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20 successful years of backing independent news — Q&A with MDIF’s Mohamed Nanabhay

The media world has seen major disruptions since the advent of the web, especially when it comes to social media and mobile. While there are a handful of publications and platforms reaping the profits, most are struggling to keep their heads above water. This pressure is especially felt by companies that face unfavourable economic or political conditions, where government often use the internet as a tool for censorship, espionage and control of information.

Yet, in this state of transformation, the MDIF (Media Development Investment Fund) recently had its 20th anniversary, celebrating a total of US$133.6-million invested in 108 independent news businesses that face either economic or political pressure.

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To top that off, the firm managed to become self-sustainable for six years, backing everything from innovative news startups to multi-million national broadcasters.

Incorporated in 1996, MDIF is a New York-registered not-for-profit that provides affordable financing and technical assistance to independent news and information businesses in challenging environments, helping them to become financially sustainable.

Ventureburn recently spoke with the newly appointed Deputy CEO, Mohamed Nanabhay (pictured above), about how the firm is approaching this exciting yet challenging environment of our new media world.

Ventureburn: What is the overarching vision of MDIF? How will your position as Deputy CEO help drive the firm going forward, and are there any specific changes that you plan to bring to the table?

Mohamed Nanabhay: The overarching vision of the MDIF is to invest in independent media around the world in order to provide the news, information and debate that people need to build free, thriving societies.

I’m particularly interested in the challenges and opportunities that the internet and mobile have borne on the news industry. On the one hand, we see some players building massive scale and, on the other, we see deep horizontals. Trying to locate independent media within markets bounded by either language, geography, or population is a challenge that I’m thinking deeply about. The need for these sources to exist is clear — the business models are not.

VB: MDIF has been active for 20 years. Within the last decade or so, the media landscape has undergone a lot of transformation (online journalism, data journalism, social media). How has this influenced MDIF’s approach and how has it adapted to these trends?

MN: MDIF has gone through a major evolution over the past five years, most visibly changing its name from Media Development Loan Fund to Media Development Investment Fund, which better captures the investment of both capital and technical assistance we make.

We held a root-and-branch review of how the organisation can best support its mission of fostering independent news and information. One of the results was a decision to move away from traditional notions of only supporting established news outlets and instead embracing a more inclusive understanding of the types of organisation that make up the current media landscape. Businesses like Colab, an app developed in Brazil that connects citizens and local governments to improve urban living environments, and the Delhi-based Gram Vaani, a voice-based social media platform for the non-literate, complement our investments in more traditional broadcasters and publishers.

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We also realised that news businesses in the current environment need both smaller and larger amounts than we had been able to provide previously. We have to be able to provide relatively small amounts of startup financing for new digital businesses, as well as providing much larger sums to help media companies take advantage of regional and multi-platform opportunities.

We launched Digital News Ventures to provide startup financing to new types of media companies as well as more recognisable online news outlets — it’s now fully invested though we continue to seek out and invest in digital startups — and are in the process of establishing a new vehicle to make much larger equity investments in companies taking advantage

VB: The traditional media landscape is becoming more fragile by the day, given the democratisation of information on the web. What are the major challenges when it comes to investing in these companies? Also, specifically when it comes to those in unstable political environments?

MN: While the richness of information sources available online has had an impact on media companies, the real challenge has been in terms of the changing business models and advertising markets. While attention has moved online and increasingly to mobile, the advertising revenue has not followed suite. And often where it has, platforms are taking a cut of that revenue too. So just like most media companies, these changes that are digital has had an impact on the types of media companies we’d invest in.

Of course, our clients have the additional challenge of operating in sometimes difficult political environments which adds a layer of complexity to these businesses.

VB: Of those MDIF has supported, what have been some of the most innovative, out-of-the-box ways you’ve seen media companies adapt to censorship and unfavourable conditions?

MN: Most of the companies we work with are survivors. Many continue to live through repeated low-level pressure, such as oppressive tax inspections or having to defend baseless defamation cases. Many are also subjected to financial pressure, for example by advertising boycotts, the unfair allocation of government advertising or the discriminatory refusal of broadcasting licenses.

We also have clients that have experienced bombings, death threats and even one who suffered a mock execution in front of his family. Each news business and journalist has their own response, and we support them in whatever way we can.

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Sometimes it can be mundane precautions that pay the highest dividends of protection, like reorganising the structure of a company so the assets are protected from any attempt by the authorities to seize an outlet’s assets, or enhancing digital security to protect against cyber attacks. Several of our clients have had their websites taken down by DDoS attacks, and we have helped them implement a distributed solution.

VB: Does tech enable independent media organisations to overcome main challenges in those kinds of repressive situations?

MN: On the one hand, technology has made the flow of information easier and has allowed small groups (or even individuals) amplify news and information quickly. It is also cheaper to start a news project given the low-cost of publishing (compared to having to physically print a newspaper, for example). On the other hand, we have states using technologies to filter and spy on the citizens and the media.

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So I’m going to hedge and say it can be used for both good and bad. Of course, technology is only one of the levers that those who want to suppress a free press have…

VB: Can the economy act as a catalyst for media censorship?

MN: Speaking of levers for repression, the control of economic resources is often central. In many markets, the state is a major advertiser and some states use this to punish and reward media outlets. So the state just diverts advertising to show it’s displeasure which can have a dire impact on the revenue of a media outlet. In some cases, they can also signal to other businesses not to advertise in a publication which has a knock on effect.

VB: How much have new forms of journalism changed the face of contemporary media?

MN: I think it is still early days for us to really see the impact of some of these new forms.

The areas where we already see a massive impact are on devices and platforms. Mobile has changed how journalism is consumed and platforms such as Facebook and Twitter have changed how news is distributed. Both of these are tremendously disruptive to existing players, including the early web players.

VB: The MDIF website notes the firm’s measurable impact over the past few years, with a reach with over 55 million people. How many profitable exits have you seen through?

MN: MDIF has made equity investments in independent news businesses in nearly 20 countries, ranging from small investments in digital startups to multi-million dollar financing for national broadcasters. While we have made several highly successful exits, we aren’t immune to investments failing from a financial perspective, though we would still call them successful from a mission perspective.

Overall the gains far outweigh the losses and they enabled MDIF to be entirely financially self-sustainable for six years, which is quite an achievement for a mission-first investor.

Image by Joi Ito via Flickr

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