Sarmad Ali Discusses Changes in Payment Policies for the Media Industry at PID

Sarmad Ali, the recently elected President, APNS talks about the Press Information Department’s (PID) new media payment policy and how it is detrimental to the newspapers industry, and the need for “perpetual governments” to clear media payments.

Synergyzer: The government has restructured the PID with the objective of bringing transparency and awarding business on merit to media outlets. What are your thoughts on it as a representative of the print, media industry?
Sarmad Ali: Firstly, the government has not restructured the PID; rather it has changed its policies, including the policy to release advertisements and make payments.
Earlier, the government would pay the advertising agency in full, which in turn would pay the media outlets. However, some circles were under the impression that agencies were not paying the media. So the government introduced the 85:15 policy.  According to this, the government would pay only 15% to the agencies and 85% directly to the media.
Secondly, classified advertising of all government departments, corporations, autonomous and semi-autonomous bodies is being released directly to the media by PID and the role of advertising agencies has been eliminated. In theory, it is a great concept. But in practice it has its drawbacks. For instance, very little payment has been made to the newspapers given April 2020 when the policy was implemented.
Thirdly, PID has sent instructions to all government departments, ministries, corporations and autonomous bodies saying that they cannot chose the media that they want to advertise in.  Rather, PID will decide on their behalf. The client-departments can only specify the geographical market, the number of newspapers, budget and the language of the newspapers. They cannot ask for any particular newspaper by name.
The genesis of this goes back to the National Publicity Conference 1964 where it was first proposed that the DFP (later PID) will chose newspapers for the client-departments keeping in view government policies. This was done in order to use advertising as a political tool and arm twist independent newspapers. It is an outdated concept and much has changed since 1964. The clients know their target market better than PID. They know their target audience and what they want to achieve through their advertising, but that authority is no longer with them. Earlier that the client-departments had the right to propose their media plan and PID had the discretion to delete or add any newspapers from that client-department’s proposed list of newspapers.
Fourthly, in 1984, it was agreed between the Ministry of Information and APNS to have a 25% quota reserved for regional press. The big newspapers voluntarily agreed to the government’s subsidized rates in return for this quota for the regional press.

“The cost of doing business has gone up; there is almost 20% inflation. Instead of increasing revenue flow, the government has actually considerably curtailed it.”

Synergyzer: The PID has decided to pay publishers and electronic media outlets directly instead of, as was the case earlier, routing them through agencies. However, a 15% agency commission is still mentioned in the document released by the PID. Is this 15% commission for advertising agencies or media buying?
Sarmad: There’s no concept of media buying in government, and media buying houses cannot be enlisted for government advertising. Only ad agencies accredited by the All Pakistan Newspapers Society (APNS) – for print – and the Pakistan Broadcasters Association (PBA) – for television – can work with the government. The process is that the ad agencies give release orders for the ads, but the invoice is made in two parts — specifying 85% for the media and 15% for the agency — Because of the belief that some ad agencies were delaying payments to the media outlets even after receiving them from the clients, the government through that the issue will be resolve if the payments were made to the media directly. However, since April, very little has been paid to the newspapers and this policy has added to the financial woes of the newspapers.

Synergyzer: For the past couple of years, due payments to the media were not being made by various government departments, which affected media businesses extremely negatively.
Sarmad: There are two types of advertising. One is display — the advertising campaigns that you see — and the other is classified — tender notices, job opportunity ads and so on.
Till 1999, the corporations, autonomous bodies and semi-autonomous bodies were releasing their classified ads through their own advertising agencies, while ministries and departments released theirs through the PID.
In that process, payments of the classified advertising was at times delayed by five to seven years — an unreasonable amount of time. Whenever the budget came, the APNS – went to the Finance Minister, Prime Minister or the President, requesting them to settle payments through the new budget. But, if the outstanding amount was let’s say Rs. 500 million at the time, we only received Rs. 300 million, while the remaining Rs. 200 million remained unpaid and was added to liabilities.

“The government client-departments know their target  market better than PID. They know their target audience and what they want to achieve through their advertising.”

This erratic system continued till 1999, when a joint delegation of the APNS and the Pakistan Advertising Association (PAA), went to Mushahid Hussain, the then Minister for Information, requesting him to change the process and bring advertising agencies to the forefront by  giving them classified advertising as well.  This he did. Ad agencies began receiving full payment, and then paid out the dues to the media. Even then, government departments never made payments on time, taking six months, nine months, even years. This had worked very well for years.  However, as quantum of government advertising started increasing, the delayed payments by the government for started pinching the agencies resulting in delays. Most agencies tried making payments as per clearance cycle to APNS. However, sometimes, they would ask for extensions of a few months. This had continued till April last year.  In the last couple of years, some agencies defaulted in paying their media dues. But this was mostly as stated above, due to their payments being stuck with their government clients.
Currently, very little payments have been made since the introduction of the new policy to the print media. So there has been no improvement in the government system; and payments are more delayed than they were in the previous system.

Synergyzer: How much of the non-payment issue has been resolved by now?

Sarmad:  There is an outstanding amount of the Federal Government of around Rs. 2 billion split into three periods:  Rs. 1.06 billion for the PPP (2008-2013); Rs. 270 million for the PML-N (2013-2018); and about Rs. 700 million for the current PTI government.
Each regime made payments incurred during its own period, but chose not to clear the dues of the previous governments. For instance, when the PPP government ended in 2013, the succeeding PML-N stopped all payments from the PPP era. When PTI came in, it stopped PML-N payments. That’s how the debt has accumulated over the years.
A portion of this debt has been paid recently, but like any circular debt, this has badly affected the media industry’s financial sustainability.  We need to understand, that when a media house does not get paid for years, it cannot pay staff salaries and may even have to downsize.  With this accumulated circular debt this is what’s happening in Pakistan’s media industry today.
For the media industry like any other industry, the governments are in perpetuity.  Their liabilities do not change with change in the political power.  Whoever is in power must honor previous commitments and pay the debts because it was the government of Pakistan, not Zardari Sb or Mian Sb or Imran Khan Sb, that released these advertisements.  This 2 billion is only the Federal Government owes to the print media.  There are Punjab, Sindh and KPK government advertising debts that go far beyond this figure.

Synergyzer: Has the new system brought any improvements?
Sarmad: I feel the older system of the government paying the agency, which in turn paying the media, and the classified being released by the agency was better.
Initially in this new system, people were very happy that they would receive their dues directly from the government, but because liability has now moved from the ad agencies to the government client-departments, corporations and ministries, the ensuing bureaucratic red tape is causing delays. Earlier, we had the option to suspend an agency if the dues had not been paid.  But now we cannot suspend it even if we go unpaid for a year.
So there’s tremendous pressure on us from our members, especially the smaller and regional newspapers, who — as a result of not being paid — are unable to sustain operations.  Our members are consistently demanding to first suspend advertising of departments/corporations who have not paid and eventually the advertising of the entire government. For perspective, I would like to add that APNS had previously suspended advertising of the Federal, Punjab and Sindh governments during PPP and the PML-N tenures. So far we have avoided taking such extreme measures but we are being left with very little options.

“The governments are in perpetuity. Their liabilites do not change with change in the political power. Whoever is in  power must honor previous commitments and pay the debts because it was the government of Pakistan, not Zardari sahab or Mian sahab or Imran Khan sahab, that released these advertisements.”

Synergyzer: The current government has also mandated that any department that advertises must have sufficient funds to pay for its campaign. How does that help matters in any way?
Sarmad: This is a great step. The Punjab government started this, and the Sindh government is also following suit. If implemented in letter and spirit, this will resolve many of our industry’s issues.

Synergyzer: Another attempt towards greater transparency is auditing campaigns by the PID’s Directorate of Electronic Media and Publications (DEMP). What will be the mechanics of this audit and does it apply to the media outlets?
Sarmad: It’s not an audit as such. The DEMP is part of the Information Ministry and keeps track of what government advertising is being aired. Whenever a department releases ads through the PID, the television channels invoice is sent to the DEMP to verify whether the ad actually ran or not. It’s similar to third-party audits by media tracking companies. Once DEMP gives its report, the government is supposed to make the payment.

“In the new system where the government is paying the media directly, liability has now moved from the ad agencies to the government-client departments, corporations and ministries, the ensuing bureaucratic red tape is causing delays. Earlier, we had the option to suspend an agency if the dues had been not been paid. But now we cannot suspend it even if we go unpaid for a year.”

Synergyzer: According to federal guidelines, agencies must certify they have cleared all previous dues relating to any government department. Since the government has not been able to pay agency dues previously, how does it expect the agency to clear all such payments?

Sarmad: There are two aspects to this.
One relates to payments before April 3, 2020. If the government has paid the agencies and the agencies have not paid the media, then it makes sense to ask for a certificate. But if the government itself has not paid the agencies, then how can it penalize them?
The second aspect relates to advertising released after April 3, 2020. The government is now paying the newspapers directly for display advertising on 85:15 basis, so how can the agencies be asked to give such a certificate.  It is therefore, meaningless and superfluous.

Synergyzer: PID changing its payment policy and limiting advertising will have a major impact on the industry, even if it is for the sake of transparency and business awarded on merit. How do you see media agencies mitigating the financial footfall that used to be there due to government advertising?

Sarmad: Print media had become largely dependent on government advertisering. For bigger newspapers, such as Jang, Dawn, Express, Business Recorder, Dunya, Nawa-i-Waqt for instance; 20–25% of advertising revenue source is government. For smaller and regional papers, up to 95% is government revenue. In the last few years, government advertising has declined significantly; the amount of print advertising released by the Federal Government last year is equivalent to what was released during Pervez Musharraf’s time. And it is almost 60% less than what was released in 2018.
The cost of doing business has gone up; there is almost 20% inflation. Instead of increasing revenue flow, the government has actually considerably curtailed it. This has resulted in many newspapers being on verge of shutting down. Bigger publications are laying off staff. They are delaying and even cutting salaries. Because when 20%-25% of your advertising is suddenly eroded, what do you do? This is one critical factor that the government needs to address.
The APNS has requested the government to at least increase the advertising to what was being released by the federal government in 2018. Secondly, we have requested an increase in advertising rates. The last time government rates were increased was in 2016. Thirdly, we have asked the government to give a stimulus packages to print media by allocating a special budget for awareness campaigns like Covid, Health, Vaccination etc.  The ECC has recently approved a reasonable amount for this, which is a very positive step and can help in the revival of newspapers.

“Print media had become largely dependent on government advertising. For bigger newspapers, such as Jang, Dawn, Express, Business Recorder, Dunya, Nawa-i-Waqt for instance; 20-25% of advertising revenue source is government.”

Synergyzer: Is there anything you would like to add?

Sarmad: As I mentioned before, government client-departments know their market better than the PID. If that’s not taken into consideration, then, to a great extent, advertising becomes useless. For instance, a shutdown notice for HESCO — which is the Hyderabad Electric Supply Company — being advertised in Faisalabad is useless.
In 2012, the PID and APNS signed a memorandum of understanding (MoU) which stated that the client-departments will have the right to suggest their own media and the PID will have the discretion to add or delete any newspapers from that proposed list. PID also has the discretion to add 25% newspapers for regional press quota.
In October last year, we had a joint meeting with the information ministry offices with APNS and PAA both present. In this meeting, it was decided that classified ads will also be released through advertising agencies on 85:15 basis. This decision is yet to be implemented. APNS clearly gave its point of view, as a stakeholder in the government’s advertising process, along with the PPA. We have urged that the 85:15 formula is not viable for the print media; if we were to revert to the old system, it should be ensured that once the advertising agencies receive their payment, they must pay to the newspapers without any delay.
Classified advertising should also revert to the advertising agencies and the right to choose, select or proposed media must be with the client departments. Period.