Post by Nick Wachira on Oct 10, 2005 20:22:38 GMT 3
The unlikely media mogul
By Nick Wachira
All that Samuel K. Macharia ever wanted in life was to make toilet paper,
until someone messed up with his ambitions.
But today, he stands tall as a media mogul who owns the biggest radio
network in Kenya with a combined listenership estimated at 70 per cent of
all Kenyans-this was far ahead of the next private-owned radio station in
Kenya. By the last count, his radio stations included: Citizen FM, a Swahili
station, which commands an audience equivalent to 43 per cent of Kenya,
Ramogi FM, Mrembe FM, Inooro FM, Musyi FM which broadcasts in Luo, Luhya,
Kikuyu and Kamba respectively.
By the sheer volume of the people who listen to his stations, Macharia is
now emerging to be the most powerful media and baron in Kenya. Though not
much of his television station, Citizen TV is watched compared to stalwarts
KTN and Nation, the transmission coverage is now larger that that of the
public broadcasters, Kenya Broadcasting Corporation (KBC).
With all these media assets and the audiences they command, advertisers are
beginning to pay attention. Though Macharia's Royal Media attracted a
negligible share of the gross advertising revenue three years ago, according
to industry data, in 2004, the group captured a 10 per cent market share of
the Sh8.4 billion that companies spent on media in Kenya.
In 2005, media planners interviewed by the Financial Standard indicated that
Macharia's stations will increase their market share. The expert argue that
with the media market fragmenting the way it has-already 17 FM stations are
featured in radio dials-in the Nairobi market alone, both national and local
advertisers are enjoying a freedom of choice to target their customers in
ways that they could not do before.
"Though Citizen was not a darling of media planners in the past, it is
becoming increasingly difficult for clients to ignore Macharia's stations,"
says Lenny Ng'ang'a, director, Seracen Media, "Though other stations have
their unique strengths, it is difficult to do a national media plan without
including the various stations owned by Royal Media."
"Kenya is moving from media fragmentation to media segmentation," says
George Lutta, Managing Director, Media Initiative East Africa (MIEA), the
media buying arm of the Scanad Group, "This means that advertisers will be
more interest in buying a specific audience that fits their product profile.
For Citizen FM, it is the low income masses in the rural areas."
But how did a scrappy media group ran by a maverick political operator and
business magnate come to dominate an industry that has not traditionally
opened its doors to outsiders?
Looking back in anger
Sometimes in mid 1970, Macharia, who was then a senior finance man who had
helped draw a revival plan for the troubled Agricultural Development
Corporation (ADC) went on a visit to Italy.
The trip was among other things meant to show them how Kenya could improve
its beef stock by cross-breeding a cow and a buffalo. Macharia was so
impressed, but what really caught his attention were farmer in this little
village who were using appropriate technology to manufacture toilet paper.
It is then that he caught an epiphany that the masses in Kenya in 1974 were
not using toilet paper.
When he came back, he went to the Hilton Hotel a got a roll which he took to
the head of the Kenya Industrial Estate (KIE) and asked them to study
whether making this product-rather than importing from the United Kingdom as
the country did then-could be a viable multimillion shilling business.
Indeed, research by KIE has established that making toilet paper was a
viable project, but the organization could neither fund the business plan
nor incubate the operations because it was too big. Nonetheless, KIE gave
Macharia study paper, which he presented to Stanley Githunguri, the then
head of National Bank of Kenya. He was saw impressed and gave Macharia Sh7
million to start the business. He did not even put up a penny in collateral.
That was the beginning of Madhupaper International Kenya Limited. The
company would become a wildly success business that operated three paper
production lines. In 1982, Macharia also got so ambitious that he drew up a
plan for a pulp producing factory based in Thika. This product made history
in the developing world when the International Finance Corporation (IF C)
gave Macharia an individual loan worth Sh1 billion without even seeking a
repayment guarantee from the government of Kenya. The IFC had never done
this in Africa before. However, this recognition boiled over into a
political persecution campaign by the former Kanu regime against Macharia
that would not only see the project banned in 1982 by the former President
Daniel Arap Moi a day after it was signed, but also start the longest
running legal battle in Kenya's business history that continues up to today.
This also marked the beginning of a colourful love-hate political and
business relationship between Macharia and Moi.
This would later lead to the revolution that would later sweep through
Kenya's media history in the late 1990s.
The Media Politics
"At no time had I interest in the media before the1992 General Elections,"
says Macharia, "I just happened to be a big political adviser and financier
of Jaramogi Oginga Odinga Presidential campaign." That year, he not only
failed in bringing candidate Mwai Kibaki and Kenneth Matiba into a coalition
to trounce President Moi, but he ended up paying expensively for political
ads for Jaramogi on Kenya Broadcasting Corporation (KBC) that were neither
aired or the cash refunded.
But meanwhile, Macharia witnessed the power of radio in action.
"We were making a lot of noises in the urban areas, but in the country,
people did not even know that the opposition existed," says Macharia, "In
the villages, people just believed what KBC Swahili service said." Of course
it never mention the opposition.
In his youth, he had seen the power of radio in spreading propaganda during
the Mau Mau war. The colonial government would try to brainwash the freedom
fighters in the Aberdares Forest through radio broadcasts transmitted from
an aircraft.
Three weeks after the 1992 elections, Macharia-ignorantly-wrote to KBC
demanding a radio broadcast license in a week. He got no replay. Shortly
later, he wrote a threatening letter to the Office of the President
demanding for a broadcast license. This letter was forwarded to the right
address: the Ministry of Information. Macharia soon got an audience with
Minister Johnstone Makau who declined. The next stop was to the office of
A.A.A Ekirapa, who was at the time the CEO of the Nation Media Group. He
tried to convince the Nation to join him in suing the government for a
broadcast license in exchange of a joint ownership deal. This strategy
failed as well.
"By that time I had not even registered a media company," says Macharia, "I
registered Royal Media and gave instructions to Gibson Kamau Kuria to sue
the government." This court battle lasted four years.
During that year, he learnt everything about broadcasting and radio
licensing. This involved spending six months in Geneva to learn how radio
frequencies are allocated to countries by the International
Telecommunication Union and how they are supposed to be distributed to
citizens.
This research guided the Court in awarding a winning verdict for Macharia,
but he could not enforce the order to grant him a license. This meant that
he had to sue Makau and Attorney General, Amos Wako for contempt of Court.
Things were looking so bad for the government and it was not surprising when
he was summoned to State House and Moi promised him a broadcast license in
exchange for political support and dropping contempt proceedings against
Wako and Co., which he did. This saw Macharia dabbling in politics with the
Central Province Development Group. He acquired a licence to run Citizen
radio and television. As a reward, Citizen Radio even managed to negotiate
an equipment co-location deal and rented transmission facilities for Sh10
million a year. Though his radio and television station was not set up soon
enough to campaign for President Moi in 1997, in 1998, he installed
transmission equipment in Limuru and at his house in Karen. He also set up a
studio at AmBank House.
The honeymoon with the Moi government would however not last for long when
Citizen radio went on air because of two programmes, Wembe wa Citizen an
Yaliyotendeka. These two programmes that attacked corruption in both social
circles and in government did not endear Macharia to power people. Though
the government tolerated the stinging criticism for a while, but on 13
December 1999, a day after Macharia was awarded a national medal for his
service to the country, his station was closed down for the first time, but
was put back on air.
However, on January 4, 2000 after airing a critical story critical of the
army top brash, his stations were shut down for a year and re-opened in
January 2001. Four months later, another corruption story would see Citizen
vandalized by the police and shut down.
"I literally gave up," says Macharia, "They took me to court for not
broadcasting without a licence." The government even assigned a High Court
Judge to listen to the case specifically for months, but Macharia lost.
Meanwhile, the government was facing a lot of pressures from foreign
governments and after a visit to the US, President Moi asked Macharia to go
back on air. By then he had learnt the mistake of co-locating his equipment
with the government.
It would take up to January 2002 for Citizen FM to go back on air. By then,
Kanu was banking on support for Macharia's stations.
"I just turned like a chameleon at the end of 2002."
Citizen makes a comeback
While Macharia was playing his political games in the 1990s, a new breed of
media enteprenuers were busy minting money in the radio business. This
included: Capital FM in 1996, Metro East FM, Nation FM, Kameme FM and the
biggest of them all as it would turn out was Kiss FM, owned by Macharia's
business rival, Patrick Quarcoo.
For five years, Macharia and his stations was considered a running joke in
the industry and with advertiser. However, 2002, by a twist of political
fate became his comeback year. Because of his political passions, Macharia
invested heavily in supporting President Mwai Kibaki and the ruling
coalition using Citizen FM and television.
During the campaign, Macharia ran the most vociferous and partisan political
coverage that specifically ran a smear campaign against Kanu's candidate,
Uhuru Kenyatta. It turned out that this is what the country wanted to hear
and all the radio dials turned to Citizen FM.
In December 2002, not only were the ratings of Citizen FM so high, but
because of the investment that Macharia had put in the coverage of the
elections, the crowning moment came when the Electoral Commission called the
presidential election using the provisional polling results reports from
Citizen. Finally, Macharia had come of age a media King maker, a modern day
Kenya's Citizen Kane. Citizen FM was the most listened to radio station that
year.
The smell of money
But still, despite the fact that Macharia curried political favour with the
new government, he was still running a scrappy radio station that did not
attract blue chips national advertising campaigns despite the stations high
ratings. Citizen FM needed some thorough polishing.
To do this work, Macharia lured Fred Afune, a 28-year old advertising man
from McCann Erickson Kenya. Afune as a copy writer had big ambitions to get
into radio, but he did not see any decent openings. After negotiations with
Macharia, he was hired as a programs manager in early 2003. Macharia also
pooched Gikonyo Macharia from Kameme FM to head his marketing team.
Two years on the job, Afune and Gikonyo have emerged among the best brains
in Kenya's radio industry having overseen the launch of five new radio
stations for Macharia and a revamp for Citizen FM. This is the team that
stemmed a confidence crisis that almost rocked the station when five of the
prime time presenters for Citizen FM was poached by Quarcoo's Kiss FM in one
evening.
All this has also happened at a period when Citizen has been pursuing an
ambitious expansion of its coverage. Today, Macharia runs the biggest
broadcast network featuring 48 transmitters. It is the only station one can
listen on the highway between Mombasa and Kisumu. You can even accidentally
caught it Jinja, Uganda.
In December 2004, Macharia completed the expansion of Citizen TV and he
claims that it now has a bigger coverage than KBC's. Starting this year, he
says that Citizen TV's programming content will be overhauled to a larger
audience.
When Afune took over the Citizen job, he came into an industry that was
dominated by Kiss FM, Nation FM and KBC. These stations seemed unshakeable.
However, coming from the advertising side, Afune says that he had noticed
the changing media consumption patterns.
"Advertisers were increasingly getting wary of running advertising campaigns
that were wasteful because all the radio stations were targeting the
consumer with same income profile," says Afune, "We saw this as an
opportunity and targeted Citizen FM to the rural mass market." This is where
the majority of Kenyans lived and it was also a captive audience that we
could easily sell to advertisers. Given that Afune has good credentials in
the advertising circles and he was working as a team with the youthful
Gikonyo, this strategy became a winner with clients.
After a while, Afune-who speaks Kikuyu, Luo and Luhya-saw an opportunity in
the ethnic market. This led to the launch of Ramogi FM and Inooro FM. These
stations became instant hits. In November, Afune led the launch of Y FM, a
youth station that specialize in popular street culture and even broadcasts
news in sheng. Last week, Afune oversaw the launch of Mrembe FM and the next
one will be the Kamba station.
According to Gikonyo, the ethnic stations have attracted national
advertisers because they allow them flexibility when monitoring their sales
strategy.
"It is easy to notice that sales are falling in western Kenya and initiate
an activation on Mrembe FM, instead of running a wasteful national campaign
with messages that other regions do not need to hear," says Gikonyo.
According to Ng'ang'a, radio will increasingly be an important media in
Kenya (its share rose from 32 per cent in 2000 to 46 per cent in 2004)
because it is cheap, compared to print and television.
However, the stations that will win advertising revenues are not those which
"try to be everything to everyone", but those that delivery specific,
measurable audiences."
eastandard
By Nick Wachira
All that Samuel K. Macharia ever wanted in life was to make toilet paper,
until someone messed up with his ambitions.
But today, he stands tall as a media mogul who owns the biggest radio
network in Kenya with a combined listenership estimated at 70 per cent of
all Kenyans-this was far ahead of the next private-owned radio station in
Kenya. By the last count, his radio stations included: Citizen FM, a Swahili
station, which commands an audience equivalent to 43 per cent of Kenya,
Ramogi FM, Mrembe FM, Inooro FM, Musyi FM which broadcasts in Luo, Luhya,
Kikuyu and Kamba respectively.
By the sheer volume of the people who listen to his stations, Macharia is
now emerging to be the most powerful media and baron in Kenya. Though not
much of his television station, Citizen TV is watched compared to stalwarts
KTN and Nation, the transmission coverage is now larger that that of the
public broadcasters, Kenya Broadcasting Corporation (KBC).
With all these media assets and the audiences they command, advertisers are
beginning to pay attention. Though Macharia's Royal Media attracted a
negligible share of the gross advertising revenue three years ago, according
to industry data, in 2004, the group captured a 10 per cent market share of
the Sh8.4 billion that companies spent on media in Kenya.
In 2005, media planners interviewed by the Financial Standard indicated that
Macharia's stations will increase their market share. The expert argue that
with the media market fragmenting the way it has-already 17 FM stations are
featured in radio dials-in the Nairobi market alone, both national and local
advertisers are enjoying a freedom of choice to target their customers in
ways that they could not do before.
"Though Citizen was not a darling of media planners in the past, it is
becoming increasingly difficult for clients to ignore Macharia's stations,"
says Lenny Ng'ang'a, director, Seracen Media, "Though other stations have
their unique strengths, it is difficult to do a national media plan without
including the various stations owned by Royal Media."
"Kenya is moving from media fragmentation to media segmentation," says
George Lutta, Managing Director, Media Initiative East Africa (MIEA), the
media buying arm of the Scanad Group, "This means that advertisers will be
more interest in buying a specific audience that fits their product profile.
For Citizen FM, it is the low income masses in the rural areas."
But how did a scrappy media group ran by a maverick political operator and
business magnate come to dominate an industry that has not traditionally
opened its doors to outsiders?
Looking back in anger
Sometimes in mid 1970, Macharia, who was then a senior finance man who had
helped draw a revival plan for the troubled Agricultural Development
Corporation (ADC) went on a visit to Italy.
The trip was among other things meant to show them how Kenya could improve
its beef stock by cross-breeding a cow and a buffalo. Macharia was so
impressed, but what really caught his attention were farmer in this little
village who were using appropriate technology to manufacture toilet paper.
It is then that he caught an epiphany that the masses in Kenya in 1974 were
not using toilet paper.
When he came back, he went to the Hilton Hotel a got a roll which he took to
the head of the Kenya Industrial Estate (KIE) and asked them to study
whether making this product-rather than importing from the United Kingdom as
the country did then-could be a viable multimillion shilling business.
Indeed, research by KIE has established that making toilet paper was a
viable project, but the organization could neither fund the business plan
nor incubate the operations because it was too big. Nonetheless, KIE gave
Macharia study paper, which he presented to Stanley Githunguri, the then
head of National Bank of Kenya. He was saw impressed and gave Macharia Sh7
million to start the business. He did not even put up a penny in collateral.
That was the beginning of Madhupaper International Kenya Limited. The
company would become a wildly success business that operated three paper
production lines. In 1982, Macharia also got so ambitious that he drew up a
plan for a pulp producing factory based in Thika. This product made history
in the developing world when the International Finance Corporation (IF C)
gave Macharia an individual loan worth Sh1 billion without even seeking a
repayment guarantee from the government of Kenya. The IFC had never done
this in Africa before. However, this recognition boiled over into a
political persecution campaign by the former Kanu regime against Macharia
that would not only see the project banned in 1982 by the former President
Daniel Arap Moi a day after it was signed, but also start the longest
running legal battle in Kenya's business history that continues up to today.
This also marked the beginning of a colourful love-hate political and
business relationship between Macharia and Moi.
This would later lead to the revolution that would later sweep through
Kenya's media history in the late 1990s.
The Media Politics
"At no time had I interest in the media before the1992 General Elections,"
says Macharia, "I just happened to be a big political adviser and financier
of Jaramogi Oginga Odinga Presidential campaign." That year, he not only
failed in bringing candidate Mwai Kibaki and Kenneth Matiba into a coalition
to trounce President Moi, but he ended up paying expensively for political
ads for Jaramogi on Kenya Broadcasting Corporation (KBC) that were neither
aired or the cash refunded.
But meanwhile, Macharia witnessed the power of radio in action.
"We were making a lot of noises in the urban areas, but in the country,
people did not even know that the opposition existed," says Macharia, "In
the villages, people just believed what KBC Swahili service said." Of course
it never mention the opposition.
In his youth, he had seen the power of radio in spreading propaganda during
the Mau Mau war. The colonial government would try to brainwash the freedom
fighters in the Aberdares Forest through radio broadcasts transmitted from
an aircraft.
Three weeks after the 1992 elections, Macharia-ignorantly-wrote to KBC
demanding a radio broadcast license in a week. He got no replay. Shortly
later, he wrote a threatening letter to the Office of the President
demanding for a broadcast license. This letter was forwarded to the right
address: the Ministry of Information. Macharia soon got an audience with
Minister Johnstone Makau who declined. The next stop was to the office of
A.A.A Ekirapa, who was at the time the CEO of the Nation Media Group. He
tried to convince the Nation to join him in suing the government for a
broadcast license in exchange of a joint ownership deal. This strategy
failed as well.
"By that time I had not even registered a media company," says Macharia, "I
registered Royal Media and gave instructions to Gibson Kamau Kuria to sue
the government." This court battle lasted four years.
During that year, he learnt everything about broadcasting and radio
licensing. This involved spending six months in Geneva to learn how radio
frequencies are allocated to countries by the International
Telecommunication Union and how they are supposed to be distributed to
citizens.
This research guided the Court in awarding a winning verdict for Macharia,
but he could not enforce the order to grant him a license. This meant that
he had to sue Makau and Attorney General, Amos Wako for contempt of Court.
Things were looking so bad for the government and it was not surprising when
he was summoned to State House and Moi promised him a broadcast license in
exchange for political support and dropping contempt proceedings against
Wako and Co., which he did. This saw Macharia dabbling in politics with the
Central Province Development Group. He acquired a licence to run Citizen
radio and television. As a reward, Citizen Radio even managed to negotiate
an equipment co-location deal and rented transmission facilities for Sh10
million a year. Though his radio and television station was not set up soon
enough to campaign for President Moi in 1997, in 1998, he installed
transmission equipment in Limuru and at his house in Karen. He also set up a
studio at AmBank House.
The honeymoon with the Moi government would however not last for long when
Citizen radio went on air because of two programmes, Wembe wa Citizen an
Yaliyotendeka. These two programmes that attacked corruption in both social
circles and in government did not endear Macharia to power people. Though
the government tolerated the stinging criticism for a while, but on 13
December 1999, a day after Macharia was awarded a national medal for his
service to the country, his station was closed down for the first time, but
was put back on air.
However, on January 4, 2000 after airing a critical story critical of the
army top brash, his stations were shut down for a year and re-opened in
January 2001. Four months later, another corruption story would see Citizen
vandalized by the police and shut down.
"I literally gave up," says Macharia, "They took me to court for not
broadcasting without a licence." The government even assigned a High Court
Judge to listen to the case specifically for months, but Macharia lost.
Meanwhile, the government was facing a lot of pressures from foreign
governments and after a visit to the US, President Moi asked Macharia to go
back on air. By then he had learnt the mistake of co-locating his equipment
with the government.
It would take up to January 2002 for Citizen FM to go back on air. By then,
Kanu was banking on support for Macharia's stations.
"I just turned like a chameleon at the end of 2002."
Citizen makes a comeback
While Macharia was playing his political games in the 1990s, a new breed of
media enteprenuers were busy minting money in the radio business. This
included: Capital FM in 1996, Metro East FM, Nation FM, Kameme FM and the
biggest of them all as it would turn out was Kiss FM, owned by Macharia's
business rival, Patrick Quarcoo.
For five years, Macharia and his stations was considered a running joke in
the industry and with advertiser. However, 2002, by a twist of political
fate became his comeback year. Because of his political passions, Macharia
invested heavily in supporting President Mwai Kibaki and the ruling
coalition using Citizen FM and television.
During the campaign, Macharia ran the most vociferous and partisan political
coverage that specifically ran a smear campaign against Kanu's candidate,
Uhuru Kenyatta. It turned out that this is what the country wanted to hear
and all the radio dials turned to Citizen FM.
In December 2002, not only were the ratings of Citizen FM so high, but
because of the investment that Macharia had put in the coverage of the
elections, the crowning moment came when the Electoral Commission called the
presidential election using the provisional polling results reports from
Citizen. Finally, Macharia had come of age a media King maker, a modern day
Kenya's Citizen Kane. Citizen FM was the most listened to radio station that
year.
The smell of money
But still, despite the fact that Macharia curried political favour with the
new government, he was still running a scrappy radio station that did not
attract blue chips national advertising campaigns despite the stations high
ratings. Citizen FM needed some thorough polishing.
To do this work, Macharia lured Fred Afune, a 28-year old advertising man
from McCann Erickson Kenya. Afune as a copy writer had big ambitions to get
into radio, but he did not see any decent openings. After negotiations with
Macharia, he was hired as a programs manager in early 2003. Macharia also
pooched Gikonyo Macharia from Kameme FM to head his marketing team.
Two years on the job, Afune and Gikonyo have emerged among the best brains
in Kenya's radio industry having overseen the launch of five new radio
stations for Macharia and a revamp for Citizen FM. This is the team that
stemmed a confidence crisis that almost rocked the station when five of the
prime time presenters for Citizen FM was poached by Quarcoo's Kiss FM in one
evening.
All this has also happened at a period when Citizen has been pursuing an
ambitious expansion of its coverage. Today, Macharia runs the biggest
broadcast network featuring 48 transmitters. It is the only station one can
listen on the highway between Mombasa and Kisumu. You can even accidentally
caught it Jinja, Uganda.
In December 2004, Macharia completed the expansion of Citizen TV and he
claims that it now has a bigger coverage than KBC's. Starting this year, he
says that Citizen TV's programming content will be overhauled to a larger
audience.
When Afune took over the Citizen job, he came into an industry that was
dominated by Kiss FM, Nation FM and KBC. These stations seemed unshakeable.
However, coming from the advertising side, Afune says that he had noticed
the changing media consumption patterns.
"Advertisers were increasingly getting wary of running advertising campaigns
that were wasteful because all the radio stations were targeting the
consumer with same income profile," says Afune, "We saw this as an
opportunity and targeted Citizen FM to the rural mass market." This is where
the majority of Kenyans lived and it was also a captive audience that we
could easily sell to advertisers. Given that Afune has good credentials in
the advertising circles and he was working as a team with the youthful
Gikonyo, this strategy became a winner with clients.
After a while, Afune-who speaks Kikuyu, Luo and Luhya-saw an opportunity in
the ethnic market. This led to the launch of Ramogi FM and Inooro FM. These
stations became instant hits. In November, Afune led the launch of Y FM, a
youth station that specialize in popular street culture and even broadcasts
news in sheng. Last week, Afune oversaw the launch of Mrembe FM and the next
one will be the Kamba station.
According to Gikonyo, the ethnic stations have attracted national
advertisers because they allow them flexibility when monitoring their sales
strategy.
"It is easy to notice that sales are falling in western Kenya and initiate
an activation on Mrembe FM, instead of running a wasteful national campaign
with messages that other regions do not need to hear," says Gikonyo.
According to Ng'ang'a, radio will increasingly be an important media in
Kenya (its share rose from 32 per cent in 2000 to 46 per cent in 2004)
because it is cheap, compared to print and television.
However, the stations that will win advertising revenues are not those which
"try to be everything to everyone", but those that delivery specific,
measurable audiences."
eastandard