Chris Moerdyk joins TheMediaOnline today as columist. In the first of a series of regular opinion pieces, the legendary media and marketing man takes a look at the probability that Independent Newspapers South Africa might just be on the market.
When Independent News and Media Plc (INM) finally gets round to selling its South African operations there is very little doubt that government and more than just a handful of economists will use this as a case history of exactly the kind of foreign direct investment this country doesn’t ever want to have again.
When, in 1994, Irish businessman and international rugby player, Tony O’Reilly, persuaded his company to buy 30% of South Africa’s Argus group and its then iconic brands such as The Star, Pretoria News and Cape Argus, the company employed more than 5 000 people.
Current employee numbers now stand at 1 700.
In 1999 O’Reilly’s group bought up the remaining shares and the company was delisted and since then it has generated about R4.5-billion in operating profits. The South African company, INMSA, has cut costs to the point where they are in danger of ripping open a major artery.
Profits have become increasingly difficult to come by and last year INMSA sold the Cape Times building (Newspaper House) and managed to send about R90-million back to headoffice.
That the South African operations will be sold is pretty much beyond question. Unless, of course, one of INM’s biggest single shareholders, telecoms billionaire, Denis O’Brien, has changed his mind in the past year.
In August last year, O’Brien, who was a major force in removing the O’Reilly’s from the scene, said quite unequivocally that in his opinion the company should sell off its South African operations and invest the funds in the group’s operations in Australia and New Zealand. Talk about rubbing salt into the wound.
From practically every point of view, it will be good riddance when INM finally sells its South African stake.
The exercise has been singularly pointless in terms of benefits to this country and if the process of the current owners talking out as much as they can without putting anything back has been their clear strategy for heaven knows how long, then some of the country’s great media brands could suffer to the point of disappearing.
When O’Reilly first showed an interest in buying a chunk of the then very profitable and well run Argus Group, jokes did the rounds about his interest not being so much wanting to invest in the newspaper business here but rather to be seen to be part of the great transition from apartheid to democracy in 1994.
It was also jocularly suggested by some wags that in actual fact all that rugby-mad O’Reilly wanted was to get his hands on the precious suites the Argus group owned at all of South Africa’s major rugby stadiums.
These jokes soured when O’Reilly was appointed to the board of the South African state president’s special foreign advisory group.
And when he started bringing groups of his friends out for major rugby internationals, one could not help but wonder.
That a lot of O’Reilly ego was involved is pretty much beyond question. The establishment of the Sunday Independent was a classic O’Reilly ego trip. It never really made much money.
For many years now, staff at INMSA have been living on redundancy tenterhooks.
That it still manages to produce quality newspapers – the Cape Times is considered to be one of the best by many journalists in this country – is a testament to the dedication and loyalty of a diminishing band of journalists and editors.
I doubt whether many newspapers the world over are produced under such trying circumstances.
Now, with the potential for profit heading inexorably into pipe-dream territory, the time must be getting awfully close for INM to offload.
There are many former Argus group employees who would hope that it is purchased by South African owners and can be once again restored to the position of the old Argus group at its best, under editors such as Harvey Tyson of The Star whom the Argus board allowed to have complete editorial independence.
There is a group of great journalists who still love newspapers such as The Star. They get together and talk about the good old days quite often. Its not a formal club of ex-Argus journalists but they are mostly all still together. In the Sunday Times newsroom, mostly.
The thing is, whoever buys INMSA won’t be able to or shouldn’t want to, return to precisely the same recipe as the Argus group of old.
Simply because times have moved on.
The new owners will have to understand very clearly the new role of newspapers, which is one that embraces the digital age without making the mistake of giving its content away for nothing.
As an exercise in direct foreign investment, INM’s operations in South Africa have been pitiful.
Fortunately, media brands such as The Star, Cape Times, Argus and others still have value.
Hopefully whoever buys them will have the experience and courage to do the right thing in terms of laying a new foundation based on solid business principles and not ego or ideology.