Only one media group owns the majority of the magazines in South Africa. Tanya Farber finds out if this is hurting the others in the market.
Even the quickest glance at the pie charts of magazine circulation and advertising market shares in South Africa raises the age-old tension of capitalism. If economic power begets more of the same, is it fair to let that happen until one player’s lion share just gets bigger and bigger until smaller players get gobbled up or disappear completely?
Simply put, some argue that that is the nature of capitalism, and that the free market economy is designed to stimulate competition and let the proverbial pie chart get sliced up as it may. Others say that’s all very well for the sausage factory, but that – because the media industry is a cultural one with ideas and opinion making at its core – it is not a fair model at all and results in media that is not in the public interest.
So what does the local magazine industry look like?
When it comes to advertising market share in the magazine sector, Media24 continues to hover around the 60% mark as it has done for some time now. The rest of the pie is sliced up among Caxton, Avusa, Associated Magazines and RamsayMedia – all of whom have between seven and 11% each.
For circulation market share, Media24 enjoys figures around the 70% mark, while Caxton hovers around 20%, with the others sharing very skinny slices of that remaining 10%.
This is, in effect, an olipoly (an industry dominated by a small number of sellers) with a monopoly at its core.
Paul Jenkins, non -executive chair of Caxton, ascribes Media24’s “juggernaut” dominance to their multi-platform ownership.
“It is a very competitive market out there in terms of advertising,” he says, “and the issue of Media24’s dominance doesn’t just relate to magazine ownership. More the issue is that their dominance is in all sectors of the media industry.”
He says the organisation’s dominance across platforms makes it possible for them to undercut the competition with advertising. It is an economy of scale, plus they have to ability to sell advertising across bundles, and that is what makes it difficult for competitors.”
But, he adds, while Caxton can “hold its own” in the industry and focuses on what it does best, the magnitude of Media24’s dominance is an unhealthy one.
“Apart from a handful of players in the market, everybody else is too small or nonexistent. And what we are looking for is much more robust debate and the emergence of a new breed of publishers who are looking for a voice and have something to say and are able to find a niche in the market,” he says.
He believes there is a danger of the reading population in South Africa declining instead of growing as a result of this uncontrolled dominance.
“What should be a tough but viable business for many years to come may ultimately prove to have a shorter life span than is in the public interest,” he says.
John Relihan, CEO of Media24 Magazines, says that a handful of stronger weekly and fortnightly titles – like Huisgenoot, YOU, Drum, heat, Landbouweekblad, tvPlus and Kuier – by far make up the bulk of their circulation figures.
“Take these out of the equation, and a completely different picture emerges,” he says.
And, what Jenkins sees as an unfair advantage, Relihan sees as a safeguard against risk.
“For any medium–to–large scale publisher, there is an advantage in diversity of portfolio – even large ones specialising in niche genres, like Meredith in the US and its portfolio of women’s interest titles and content entities,” he says. “Sound business principles require risk – particularly fluctuating circulation and advertising revenues – to be spread across the respective publishing genres and advertising sectors.”
With regards to negotiating better rates because of his company’s size, he says: “Discounts do apply throughout the media industry. However, no amount of bulking up, addition of titles to the advertising pot or upping the stakes of the discounting game will guarantee sustained returns if the titles do not deliver on the campaign or brand objectives.”
He says titles that lead in the circulation stakes do so because people buy them. “To us, this means that our content and the editorial mix – at the end of the day the only currency in our business – is right for the intended target market.”
Aspasia Karras, editor of Associated Magazines’ title Marie Claire, offers an editorial perspective on the fierce nature of the competition, and the focus on loyalty rather than the proverbial pie chart.
“Marie Claire, like all women’s magazine titles, has to fight for attention on the shelf, but our advantage is that we are a niche publication not a mass title,” she says, “so we are blessed with a very consistent readership who come to the title with clear expectations and a certain amount of loyalty.”
And, she adds, innovative campaigns are part of the strategy. One such example was the title’s ‘love your body’ campaign where the team asked advertising agencies to design a full page advert that would answer the question, “what will it take to love your body?”
Group publisher at Associated Magazines, Andreline van Tonder, says “Most of Media24’s bigger selling titles specialise in the Afrikaans market, and the fact that they have 70% of the circulation share does not mean it has a negative affect on Associated Magazines. It’s not just about the numbers.”
On the issue of distribution, however, Associated Magazines had to make a hard decision last year to improve performance.
“We continue to fight the battle on the crowded newsstands,” says Van Tonder, “and in May 2011, after a 26-year relationship, we appointed a new distribution partner. We have service-level agreements in place and our distribution partners are delivering on those. We are continually looking for further improvements.”
Jacqueline Lahoud, Getaway publisher (part of the RamsayMedia stable of magazines), says Media 24’s colossal slice of the pie is of no relevance.
“We are not focused on what Naspers do, or own or say, or sell.
“Instead, we are focused on special interest content and not broader based offerings which are under threat.”
She says the group focuses on profitable brands with growth potential, and “being number one in each special interest area”.
This means that “feeding a hungry press or distribution set up” is not part of RamsayMedia’s strategy.
And, she adds, “We do not own companies in India or ISPS in China. We are wholly committed to making a difference in South Africa. Our special interest slice of the pie might be smaller, but it works for us.”