Kenya’s competitive media scene is set for yet another grand shift with the exit of Regional Reach -- the media and marketing company that owns K24 TV and vernacular radio station Kameme FM.
Beginning October 9, the company that entered the media scene under the leadership of journalist turned marketer Rose Kimotho will hand over its assets to TV Africa Holdings, a media firm linked to the Kenyatta family.
The switch puts TV Africa Holdings, which launched its operations in Kenya with the acquisition of STV from veteran journalist Hillary Ngw’eno, in a much stronger position to fight the bruising battle for control of the vernacular radio market as well as an additional platform in the TV market.
People familiar with the matter said the two media platforms will continue to operate from Nairobi’s Longonot Place, a stone’s-throw away from Kenya Broadcasting Corporation that entered into a business deal with Regional Reach to facilitate the launch of K24.
It is not clear where the change in ownership leaves the KBC-Regional Reach partnership.
Ms Kimotho announced the sale and transfer of Regional Reach’s assets in a gazette notice published on August 14. The list of assets earmarked for transfer includes radio and television broadcasting, rural marketing and other media initiatives.
Regional Reach has been operating on a tight financial budget since the launch of K24. The TV station is said to have put a heavy burden on the company’s finances, forcing its owners to bow out.
Mr David Kimotho, a director of Regional Reach, had not returned our calls for a comment as promised by the time of going to press while Ms Kimotho was said to be out of office.
“What holds businesses in Africa back is a lack of venture capital,” said Kimotho in an article published by Businessweek magazine last year.
“The only way we are going to grow Africa is through business, and business is having people who have faith in [you] putting money behind an idea.”
It was not clear whether the regulators had approved of the takeover deal as Information permanent secretary Bitange Ndemo said he was not aware of it.
“I must assume that Regional Reach followed the law in executing the takeover. I shall check with CCK then let you know,” he said.
The Communications Commission of Kenya, the government agency that is in charge of TV and Radio frequencies, did not respond to our inquiries on the transfer and the status of K24/KBC partnership.
Regional Reach entered the Kenyan media scene with a business model targeted at prospective viewers in rural Kenya without access to a television set at home.
It started off by putting up about two hundred TV sets in public places and using them to advertise different products between scheduled television screenings.
But as technology improved, making it cheaper to set up TV and radio stations, the company broke into the mainstream media scene with the launch of Kameme, a Gikuyu FM radio station that quickly won a large following in Central Kenya.
Offering a combination of music ( 60 per cent), cultural education ( 30 per cent) news and information (10 per cent), the presenter-driven station was set up at the initial cost of Sh40 million.
But it soon found itself in the middle of stiff competition when national broadcaster KBC and Royal Media Services unveiled their Gikuyu stations — Coro FM and Inooro FM respectively.
Its main presenters such as Gathoni wa Muchomba — now managing another Gikuyu station, Bahasha FM — were poached by Royal Media Service’s Inooro FM, tilting the listenership landscape in favour of rivals, at least according to regular media diary reports by Synovate, a consumer market research firm.
But even as the protagonists fought the talent war in the open, a more vicious and highly potent revenues war was under way behind the curtains. To win some of Kameme’s advertisers, rivals offered huge advertising discounts that soon began to eat into the station’s revenues dealing it a commercial blow.
It was in an effort to decrease its dependence on radio that Regional Reach went into TV broadcasting with the launch of K24.
Launched in November 2007 in the heat of political campaigns for the December elections, K24 has been riding on a controversial KBC frequency – a deal that recently came under intense scrutiny in Parliament.
K24’s troubles began after the post election skirmishes. A report published by ET, East Africa’s media review publication, said K24 had to revise its growth projections with the steep decline in advertising revenue that followed the violence.
Sources familiar with the deal say the transfer of Regional Reach assets to TV Africa is linked to the fact that K24 was set up with financing from a local bank in which the Kenyatta family has a major shareholding.
But K24 has been making losses from inception and is said to owe KBC millions of shillings in unpaid use of its frequency.
Earlier this year, Africa Intelligence, a publication that tracks deals and deal makers in Africa, said investment group TransCentury, had taken a further 40 per cent stake in K24 in addition to shares held earlier.
It is not clear whether the KBC partnership with Regional Reach will continue after the transfer of the assets but people familiar with the deal said TV Africa Holdings intends to air its programmes through the STV frequency that has been idle since it was acquired.
K24 which has been broadcasting to Nairobi only, but has announced plans to go countrywide.