Dr Iqbal Survé finally ended months of speculation last night when he revealed the full shareholding of his Sekunjalo Independent Media consortium.
Everyone was aware the two main shareholders were the Sekunjalo Independent Media (SIM) consortium with 75% and the Government Employees Pension Fund acting through the Public Investment Corporation with 25%. But just who was putting in the money, and how would the shareholding be divvied up?
The consortium comprises trade union investment companies including the Congress of South African Trade Union’s Kopano Ke Matlaka; The South African Clothing and Textile Workers Union investment group; the Food & Allied Workers Union represented by Basebenzi Investments and a special purpose vehicle that will give a 10% stake to employees of the company.
“This introduces a number of new players to media ownership and certainly adds to the diversity of the industry,” says Professor Anton Harber in his blog, The Harbinger. Harber, when the news broke that Sekunjalo was buying Independent Newspapers, wrote a piece in Business Day that said Survé was “being secretive about his consortium’s purchase of Independent News & Media and this is starting to sour his arrival in the news industry”.
Responding to news of the shareholding structure, Harber said, “Dr Survé has chosen to go with an older model of broad-based empowerment, through mostly politically-aligned interest groupings, rather than the large numbers of individual shareholders – a true BBBEE – as one has seen recently in some other companies”.
In a statement, Survé said these were “exciting times for us and the country, and we are happy with the INM Shareholders’ decision. Our advisors from Citibank, ENS, and auditing and tax partners conducted an extensive due diligence and we looked at the business thoroughly. We know we can continue to grow and run this media group profitably.”
He doesn’t foresee a problem with the Competition Commission, and says the approval process is at “an advanced stage”.
The remaining 37% is made up of a number of “broad-based value adding partners” including the Black Business Chamber (Western Cape), various independent South African women’s business community organisations spread throughout the country, represented by Lindiwe Barbara Ngcobo, and Manemele Maria; the Sekunjalo Digital Media, which drive the digital and mobile growth strategy.
Also on the list is the Mvezo Development Trust represented by Nelson Mandela’s grandson Mandla Mandela, which will “provide for the development of the communities of the Eastern Cape”. The Umkhonto Wesizwe Military Association (through the Military Veterans Trust) has been given a stake too. Survé says another shareholder, the Western Cape Development Trust, will focus on the provision of bursaries for journalists from black communities. Finally, some “prominent entrepreneurs and business people” such as Sandile Zungu, and media and advertising personalities Tim Modise and Groovin Nchabeleng from Blue Print Group have a share too.
Harber also pointed out that Survé’s “lead grouping holds a minority, and one wonders why they let it go below 50%. It is not clear how much he personally controls. He does, however, seem to also have a shareholding in the smaller grouping through something called Sekunjalo Digital Media”.
“One can safely say now that Independent Newspapers, the country’s second biggest newspaper groups, is in hands which are closely tied to our ruling party, the ANC. This in itself is neither here nor there, depending on how Dr Survé plays that out and interprets his and his newspapers’ roles,” he wrote. “At least this is now out in the open and we can have the debate about newspaper ownership – despite those who have been arguing that we must debate ownership unless it is black.”
Survé said keeping the names of shareholders close to his chest was a requirement of the transaction, as the deal was a “private and commercial transaction where details of shareholders and funders were typically only made public once all the sale conditions had been fully met and the transaction had become unconditional”
He said “competitor media had unfortunately set about creating a huge amount of unnecessary speculation which had offended the privacy of such arrangements”.
The Media Workers Association of South Africa (MWASA), which is involved in the staff’s Indie Trust, has “warmly” welcomed news of the shareholding. General secretary Tuwani Gumani said the 10% offered to staff would “revolutionise labour relations in the media sector”. It said the SIM consortium’s buying of the group was a “watershed achievement”.
“MWASA’ primary responsibility towards its members is ensuring security of employment and improvement of material, economic and social conditions. We believe this change of ownership which includes staff participation will enhance the status of delivery by MWASA on these aspects of its mandate,” he said in a statement.
But, he warned, “Sustainable job security and prevention of occupational detriment is only possible if SIM indeed bucks the current media divestment trends and expands the operations of the company.”
Guwani said the union believes the media “needs reforms in many respects including in terms ownership structures, promotion of diversity of views, improvement media-product quality and making relevant the role of the media in developmental programmes both locally and continentally”.
There is still one secret element to the SIM deal. The Irish owners stripped the company of its assetsm and it desperately needs reinvestment. Survé says SIM will “at all times” have control of Independent. Funding would come firstly from SIM itself and an international bank. But, he said, “To ensure that the business has sufficient capital resources to reinvest in vernacular titles, digital strategy, reinvigorating existing titles and an African growth strategy additional funding has been arranged which may see a further shareholding/ investment of 20% placed with the Chinese Consortium”. A minority interest, he says.
Harber says this is a “surprise”. “It is odd – to say the least – to be so cryptic, telling us only that they are Chinese, with no further details. We can assume that this is tied to the Chinese authorities, and their push for a greater media presence in Africa as part of their ‘soft diplomacy’ drive for influence on the continent.”