Samuel K. Macharia Journey to immense Wealth
He is arguably Kenya’s Rupert Murdoch thanks to his over a dozen thriving radio stations. But the journey has not been easy for media mogul Samuel K. Macharia. Nick Wachira of Jukwaa recently took a look at the bumpy road that the Royal Media Services owner has endured to get to where he is. Here it is;
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 than 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 multi million 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 (IFC) 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.......
SK Macharia’s Journey To Immense Wealth – Part 2
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” and “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. These 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.
SK Macharia’s Journey To Immense Wealth – Part 3
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 poached 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 were 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 catch it in 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 had 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. Later, Afune oversaw the launch of Mulembe 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 Mulembe 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 has increasingly become 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."
Today, SK Macharia’s media empire boasts of 11 radio stations (Radio Citizen, Inooro FM, Ramogi FM, Musyi FM, Mulembe FM, Egesa FM, Muuga FM, Chamgei FM, Wimwaro FM, Bahari FM and Hot-96) and 1 TV station (Citizen TV), which currently has the bragging rights for most viewership.
Labels: Citizen FM, Inooro FM, Mrembe FM, Musyi FM, Ramogi FM, Samuel K. Macharia, Samuel K. Macharia millionaire, Samuel Macharia