply no longer available.

Sasa Vucinic, MD of MDLF, told Bizcommunity.com on 5 July: “The crisis is unprecedented. It has affected all businesses and has dramatically changed business environments. This goes for the media business too. Advertising markets, newsprint prices, delivery and distribution - all of these aspects are now operating under dramatically different business conditions.

“So the best way to assist our clients is not to insist on the repayments that were scheduled in other previous good times, but instead to help them ‘transition' and adjust to these new market conditions created by this crisis. We estimate that they will need between six and 18 months for this transition. We also decreased our previously stipulated interest rate for this year.”

Clients were warned

Vucinic said that MDLF last year warned its clients about the crisis and advised them to, among other measures, sell advertising under as many prepayment arrangements as possible, conserve cash and embark on immediate cost reduction programmes.

Then, as the crisis got into full swing, Vucinic said that MDLF helped clients to develop their ‘crisis plan', reschedule repayments of previous loans based on numbers indicating financial performance of the company, and in some cases gave additional grace periods of two to six months.

MDLF operates in 27 countries and none of its clients has yet had to close shop as the result of this crisis.

Asked if MDLF has helped any SA media company since helping M&G, Vucinic declined to comment, saying that they are not allowed to divulge any ‘confidential' information without the consent of their clients.

MDLF said that it provided working capital to M&G management to transform the newspaper into a financially viable business, and more recently it provided further financing for the company to develop an independent distribution system that is claimed to have helped significantly increase circulation.

In 2007, nearly 29 million people in developing democracies got their news from 30 MDLF clients - an increase of 4 million from 2006.

SA existing media businesses and newcomers are fighting for their lives as the country's economy sinks further into recession.

However, the Media Development and Diversity Agency (MDDA), which was established in 2002 by the ANC-led government in partnership with major print and broadcasting media companies to promote, support and ensure media development and diversity, lacks adequate funds to achieve its goals.

CEO of MDDA Lumko Mtimde said: “General growth in the sector demands a strong, well-resourced funding agency. Currently we receive more than R150 million worth of applications, which means without increased funding, the agency will fail to fulfil its mandate objectives as envisaged by the Constitution Act of 1996.

“The MDDA support is needed on an ongoing basis in underdeveloped areas, as sustainability of some projects is reliant on development of those areas. Therefore, the main challenge for the Agency is increasing its funding base.”

Visit www.mdlf.org and www.mdda.org.za.