KARACHI: The present crisis, the media industry is going through, took an ugly turn on Wednesday when Geo News, the largest and most watched news channel of the country, announced an across the board pay cut ranging from 10 to 20 per cent and retrenchment of staff in the face of falling revenues and growing costs.
The channel said that the economic slowdown, drastic reductions in advertising budgets of major advertisers and repeated closures of the channels during last few years have hit its revenue hard.
It added that with the aim to eliminate the gap between revenues and expenses and to be able to pay the salaries on time, the channel management has decided to take a number of steps in terms of staff and overheads.
“This would mean that, with a heavy heart, we will need to say goodbye to some of our colleagues and undertake pay cuts for the rest. Therefore, effective immediately, we are reducing by 20 percent the salaries for all employees earning more than Rs 4 lacks per month. This salary reduction is across the board starting from the Chief Executive and Managing Director, Senior Anchors and continuing down the line. 10 percent salary reduction is being done on all team members whose salary is from 110k to 400k per month. No salary reduction is being done on team members that are earning below 110k per month,” the Board of Directors announced in an email sent to all employees of the channel.
The management in its email sent to the employee states:
By now you are all aware of the difficult phase that the media industry as a whole is going through. Over the last few months, media companies across the industry have been implementing retrenchment and cost-cutting.
This situation has been brought about due to an economic slowdown, broadly the consequence of a weakening rupee and a drastic reduction in advertising budgets of major advertisers. This has seriously hit our revenues, while also at the same time increasing our costs.
In addition to above, the Network has been facing a survival crisis for many years now because of repeated closure of channels, which resulted in fall in revenue, forcing the company to bridge the gap through large commercial loans.
We had hoped we would be able to manage the situation through continuing growth of the industry.
However, the situation has continued to worsen. Compared to 2013, GEO News average monthly revenue dropped more than 33%. Since then net costs meanwhile have risen up by 50% both due to competition in salary by non-commercial entities who had funding from illegal/other sources, the falling rupee-dollar parity and the additional costs of debt servicing against the commercial loans that the Network has continued to avail due to the repeated closure of the channels since 2013. As recent as April-May 2018, our channels were shut for almost 60 days, meant that despite continuing operational costs the channels earned much less revenue thus resulting in deficits that again had to be bridged through new commercial loans. The additional costs pertaining to increasing debt servicing and corresponding significantly lower revenues have resulted in the network in its present state as being no longer sustainable.
There are now limited funding options given that all of Group assets including properties and even personal property, homes of the sponsors/owners are mortgaged with the banks. Billions of rs of loans have been taken not for funding new projects, channels, property but to pay for salary and to help the team members not lose their jobs. The Jang Group has had a culture of being the last to fire people if at all. Geo Network is now faced with an existential crisis, something that can only be addressed by taking serious decisions to reduce costs.
We are fully aware of the painful situation that most of our staff is facing today because of delay in salaries and we assure you that we are doing everything to fix that problem permanently. The continuing delay in our team members’ salaries is totally unacceptable.
With the aim to eliminate the gap between revenues and expenses and to be able to pay the salaries on time, we have decided to take a number of steps in terms of staff and overheads. This would mean that, with a heavy heart, we will need to say goodbye to some of our colleagues and undertake pay cuts for the rest.
Therefore, effective immediately, we are reducing by 20% the salaries for all employees earning more than Rs 4 lacks per month. This salary reduction is across the board starting from the Chief Executive and Managing Director, Senior Anchors and continuing down the line. 10% salary reduction is being done on all team members whose salary is from 110k to 400k per month. No salary reduction is being done on team members that are earning below 110k per month.
We are hopeful that through these difficult but necessary measures, along with an improvement in the market situation, we would be able to pay salary on time/clear the backlog by March/April.
Mashallah in 2018, GEO News, GEO Entertainment Network (GEO Entertainment/Kahani), and the Network as a whole compared to all Networks are number 1 in all these rating categories. This is despite us being shut for 60 and 45 days for news and entertainment. However, we are also number 1 in losses at the moment, which leads to delays in salary. This is what we are intending on changing for good.
We are thankful to all the team members who have stood by us in the most difficult of times and we are counting on their continuing support.”