They used to be called the big four newspaper groups but that would be incorrect today. In the last year, the Big Four – Independent Newspapers, Media24, Times Media Group and Caxton – have spent a lot of money furthering their diversification into other areas.
Here’s a round-up of some of the big business moves since June 2013.
TIMES MEDIA GROUP
When the then brand new Times Media Group (TMG) CEO Andrew Bonamour spoke to The Media in 2013, he outlined big plans to turn the company around. Bonamour, who had already paid off 35% of the company’s debt, said he would be streamlining the company, continuing to get rid of non-core assets. He was finding ways to leverage TMG’s existing content archives and branching out further into broadcast.
He certainly hasn’t been twiddling his thumbs since then. TMG has divested itself of all the assets “that weren’t really great and didn’t really belong together”, in the words of media guru Professor Anton Harber, to invest in the media side of the business. They sold casinos, the loss-making Nu Metro Cinemas, Exclusive Books and INet Bridge.
Selling off these assets and reducing operation costs allowed the company to invest in staff, according to the group’s unaudited financial report for the six months to December 2013. TMG managed to maintain circulation for its newspapers that include Sunday Times, Business Day and Sowetan in a tough climate for print, says the report. TMG also increased its broad-based black economic empowerment rating.
Bonamour has said that the company will one day make more money off broadcast than print. TMG already had Business Day TV (previously Summit TV) and in the past year bought stakes in Mpumalanga station RISE fm (formerly MPowerFM, which was in business rescue) and in KwaZulu-Natal’s new gospel station, Vuma FM.
The company made its first foray into West Africa with the purchase of a 32.2% stake in the Multimedia Group, Ghana’s largest independent media company. Through its Ghana properties, TMG is aiming at economic giant Nigeria. Said TMG’s head of radio Tony Mallam, “It’s a strategy of west and east. Ghana is a lovely place to do business. It’s not as politically fraught as Nigeria, but it’s just across the border. We have some TV in Ghana and that goes to neighbouring states, too.”
And in the east, TMG now has a 49% stake in Kenya’s Radio Africa, which owns the five biggest stations in Nairobi.
Kenya and Ghana are far better equipped for the switchover to digital terrestrial television, said Mallam, and “the whole of the east coast is a thriving hub now. Kenya has a mature market dominated by radio and TV, and Tanzania is a slumbering giant about to wake up. The idea is to go into Africa with partners we can trust”. TMG is also looking at pay TV models in those regions, he adds.
Paul Theron, CEO of investment company Vestact, voiced his concerns about TMG from a market perspective. “They have done a lot of work on their portfolio… but many challenges remain. Advertising in print is in decline globally. How much longer will the Sunday Times be stacked with full-page colour spreads? Online advertising has yet to take up the slack.”
He was not sure if this move into broadcasting was well advised, saying: “TV is an area where management wants to expand, but capital costs in that area are high.”
Harber said that while TMG invested in paywalls, the company had not been fast to go digital first. He acknowledged that BDLive was the first print publication to go digital first, but added: “If you look abroad, you will see that financial publications have really led the way to successful paywalls. BDFM is lagging; but this is true of all the newspaper groups actually. People in this country proclaim digital first, but it’s not the reality. I don’t see it.”
Bonamour told The Media that TMG does not intend to be a digital pioneer, but rather a “fast follower”. The company has, however, been experimenting with packages that offer advertisers exposure across a range of platforms, including digital.
Generally considered a cautious and conservative company, Caxton CTP Publishers and Printers this year continued to focus on their core capabilities and diversifying into digital.
Theron said, “[Caxton founders] Terry Moolman and Noel Coburn have been cautious, focusing on printing solutions and avoiding grand projects in other media platforms. It is a solid operation, but the market shows the company little affection.”
Caxton CTP Publishers and Printers was buoyed this year by the government’s textbook contracts.
Managing director Gordon Utian said in the group’s financial report that Caxton did well considering the economic climate. “The company has achieved good results in a difficult economic environment that brought about adverse trading conditions,” he said.
Thanks to the new curriculum, “the volume of books printed for educational publishers increased dramatically through the year… Resulting from the large quantities produced, good profits were achieved”. But he added, “This situation is not expected to be repeated in the short term as the new curriculum has now been installed for all grades.”
Caxton’s commercial newspaper, The Citizen, underwent a redesign and, while circulation fell slightly, “gains have been made in advertising market share”, said Utian.
Magazines, however, had a difficult year, said the report, and did not make budget. “Whilst advertising market share was retained, costs increased mainly on printing and circulation revenues were down.” Utian said this was “accentuated by the difficult economic times in which readers find themselves. As magazines can be considered an ‘impulse purchase’, with stretched budgets it is clear that magazine sales are suffering as consumers battle to live within their means”.
Struggling magazines hit Caxton’s distribution arm, RNA, which was further affected by a difficult retail environment and the escalating cost of fuel.
Caxton diversified into packaging, buying Nampak’s Cartons & Labels division.
The company leads the market in local newspapers (freesheets), but was slow to move these online, said Harber. “The hyperlocal is a huge online market because you can easily run local communities and advertising online,” he said. Caxton’s local newspapers have, however, been available online on looklocal.co.za since late in 2010. The site had 358 080 unique visitors during March 2014.
The company’s digital properties include a stake in Moneyweb, looklocal.co.za, digital agency Habari Media and printers Mega Digital, and this year it bought into telecoms and IT solutions provider FoneWorx Holdings and internet service provider RSA Web.
This year Caxton also bought RamsayMedia, effectively blocking a bid by TMG to acquire the magazine publisher. Caxton, as a 30% shareholder, had pre-emptive rights to buy the Ramsay family’s 70%.
TMG moved some printing contracts to Caxton rivals Paarl. Then Caxton in March disposed of its remaining interests in TMG to Bonamour’s Blackstar Group, increasing the latter’s stake to 32.3%. There is rumoured to be bad blood between the companies, said Harber. Caxton chairman Paul Jenkins and Moolman have denied this.
In the past year, Caxton also disposed of its shares in education publishing Pearson in order to increase cash reserves.
Media24, Naspers’ print division, struggled like its competitors with falling circulation and ad revenue, but was bolstered by its book publishing and restructured magazine divisions, according to its performance review for 2013. Like Caxton, the book publishing unit did well thanks to the implementation of the new school curriculum. Magazines “delivered 34% increase in trading profit”, according to the report.
Despite the general contraction in print ad spend, magazines retained market share and delivered a profit, said the review, partly due to decisive cuts. Media24 is not hesitant to close failing titles – in the last year, six were closed and 109 jobs were cut.
Newspapers had a tough year across the board and Media24’s Afrikaans titles, which include Beeld and Rapport, were especially hard hit.Media24 CEO Esmaré Weideman says, “Our Afrikaans titles bore the brunt of declining advertising sales and the JSE’s rules change – which no longer compels companies to publish their results in two languages – was a severe blow.”
Advertising spend in print and a decline in print circulation contracted further in the last year, she added. However, “encouragingly, some of our titles maintained their volumes and a few even managed to grow their footprint”. Circulation decline slowed considerably in recent months, Weideman said, improving in the fourth quarter of 2013, “but this was largely thanks to bumper newspaper sales around the time of former president Nelson Mandela’s death.” Daily Sun and City Press grew readership and Soccer Laduma!, the country’s best selling sports publication, grew circulation.
All the big four recognise the value of local newspapers and Media24 is no exception. The company “loves to go to war with Caxton in this space”, said Harber. The review said two new local papers were launched this year: Eden Express in the Eastern Cape and the Sedibeng Star in the Vaal.
Despite the difficult economy, there were many highlights for Media24 this year, said Weideman. There was an explosion in digital audiences and content consumption across all platforms, most notably mobile, she said, “enabling publishers and editors to forge even closer bonds with their audiences”.
She added, “That said, broadband in South Africa remains slow and prohibitively expensive. Once this changes, publishers and content creators across the board will be able to achieve digital scale much more rapidly. At Media24, we are ready for it.”
Harber agrees. “Media24 is a company that is not afraid to experiment. It spends aggressively in online. News24 is clearly the leader online, so the company’s investment is paying off… It is not afraid to try new things; it has a dynamism other companies lack.”
Weideman said recent innovations include the first digital – and mobile-only – offering for Muslim women in South Africa (a platform called Modest Muse), mobi sites for emerging markets like the phenomenally successful Kuier, and the content aggregator MyEdit. “We also diversified the traditional business through expansion into job classified and fashion e-commerce in the last year and will continue to invest in these fields in 2013,” said Weideman.
Harber said it would be interesting to see if Naspers retained Media24 in the long term. Chair Ton Vosloo’s retirement next year severs the sentimental link with Media24 (Vosloo began his career with the company), said Harber, and “if you’re a global investor in Naspers, you’re going to ask… why keep this one when the company has other fantastic assets?”
Theron agreed that “Naspers has many larger fish to fry than Media24 “, but said Naspers would hold on to its print division.
“Media24 seems to have been told to cut costs. I would expect them to retain the business, though, as the teams of journalists in these businesses do generate useful content, which can also be leveraged on other platforms.”
When Dr Iqbal Survé’s investment holding company Sekunjalo Group bought Independent Newspapers from the Irish O’Reilly family, there was rejoicing in the media industry. With the group – and its revenue – back in South African hands, much-needed investment could begin in the stagnant and neglected newspaper group.
Since taking over, Survé has initiated a process of restructuring and is to spend R55 million on the company in the first year of acquisition, the first major investment in the company for decades. This is intended to redress what Survé has called the “virtual balkanisation of Independent into various regional entities, with no coherent corporate structure, identity and no internal systems of co-operation and direction”.
The restructuring included appointing journalist Karima Brown as group executive editor, responsible for group strategy and implementing the turnaround plan of the new owners. Independent owns 18 well-regarded newspapers including the flagship Sunday Independent and other titles all over the country.
Survé told The Media last year that he would be investing in vernacular media, particularly in the Eastern Cape, and digital media. Independent already owns the highly successful Zulu newspaper Isolezwe, which grew sales in the fourth quarter of 2013 compared to the same period last year, as well as local newspapers. Grubstreet website reported in January that Independent would be launching an English/Xhosa tabloid in the Eastern Cape in April or May, but there was no indication that this had happened at time of going to press. Launching vernacular media was to be the province of group executive editor Chris Whitfield, who took early retirement in January.
Survé has had to defend himself against criticism and controversy over alleged non-transparency in revealing the shareholders of Independent; of his close links with the ANC; and of his alleged interference with the editorial independence of his editors (rumoured to be the reason Whitfield left the company).
The company were approached for comment on this story, but their communications representative declined, saying, “As we are in the midst of the strategic repositioning of Independent, we are not commenting externally at this time. We will be prepared to comment once this process has been completed, later this year.”
Harber said the restructuring is not going well. “What I’m hearing from insiders is that things are uncertain and depressed. And these are not people who are critics of [Survé]. He seems to have blundered in and made mistakes very quickly.
“There’s no sense of editorial strategy. Karima and he are saying what they don’t want to do, what they don’t want to change, but not a whole lot about what they do want to change. So editors are not clear on what the strategy is, what the structure is.
“In the old days, editors would respond to regional managers. Then they introduced an editor in chief and now editors don’t know who they answer to. Iqbal doesn’t understand the structures of editorial control. There was great hope pegged on Iqbal to spend, invest and grow. It’s not off to a good start. It’s a difficult time to be R1.5 billion in debt, just as you need to invest in digital.”
This story was first published in the July 2014 issue of The Media magazine.
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