Naspers bucks media gloom

Johannesburg - The latest results of media giant Naspers have exceeded market expectations, after its internet and pay television divisions in particular posted a strong showing.

Naspers reported an increase in operating profit - before amortisation and other gains or losses - of 19% to R2.8bn and core headline earnings growth of 36% to 648c per ordinary share for the six months to end-September on Thursday.

Naspers' pay television division delivered a particularly good result on the back of the uptake of DStv's latest bouquet, DStv Compact. The package is aimed at lower-income households at R219 per month. The division posted a 15% revenue increase to R8bn during the period under review.

"The Compact bouquet is so well priced, it's almost impossible for anyone to compete," said media analyst at Cadiz African Harvest Rob Nagel, adding that he had not expected pay television to perform this well.

DStv will continue to dominate the sector, as licensed competitors such as Super5Media (formerly Telkom Media) and On Digital Media (ODM) are continuing to push back their launch dates.

"The other side of the coin is that we are a soccer, rugby and cricket-crazy nation. Naspers is the only one which can afford all those licences," Nagel said.

The internet division also performed well, posting 29% revenue growth to R4bn. However, most of this is attributable to Tencent, China's largest and most used service portal, in which Naspers has a 35% interest.

Tencent's operating profit soared 79% to R1bn in 2009, compared to R584m in 2008. However, Naspers' other interests in the internet division did not perform as well, with a 65% loss in operating profit to R53m from R151m. These include wholly-owned companies such as 24.com and Mweb South Africa, as well as its stakes in mobile platform Mxit and Russia's Mail.ru.

In line with results reported by its competitors Avusa and Caxton, Naspers' print division showed some strain. This division includes newspaper and magazine company Media24, printing and distribution agent Paarl Media, publishing business Via Afrika, Brazilian magazine publisher Abril and various Chinese investments.

The division's operating profit fell by 32% to R327m, from R484m in 2008. Nagel said it was difficult to compare the divisions since all three companies had a different mix of papers and businesses. "However, the trend is the same," he said.

"Naspers performed ahead of my expectations, but the results just go to show that the company has a large variety of offerings to service a wide market," a Johannesburg-based equity analyst commented.

Nagel concurred, saying even with the exclusion of Tencent's results, the rest of the company still performed well in recessionary conditions.

- Fin24.com

Fin24.com is owned by Naspers.