The Virgin Group is looking to enter South African media by teaming up with local financiers, writes Jacquie Golding-Duffy
Voice of Soweto, a local community radio station, has linked up with British billionaire Richard Branson in a bid to obtain a FM licence in Gauteng.
The application for a Gauteng radio licence is part of an effort to set up a radio station to be called Virgin 96 FM.
The radio station’s planned format is music and news bulletins, with the bulk of programmes aimed mainly at the youth.
Director of the Virgin Group in London, Will Whitehorn, told the Mail & Guardian that the “principle shareholders” in the Virgin application are Standard Bank and Soweto Megalomedia. Standard bank is in line to set up the financial backing if and when the application is approved and to take an equity stake in the station, says Whitehorn; while Soweto Megalomedia is the black consortium which was established to make the application to the Independent Broadcasting Authority (IBA).
Whitehorn pointed out that the chief executive officer of Voice of Soweto, Mpumi Dakile, is the principle shareholder in the consortium.
Dakile, acting representative for the Megalomedia consortium, said in a statement earlier this week that the licence application was done in “partnership with Virgin and South African financiers”.
One of the financiers is believed to be Richemont, the international business arm of the Rembrandt Group — owned by the Anton Rupert family empire.
Whitehorn confirmed that Richemont has approached Virgin for a stake in the radio station, but says “everything is still up in the air”.
Local Rembrandt representative Hans Knoetze denied that Rembrandt was involved in the licence application, adding that he is “unable to talk on behalf of Richemont”.
Rembrandt is the fourth-largest group of companies in South Africa after Anglo American, Sanlam and SA Mutual.
Richemont owns 50% of Nethold, a multi-million rand pay and satellite television operation that functions in the Benelux, Nordich and Mediterranean countries, Central Europe and the Middle East.
Based in Switzerland, Richemont’s main operations outside of media include the Vendome luxury group and the Rothmans International cigarette group whose brands include Rothmans, Peter Stuyvesant, Dunhill and Craven A.
The Ruperts own a 27,2% stake in Perskor (owner of The Citizen), which owns a 15,4% stake in M-Net.
If the Ruperts are linking up with Branson in an indirect manner, they will make a formidable team, says one industry source, while another says he is fearful that this type of partnership — a new foreign kid on the block (Virgin) teaming up with old local money (Rembrandt) — will sideline the real issue of black empowerment and diversity in the media, especially since both Virgin and Rembrandt, either directly or indirectly have other media interests.
Virgin has several media interests in Britain including a medium-sized book company which publishes entertainment, rock and television books, among others. “We have published several well-known biographies such as the Ted Turner biography, one on the Rolling Stones, Elvis Presley and so on,” Whitehorn says.
Virgin is also involved in post-television production, providing facilities for editing and interactive programming. It owns the largest commercial radio station in Britain on both AM and FM frequencies. The AM frequency is national, with a FM frequency for the south-east of England. Whitehorn says the total listenership is about 4,5- million people.
He refused to comment on how much money Branson will be ploughing into the South African radio station, but said Virgin Radio International (the company set up for all international interests outside of the UK) will have 20% of the equity — the maximum shareholding allowed under South Africa’s laws on foreign ownership in the media.
The Virgin application was one of 11 applications received by the IBA for three new FM and one AM licence in Gauteng. According to the IBA, nine applications were received for the Fm licence and two applications for the AM licence.
Virgin’s other sideline operations include a rival to Coca-Cola and selling Virgin Insurance and Pension Schemes. In October, Virgin Atlantic Airline will also begin a regular service from Johannesburg to London.