SK Macharia’s Journey To Immense Wealth – Part 1

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. We uncovered a post on the Jukwaa forum that 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 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 (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.

Continue reading the second part of this series here