Do foreign media owners exploit local media?
Back in 2009, local media reported that Irish businessman Tony O’Reilly’s Independent News and Media Group South Africa (INMSA) was going to have to sell its South African assets, which included 14 newspapers such as The Star, the Pretoria News and the Cape Times.
At the time, Caxton professor of journalism and media studies and director of the journalism programme at the University of the Witwatersrand, Anton Harber ,blogged: “O’Reilly at first reorganised, invested in and grew the South African company that he bought for a pittance from Anglo American, but for the last few years he has treated it like an extractive industry – pulling every ounce of profit he could to subsidise his failing London newspapers. The South African operation has been cut to the bone and beyond, to the point where all the papers have suffered and some have become sad shadows of themselves. O’Reilly’s oversized ego has meant a reluctance to do the sensible thing and close or sell its losing London operations.”
Harber was echoing the opinion of many observers of the South African media. INMSA’s newspapers were the most profitable in the group, yet there was no reinvestment in these titles.
John Spira, former business editor of The Star and now a communications and reputation management consultant, says, “The Irish erred in adopting a policy of cutting overheads to the bone. Included in this approach was a suicidal strategy designed to replace experienced and highly competent journalists with rank novices. The bottom line thereby improved but quality suffered. Hence, circulation numbers dwindled, along with advertising revenue.”
For many, INMSA’s case has become an embodiment of the problems with cross-border media ownership. But, says former Weekly Mail director Reg Rumney, “I think worldwide there is a suspicion of foreign media ownership. This is because media are perceived as being politically influential and connected to the national interest. Foreign media may not operate in the national interest… and might be used to further a foreign agenda.”
However, he adds, cross-border ownership of media is not necessarily an exploitative relationship. “We’ve had mixed experiences of it here… It can mean growth; it can be a positive thing.”
He cites the example of The Guardian in Britain, which held a majority stake in the Mail & Guardian (M&G). “I doubt whether they made any money off their investment, but it saved the newspaper from ruin,” says Rumney, who had a long career at the M&G, where he was business editor, managing editor and then a director until 1996.
“The Guardian was a good owner. They never ever told us what to publish. They did at some stage suggest fewer dead bodies for an easier read! But they were very hands off,” he says.
When Peter Bruce was editor of the Financial Mail in the late 1990s, adds Rumney, he was a staunch supporter of Bantu Holomisa and his United Democratic Front party. “[Cyril] Ramaphosa was then chair of [FM proprietor] Avusa and he didn’t like this at all. He was furious, in fact. But he couldn’t do anything about it. The 50% ownership by Pearson did protect editorial independence at the time, so that’s an actual example of how foreign ownership can work in your favour.”
Pearson has since disinvested from what is now the Times Media Group.
Spira says that the issue is less about the nationality of the owners and more about their moral compass. “Foreign ownership of media is a somewhat open-ended issue, since the quality or otherwise of such ownership is dependent on the quality and intentions of the owner/prospective owner,” he says.
South African media commentators were hopeful for the resuscitation of the Independent last year, when Dr Iqbal Survé bought into the group. However, this was clouded by Survé’s reaction last year to journalists’ questions about the size of South African and Chinese state entities’ stake in the Independent group.
And then came the dismissal late last year of Cape Times editor Alide Dasnois, which was widely seen as censorship. Dasnois had run a front-page story on a report by the public protector that implicated Survé’s company Sekunjalo.
Dasnois was followed by Chris Whitfield, editor in chief of the Independent titles in the Western Cape, who took early retirement in January, reportedly due to unhappiness with Survé’s management style.
Spira says the Irish Independent understood when they bought the Argus 25 years ago that editorial interference would compromise the credibility of the newspapers. The negative consequences of the acquisition were “not on account of direct interference in those newspapers’ editorial policies. Rather, the harm done by the Irish resulted from financial myopia”, he says.
“In contrast, the new owners of Independent Newspapers have clearly entered the media fray with a political agenda. Now… any form of criticism of the new shareholders is evidently totally unacceptable. And with most of the new shareholders aligned with government interests, it can only be a matter of time before previously independent and objective editorial strategies are manipulated to accord with the policies and views of the new shareholders.”
Media ownership in general is an emotional issue all over the world, because the media are perceived to be an important factor in national identity and a lynchpin of democracy. Many countries have laws governing cross-border proprietorship. Media magnate Rupert Murdoch famously gave up his Australian citizenship to become an American in 1985 because he wanted to get into broadcasting there and the law prohibited foreigners from holding majority stakes in TV networks.
The regulation of broadcasting is considered especially important because airspace is a finite resource, says Professor Pippa Green, University of Pretoria head of journalism. Broadcast law expert and consultant Justine Limpitlaw agrees and adds, “Broadcasting especially is so important to who we are as South Africans. Traditionally the government has thought it important to keep that voice authentically South African and the law reflects this.”
Limpitlaw says that in South Africa there is a restriction of 20% on the foreign ownership of broadcasting. The regulator, the Independent Communications Authority of South Africa (Icasa) may not grant any exceptions to this. “It’s not just about how many shares are owned… not more than 20% of the board of directors of a broadcasting licensee may be foreign.” She adds that cultural issues aside, foreign ownership can provide more competition in the media landscape, which Icasa should be fostering.
Media ownership patterns in this country are changing as the global balance of power shifts to emerging economies. China and India already have a foothold in our media landscape.
India’s Gupta family owns The New Age, controversially linked to government, but again, says Spira, the Guptas’ nationality is not the issue. “The New Age is [a] warped aberration. Propped up by state-sponsored advertising, bottomless Gupta pockets and an embarrassingly amateurish TV channel, this apology for a newspaper unashamedly panders to the ANC… That the Guptas are Indians is not directly relevant; relevant, rather, are their ethics, morality and enormous wealth,” Spira adds.
Interests owned largely by China are gaining a far more extensive presence in the local media. Rumney points to the rather mysterious sale of a stake in Independent to a Chinese consortium. “There’s some confusion over the Chinese stake… It’s unclear if it’s an equity stake or a loan that may be later converted into equity,” he says.
The Mail & Guardian reported last year that two Chinese companies had bought the 20% stake in the company. The South African state-owned Public Investment Corporation (PIC) bought 25% with government employee pension funds. This gives Sekunjalo 55% of ownership – but the weekly newspaper says that loans from the Chinese companies and PIC could give the two governments even more control than their 45% share suggests.
China’s StarTimes last year invested in TopTV (renamed StarSat), which is attempting to rival broadcasting behemoth MultiChoice. They bought the maximum stake of 20%. StarSat may not have a large presence in South Africa, but StarTimes has a solid presence in 16 countries on the rest of the continent, as well as in China.
Harber has written extensively on China’s massive investment in media in Africa at large, which he says is part of a strategy of ‘soft diplomacy’ intended to counter negative perceptions in local media. “Chinese media expanded rapidly just as western media was cutting costs,” Harber writes. The Chinese CCTV covers 98% of the world with 45 million subscribers and was launched in Kenya in 2012. Xinhua news agency has more than 20 bureaus in Africa.
“Some would welcome the Chinese because they counter the dominance of western media. But the authoritarian Beijing media model would not sit well in a country like ours,” adds Harber. “It’s going to be important to track the growing Chinese presence. Is this just investment, or is it colonialism with Chinese characteristics?”
Foreign ownership appears to be somewhat inevitable. Yet while it does have political implications, it’s not necessarily an exploitative relationship. Says Spira: “It matters not whether ownership lodges with a foreign or a domestic source. What does matter is the manner in which that ownership manifests itself in terms of editorial independence and strategies designed to ensure the long-term, sustainable, prosperity of the media group in question.”
This story was first published in the February 2014 issue of The Media magazine.
IMAGE: Right 2 Know campaign