THE RJR Communication Group’s television arm, Television Jamaica (TVJ), will require an investment of $750 million over three years to upgrade to high definition HDTV, according to Gary Allen, the group’s managing director, in a panel discussion with experts about its merger with the media arm of the Gleaner.

Allen said media requires more investment to transition into the digital space within a market of reduced advertising spend. As such, the merger offered a partial solution to capture greater advertising market share.

“We have to find a way to develop more content and higher quality. So part of this was asking how do we go to high definition. TVJ will need $750 million over the next three years to switch over, ” Allen stated on the grounds of the University of West Indies Mona (UWI) on Thursday night.

This is in addition to the company’s recent venture in fee-based streaming of its content online. The RJR Group profits jumped to $22 million for its June first-quarter 2015 or 44 per cent higher due in part to new revenues from its online media entities. On August 5, the directors of RJR and the Gleaner Company Ltd signed an agreement to merge both media entities. RJR views the Gleaner’s online media assets as prime for its shift into monetising digital news content.

On Thursday, the panel discussion entitled ‘The RJR-Gleaner Merger: Implications for the Media Business in Jamaica’ was produced by the Mona School of Business Management (MSBM ) at the Faculty of Medical Sciences. Allen stated that the merger aims to expand the reach of the group, but will result in job cuts.

“There are likely to be job cuts. We are not coming together to stay at the current size”, he said in response to a query from a Carimac media student. “It’s not just about cutting a bunch of people and sending them home. We are going to assess those that are trainable so as to minimise the level of cuts.”

Other media experts on the panel described the Gleaner/RJR merger generally in favourable terms within a market in which both telecom advertisers are themselves seeking advertising. Digicel acquired the regional channel Sportsmax, Telstar, cable operator and Loop, a news start-up, while Cable & Wireless Jamaica (C&WJA) acquired regional cable operator Flow.

Digicel and C&WJA are motivated to get new revenue streams based on reduced SMS text revenue due to free US-based messaging apps, said Kay Osborne, management and communications consultant on the panel.

“But a question to ask: Is it in Jamaica’s best interest for those in telecom to also own media and advertising businesses?” Osborne posited in her presentation.

Annie Paul, senior publications officer, Sir Athur Lewis Institute of Social and Economic Studies at UWI, reasoned in her presentation that the merger will not result in “a loss of choice” for consumers, as both entities will continue their “legacy” products.

The Gleaner and RJR operate the oldest print and broadcast media entities in the island. However, Paul cautioned that the merger should also focus on investing in the production of high quality content and compelling news. For Paul, the formal newsroom represents a major competitive advantage for legacy media over new media entities from the telecoms.

“Capitalise on the fact that legacy media entities have newsrooms and focus on content rather than on advertising dollars,” Paul stated.

Don Anderson, chairman and chief executive officer at Market Research Services Limited, in his presentation viewed the merger as “a good one” within the context of just too many traditional media entities fighting for a reduced potential audience. He indicated that the radio and print audience has dwindled at a time when the Internet audience has doubled.

“Every time someone comes to me to conduct a survey to get into radio, I think they are crazy. I don’t mind the money but the bottom line is that the market has become so dynamic, fragmented and huge, but there are no more than 24 hours to a day and very small [growth] in population. It basically makes no financial sense for all these radio stations to be entering the market, and I hear there are a couple more still coming,” stated Anderson about the market with 25 radio stations and three public free-to-air television stations.

Dr Twila Mae Logan, lecturer in Finance at the MSBM, stated that shareholders have thus far benefited from the rise in the stock price of both the Gleaner and RJR shares.

Within a week of the merger announcement the market capitalisation of the Gleaner and RJR collectively rose by $1.2 billion, sending both stocks to 52-week highs. It’s rare for these established stocks to rapidly fluctuate in price over a short period.