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Who owns the media?

Mar 15 2013 14:40 Mandy de Waal

(Picture: Supplied)

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IN MORE mature democracies, it’s a given that media are often founded by people who want to push political or social reform.

The New York Times was founded by Republican conservatives in 1851, although it has become decidedly more liberal in recent decades.

Similarly, Britain’s Guardian was started in 1821 by a group of businessmen who witnessed the Massacre of Peterloo (which followed the Napoleonic Wars) and were horrified. They wanted to use the press to advocate reform and civil liberty.

Ownership of the public discourse is hotly contested locally by the ruling party, and with opposition parties increasingly consolidating under an opposition umbrella, political interest in the media is significant.

That’s why when it was announced that Sekunjalo’s Iqbal Survé was set to become South Africa’s latest media mogul, it was assumed that this move was political.

In mid-February it was announced that a consortium led by his investment company, Sekunjalo, successfully bid R2bn to buy Independent News and Media South Africa from its debt-laden owners in Ireland.

The heads of agreement are done, but the offer must still be approved by the Competition Commission, and shareholders of Independent News and Media Plc.

The beleaguered Dublin-based media company has been looking for a buyer for its SA operation for a while, and all indications are that the deal will go through.

Independent’s local operations comprise the mass market tabloid the Daily Voice, the Cape Times, The Star, Pretoria News, the Daily News and The Mercury , together with a number of other news titles; while Independent’s magazine division publishes House & Garden, Glamour and GQ for this market.

Survé scoffs at the idea that his move into media is in any way partisan, despite his having beat a number of other political or well-connected suitors to the spoils.

Other big names who were reportedly vying to bring the Independent back home were Moeletsi Mbeki – the businessman and political analyst who is Thabo’s brother and said to be the mastermind behind Mamphela Ramphele’s political platform, Agang; business tycoon-cum-ANC deputy president Cyril Ramaphosa; the Gupta family who started pro-Government newspaper The New Age and who have mining interests with president Jacob Zuma’s son; as well as former unionist and e.tv boss, Marcel Golding.

“This is a business transaction and anybody who says the deal is politically motivated is speaking absolute nonsense,” says Survé, a former medical doctor-turned-investor whose Sekunjalo has interests in the fishing, financial, healthcare, technology, telecommunications and biotechnology sectors.

Survé says the decision was about securing a highly profitable investment.

“Independent News Media’s profits are publically disclosed and you are talking almost R350m to R400m in profitability,” he says, adding that Sekunjalo will be paying about two thirds of what Mvelaphanda paid for Avusa.

“It is a super business with a strong title base, a strong content platform, good history and good people in the organisation.

“We have looked at this business thoroughly. We are the only people to have done an extensive due diligence, and I think that’s why the Irish thought we were very serious, even though our offer was much lower.

"We know the business well, by the way. We are excited by it, but it is a business that needs a South Africa,” says Survé who states that he is looking to invest in and grow the business.

“I am very bullish about Africa, and Independent is a platform for expansion into Africa in the media sector. If you look at newspapers in India, Brazil, Vietnam, they are growing, they are not declining. It is a question of where and how you position the newspaper,” he adds.

“Take a look at Isolezwe (the Zulu daily owned by Independent) – it is almost as big as the Sunday Times now,” the founder of Sekunjalo says.

Survé wants to take the Isolezwe formula and replicate it in places like Limpopo, Free State and the Eastern Cape. He’s doing this, he says, not just because it makes commercial sense but because he’s a nation builder.

Survé pegs himself as a man who wants to leave a legacy, and believes that a media business that creates mass market newspapers in the mother tongue of the every man and woman would be the work of a true patriot.

This as the Sunday Times announces the closure of its Zulu edition in KwaZulu-Natal.

Beyond South Africa, Survé has his eyes on Africa and has been watching Naspers’ growth. He is wondering if that formula can be replicated.

“I think we are going to compete head on with Naspers and others that are going to expand into the continent. I go to China at least twice a year in my capacity as chair of the Summer Davos meeting, and I can tell you that I only admire what Naspers has done.

"I think it is a great company, and even its Media24 company – Esmaré Weideman is very clued up, she knows what she is doing,” he says.

Naspers started in print, but has become a global multi-media empire that rivals Google in some markets.

The jewel in the crown is the company’s internet division, which looks set soon to earn the lion’s share of businesses’ revenues, thanks to smart investments in emerging markets that are yielding impressive returns.

Naspers’ internet operations include investments in social networking like China’s Tencent; and e-commerce businesses such as auction website Allegro (in Poland); comparative shopping platform Buscapé (in Brazil); and India’s iBibo, which is a challenger to Facebook’s throne in that region.

Pay-television has always been Naspers’s cash churner, but competition in this sector is increasing and will continue to intensify as broadband and connectivity become more readily available and pipelines get bigger and faster.

What may mitigate against potential revenue erosion here is how well Naspers rolls out its digital terrestrial television network across sub-Saharan Africa, and its ability to extend its movie on-demand offering beyond PVR, to more of a NetFlix-type offering.

The smallest business division at Naspers is the technology offering called Irdeto, which creates the software and technology used by content businesses to pioneer new forms of broadcast, broadband and mobile entertainment.

 - Finweek

For more go to finweek.com or follow Finweek on Twitter.

*Fin24 is part of Media24.



 

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