The 75-year-old South African Press Association (Sapa) could change hands if Gallo Images presses ahead with plans to acquire the news agency.
Tim du Plessis, chairman of Sapa’s board, says the future of the agency has been under debate for some time due to a number of its chief members – newspaper groups such as Times Media Group, Caxton and Independent News and Media SA – resigning their membership.
“The alternative to not finding a suitable new home for Sapa is closure – an option we desperately want to avoid, not only for the sake of the staff, but also because we remain convinced there is a role and a place for Sapa. The resigning members immediately became subscribers to Sapa. That tells you there is still a demand for what Sapa offers. And we know that demand is much wider than just the current SA media houses,” Du Plessis told The Media Online.
Du Plessis said the Sapa board’s main concern was that Sapa should continue in some form or another as an independent news agency. “We want Sapa to be housed in a new home that will ensure its survival even if it means a different business and operational model,” he says.
Bruce Stewart, CEO of Gallo Images and a 25% shareholder, says Gallo Images and Sapa have much in common. “Both are wholesale licensors of IP to the publishing industry. We share common ground on a number of fronts. Text is a natural extension of our editorial video, multimedia and image offering. We also service and sell to largely the same customer base,” he says.
Gallo Images is currently conducting due diligence. “We are in the process of a financial, legal and operational due diligence,” Stewart says. “It is perhaps a little early to say, but Sapa is a strategic fit and if everything stacks up as disclosed to us then I am confident we will conclude a transaction.”
Du Plessis says the board had investigated other operational models and in doing so, came up with the Gallo Images proposal. “There was interest from other entities, but they were from outside the country. It was unthinkable that Sapa, a 75 year old South African institution, end up under foreign control,” he says. He declined to name the organisations, saying non-disclosure agreements were in effect.
Although Du Plessis is no longer with Media24 (he is with kykNET now), and with Media24 being Sapa’s big remaining member (with interests in Gallo Images too) he has retained his interest in the agency because he “really cares for Sapa”.
He says the main reason given by its former members (Independent’s notice period runs out in November) was cost saving. “One media house argued instead of paying membership fees to Sapa, they intended hiring additional journalists. I don’t know if that has happened,” he says.
Sapa is a section 21 ‘not for profit’ company so cannot be sold. “It has to disbanded after all obligations have been met and due process was followed in terms of disposing of its tangible assets,” says Du Plessis. “Sapa’s biggest value lies in the brand, its network and operations, including the archives. These can only be sustained if a new model for ‘ownership’ and operations is found.”
Stewart says if it all works out, Sapa would be Sapa would be a “100% owned subsidiary of Gallo Images (Pty) Ltd”.
“The team of journalists will retain their editorial independence and at the same time continue to uphold the Sapa values and principles set out in their mission statement,” he says.
Sapa’s archives, particularly its photographic material, house much of South Africa’s history. Du Plessis says the board would know more about Gallo Image’s plans once it presented its proposal to them.
Stewart says Gallo Images started its due diligence last week and has regular feedback sessions scheduled with Du Plessis and the board, the first of which is scheduled for 8 August.
“We anticipate that we will conclude our DD work in the next six weeks,” he says. “We will present to the Sapa board as soon as practically possible thereafter.”
