As Samaa drowns in losses, Aleem Khan offers to buy the channel

Why would you buy a television channel in Pakistan? More specifically, why would you buy a news channel in Pakistan? Even more specifically, what would convince a real estate tycoon and a Senior Minister in the ruling party to want to spend Rs3.5 billion of his hard earned money on a television channel that has been making massive losses for years? 

The latest reports from the world of news media are strongly indicating that the Pakistan Tehreek-e-Insaf (PTI) Senior Minister in the Punjab Government, Aleem Khan, is in the process of buying Samaa TV. And while both the management of Samma and Aleem Khan have declined to comment on the matter, employees at the television channel have revealed that layoffs, structural changes, and revisions in HR policy are already underway to pave the way for new management. 

So why would Aleem Khan, or anyone for that matter, want to buy a television channel? With the state of the industry and censorship, it cannot possibly be a love for journalism. With ad revenues down and the digital medium gaining more traction by the day, the profit motive is definitely out of the question. Even if you were to not consider the censorship aspect, and even if you made a big splash and have a lot of resources, chances are that if you started a news channel tomorrow you would be much more likely to bleed out money and fail than you are to make even a small profit.

Yet Aleem Khan is more than interested, and he is not the only one. The reason is that with the possession of a television news channel comes influence. Say, for example, you are a businessman like Aleem Khan that also has political interests. If there is a story breaking about you or your business in a newspaper or on a different channel, all you have to do is mobilize the journalists that work for your channel to tell another version of the story. Anyone that doesn’t comply can be terminated, and everyone will listen because you pay their salaries. 

It is a neat little solution, and one that happens far too frequently. Just last week, Profit reported on how personal the reporting of the news can get with the example of a feud between Bol News and a private company over politics at an elite Karachi school. And if Aleem Khan does manage to buy Samaa it will mean a bit of a shakeup in the Pakistani news industry.

According to a report of the Freedom Network, Samaa News is currently the fourth largest news media channel in Pakistan, behind only Geo News, ARY, and PTV. Samaa has 7% of Pakistan’s television viewers tuning in daily. All of this means that while Samaa might not have massive viewer numbers, but it is important, and it has a lot of influence – which is why Aleem Khan wants to buy it in the first place. Through the 7% of the television watching population that Samaa reaches everyday, Aleem Khan can promote both himself and his party. And while the channel might be at a loss, it makes up for it by providing Aleem Khan the luxury of knowing that he will always have a portion of the media backing him, and the fourth largest national private television channel is not the worst horse to have out on the track. While it might not ever win, it sure can make some noise.

Of course, Aleem Khan is still very much a businessman whose money is precious to him. To get the most out of his investment, he will be looking to try and get those numbers as high as possible. He will also be trying to cut his losses as much as possible, and one of the most sure fire ways to do both those things are layoffs and sensationalism. The downside is the death of quality journalism. 

Profit takes you through the ins and outs of buying a news television channel in Pakistan, and why it might be a good idea despite the cost. 

Samaa and the Zafar Siddiqi connection 

We have two main characters in this story. The first, of course, is Aleem Khan. The other is Zafar Siddiqi. Aleem Khan is a real estate developer and Chairman of the Vision Group. His political activity has landed him in the Punjab cabinet on three different occasions. He is the prospective buyer of Samaa TV. Zafar Siddiqi on the other hand has been thoroughly involved in the business of news media his entire career, launching and re-launching two different channels in Pakistan as well as presiding over their sale. 

There are currently at least 33 licensed television channels on Pakistani cable networks. Most of them are doing abysmally. Currently, other than Geo, which is owned and operated by Mir Shakil ur Rehman of the Jang group, most of the other television news channels are owned by industrialists, real estate developers, or other people whose fortunes and fame come from anything but journalism. Geo’s top two competitors, ARY Digital and Dunya news, are owned respectively by the gold trading ARY Group and Mian Amir Mahmood, the former mayor of Lahore who owns the Punjab Group of Colleges and has stakes in different businesses. Then there are less serious competitors like Gourmet with its GNN and the Axact group with Bol News. 

Yet this was not always the case. The story of television in Pakistan begins with Syed Wajid Ali, the elder brother of Syed Babar Ali of the packages group, signing a joint venture agreement with Nipon Electric Company (NEC) to bring television to Pakistan. The project was quickly taken over by the Ayub regime in 1962, and brought under the information ministry. From here, PTV would be the only programming on Pakistani television sets for three decades. In the 1990s, however, changes were happening both in technology and in possibilities. The formation of the semi-government Shalimar Television Network (STN), which broadcast shows from CNN and the BBC, paved the way for Network Television Marketing (NTM), which became Pakistan’s first private television network. Most of its programming included slots for CNN, BBC, the German DW, and NTM’s own content. 

In the mid-1990s, Zafar Siddiqi could tell that the winds were changing with regards to television in Pakistan. A chartered accountant by profession, Siddiqi had found great success in his field, first starting off as a partner at KPMG Oman. Later on he was promoted to the managing director of KPMG in Pakistan. But the prospect of television was lucrative and attractive, and Siddiqi made the rather significant career change decision. “In the mid-1990s, I spotted an opportunity to launch a TV production house in Pakistan specializing in providing business programmers to overseas broadcasters,” he said in a statement. 

From seeing this opportunity, Siddiqi began to produce various shows which included a business show on PTV, Question Time Pakistan for BBC World, Pakistan Business Week for CNBC Asia, and Business Week for NTM Channel. So by the turn of the century, he was deeply entrenched in the business of news media, not just in Pakistan but very much in the region. Around this time, bigger changes were happening in the Pakistan television industry. 

NTM shut down in 1999 due to financial losses, but it had set in motion the beginning of the private television channel revolution in Pakistan. In 2000, the government finally allowed private broadcasts and for television channels to produce their own content and independently report the news. Very quickly a number of news and entertainment channels began to make their way onto the airwaves. Geo, ARY, Indus, Aaj, and Hum were all launched between 2001-2005. Samaa was also one of the early entrants, making its way to the stage in 2007. 

During this very crucial period, Siddiqi was instrumental. Up until 2003 he continued to produce different shows, and later launched CNBC Arabiya in 20 countries in the Middle East. The channel was the first Arabic language international brand in television news. In 2005, Siddiqi came back to Pakistan and set up CNBC Pakistan. In 2007 he set up CNBC Africa and Samaa TV in Pakistan. He launched Samaa FM in 2009. Siddiqi continued to serve as Chairman of Samaa TV and CNBC Africa to date.

So in Pakistan, trying his best to take control of early mover advantage, Siddiqi was responsible for launching two channels: CNBC Pakistan and Samaa TV. Out of the two, CNBC has already been sold and has gone through a number of rebrands. Samaa is now in the process of being sold, which means what happened to CNBC is telling. 

Prior to CNBC’s launch, Zafar stated that within a year of the launch, CNBC would be listed on the stock market. So far, the only TV channels listed on the PSX are Hum Network Limited with its bouquet of channels including Hum news and the formerly operational Business Plus. An investment of $10.7 million had been made to set up CNBC by VNTV, a Pakistani company that had access to the CNBC global network. However, the IPO did not go through and CNBC was later sold to Vision Network Television Limited in 2015. It was renamed as Jaag TV. Later on Gourmet bought Jaag TV for Rs 1.5 billion and changed the name to GNN.

GNN is the channel that has been bought by the family that owns the chain of Gourmet bakeries. It is another example of a business family wanting to have some media muscle and investing in a news channel that might not be able to turn a profit, but can be used as a vehicle to spread PR and a preemptive defense in case something goes wrong. Jaag, formerly CNBC Pakistan, was sold for Rs 1.5 billion. Samaa is comparatively a much larger fish to fry, which might explain that the price tag for it has been around Rs3.5  billion. Now, this might make sense. Samaa is a larger channel with a larger audience and  it has been a few years since 2015, which means prices should have gone up. The only problem is that now is the worst possible time to be buying a television channel. Censorship is at its height, and the government has massively cut down on ad revenues (rightly so in theory, but not in spirit) which means running a channel into the ground is easier now than ever before. 

A seismic change 

To understand the extent of the influence that the proliferation of private news channels has had on Pakistan, it is worth looking at how much these channels have grown over the years. The earliest point to find the size of the private news channels is a 2012 TAM survey conducted by Gallup. According to their research, back then Samaa was the seventh most watched news channel in Pakistan, behind Geo News and ARY but well ahead of Dunya news. The most watched channel was PTV – because still a majority of the television owners in Pakistan do not have access to cable networks and rely on state run media. And in comparison to PTV and some other entertainment channels, Samaa was a not so important cog in the media machine. 

PTV was the most watched because it was and remains one of the two free channels and does not require cable connection. According to Gallup Media Survey 2010, large portions of Pakistani public, including 81% of Rural Population living in 45,000 villages, simply did not have cable access and therefore cannot watch cable channels even if they are willing to do so. The total number of television viewers in Pakistan back in 2012 was around 122 million. With just over 53 million viewers, PTV Home held nearly 44% of the viewership. Star Plus was a very distant second to PTV Home, and reaches around 17 million people daily, which means a mere 14% of the television watching population. PTV News cames in third with just over 15 million viewers reached daily.

Compared to these numbers, Samaa was a very small channel. It reachesd mere 883,000 viewers daily, meaning only 0.7% of the national television watching population. In the near decade since 2012, however, Samaa’s viewrship has increased ten-fold to nearly 7% of the television watching audience. Similarly, other private television news channels have also seen an increase, with GEO sailing far ahead of PTV News to gain nearly a quarter of the population of viewers, and ARY News getting more than 12%. Meanwhile, PTV News has remaind stagnant at 11% of all television viewers tuning in – most of them still from rural areas with no cable connectivity. 

This points towards the fact that not only has the number of people with access to television grown, but that access to cable television has as well. Normally, this would mean that Zaffar Siddiqi is leaving Samaa in a better position than when he founded it. However, the state of the media has been such that despite the increased number of eyeballs, ad revenues from the government have shrunk and turning out profits has become increasingly difficult. Despite more demand and more people tuning in, channels are barely meeting their costs. This means that anyone whose livelihood depends on the media will not be happy – more scrutiny and no money. But for buyers like Aleem Khan it is an ideal scenario where they can spend money have a large number of people tuning in as they control editorial policy from the shadows.

So is Samaa a good buy? 

Financially speaking, the simple answer is no. While Profit was not able to get the latest financial statements, we were able to have a look at 2016’s accounts. Samaa TV incurred a loss of Rs 1,118,348,327 in 2016 bringing its accumulated losses to Rs 11,148,056,624. As a result, the company was flagged by the auditor as a going concern. Yet, in the notes to accounts for the financial statements of the year ended June 30, 2016, “The Company believes that the losses would be eliminated in the future as the Company’s operations would improve/ increase.”

The only problem is that since 2016 things have only been going downhill for the news media industry, especially ever since ad revenues from the government have been given massive cuts since the new government took power in 2018. Add to that the coronavirus pandemic which has affected all industries, and the financials for Samaa do not make pretty reading. Already in 2016 some of the facts indicated that the channel and the media group were rather bloated. 

Naveed Siddiqi is currently the CEO of Samaa TV. He is an MBA from the Institute of Business Administration. Samaa TV was not his first stint in the media. Naveed had previously worked as a marketing manager for Geo TV in 2005 – 2007. He was then made the vice president of product development at ARY News. In 2010, he joined Samaa TV as Director of Strategic Planning and was then promoted to CEO in 2012. In addition to Naveed, Sara Siddiqi, the daughter of Zafar, also works at Samaa as vice chairman of Samaa TV. She has a master’s degree in international journalism from City University London. In addition to this role, she also runs cutacut, a digital media platform established for a younger audience.

In 2016, Jaag Broadcasting also had non-current assets worth Rs 535,742,699 which include license which had a written down value of Rs 1,095,594 in 2016 with a useful life of 15 years. Advertising revenue stood at Rs 1,947,895,674 in 2016. As per the financials, the company was highly geared with a gearing ratio of 1050%. Samaa TV employed 1,117 employees in 2016 while the CEO earned a salary of Rs 11,652,500 in a year.

These numbers have now all gone down. Moreover, Zafar Siddiqi also seems to be more than happy to sell because he is now getting on in years, and there is no clear person to take over from him as Chairman. At the time of incorporation, Zafar Siddiqi, Javed Faruqi, and Saleem Adil owned 98%, 1% and 1% shares of Jaag Broadcasting Systems. However, as per Media Ownership Monitor Pakistan, Zafar Siddiqi  transferred his shares  Bilal Siddiqi.  Zafar has definitely tried to keep it in the family, and his passion lies in the media. He has authored the book ‘Media 3.0’ as well, but keeping Samaa was almost always an impossible dream in the current climate with the organization bleeding money fast. 

What is in it for Aleem Khan? 

We have already discussed why Aleem Khan or any other politician or businessman would want to have a television news channel at their beck and call. These days, there are only two ways to run a television news channel. The first is to already have one that has been running for decades, and is such a juggernaut that it is charging on ahead by the sheer force of its inertia and how massive the organization is. These would be channels like Geo and ARY. The other way is to have so much money from your other businesses that you can afford to subsidise a channel that may be of use to you in a propaganda war. 

Aleem Khan definitely has that kind of money. The Vision Group was founded in 2012 as a company working on real estate projects. The group has worked on various projects including the Abdul Aleem Khan Foundation, Park View Icon located at I. I. Chundrigar Road, Park View City in Islamabad, Park View Corporate Center at Mall road Lahore, and Park View Signature Apartments at Gulberg Lahore, The National School, and Park View Villas at Multan Road Lahore.

As per his nomination papers for the 2018 elections, Khan owns assets worth over Rs 918 million. His personal property was valued at more than Rs159 million while his ownership of shares was said to be worth more than Rs129.3 million. Khan’s domestic business is valued at a mere Rs90,000 whereas his foreign businesses amount to over Rs8.1 million. He owns 43 registered companies in Pakistan and three outside the country.  Khan earned more than Rs43.9 million in salaries and profits, and gave taxes of over Rs10 million in 2018.

He has also had bad press in the past, to the extent that NAB investigations forced him to resign from the Punjab cabinet. In 2019, however, the National Accountability Bureau (NAB) arrested Aleem Khan in light of the Panama Scandal Investigation, asset beyond means in Pakistan and overseas, and misuse of authority as a lawmaker for his Parkview Housing Society, and acquisition of 1500 kanals of land in Lahore and outskirts.

Once again, we have to stress that as a business decision, purely on the basis of direct profit and loss, buying a channel makes no financial sense. Although the financials presented in this story are based on 2016, it is important to note that it is highly unlikely for massive losses for the company to turn into profits, especially keeping industry dynamics in mind.

Media houses are no longer making the same money they were able to, especially due to the heavy slash in government ads during the PTI government’s tenure. In August 2018, the Senate was informed that the government provided advertisements worth Rs 15.7 billion to print and electronic media from 2013 to 2017. The PTI government aimed at reducing ads to media in order to avoid the notion of buying influence or favors from TV Channels. However, the conditions started deteriorating prior to the elections so one cannot blame it solely on that reason.

As per an article published in Aurora Magazine in 2018, TV accounted for 46% of Pakistan’s news media advertising market worth Rs 4 billion. This was a 9.5% contraction in revenue compared to the previous year and a 2% cut in share against other mediums. The biggest sources for ad revenue come from the Federal Government, Real Estate, Education, Finance Sector, and Big Pharma.

Controlling the narrative 

Since Aleem Khan has declined to comment on the news, we cannot in all earnest claim to know the reasons behind why he might want to buy out Samaa. For all we know, he is a great lover of the free press and will give the channel complete editorial authority and encourage them to report on both him and the party he is a cabinet minister for. However, if we were to take a gander, it would be that Aleem Khan realises owning the means of disseminating information is a great way of controlling what information makes its way out there and how.

Speaking at the launch of his book last year, Zafar Siddiqi was asked why people enter the media business. He said they do it to protect their other business interests and because it “opens doors” for them and that there were very few people who were in the media business who had been in it for a very long time.

Considering the government’s decision to cut down on ad revenue to buy influence in the media, this may be a covert way of PTI trying to send out a favorable message. With elections nearing in, this would not be the most absurd election campaigning tactics. However, if this speculation of intention does turn out true, it will end up in reducing the public’s already decaying trust on independent journalism and media. 

{Editor’s note: An earlier version of this article stated that Samaa TV reached 7% of the entire population, when it actually meant to state that it reached 7% of the national television audience. The error is regretted, and a longer explanation has been added as part of the story.}