With the Appellate Division ruling in favour of Caxton, the Independent and Times Media groups have a fight on their hands, report Jacquie Golding-Duffy and David Shapshak
TIMES MEDIA LIMITED’S (TML) management are unable to agree on the implications of the Appellate Division judgment reached in favour of printing and publishing group Caxton.
The judgment, which marked the end of a five-year battle between Caxton and Independent Newspapers, formerly Argus Newspapers, is also expected to stymie TML’s plans to link up with Pearson, owner of the London Financial Times.
The battle revolved around Independent’s distribution of regional supplements in contravention of a 1980 restraint agreement.
But TML managers, depending on whether or not they are in favour of the Pearsons deal, see the Caxton judgment differently.
Outgoing TML managing director Roy Paulson indicated in rival business publication, Business Report, earlier this week, that Pearson would want to resolve areas of uncertainty before completing the deal with TML, adding that “this could take months”.
However, the following day in TML’s own financial daily, Business Day, the stable’s financial director, Lawrence Clarke, contradicted Paulson, saying the judgment is unlikely to jeopardise the proposed deal with Pearsons.
In the article, Clarke said TML was still negotiating with Pearson and was “getting close to finality”.
The long-vaunted deal between TML and Pearson will see the latter acquire a 50% stake in Financial Mail and Business Day.
However, it is understood that Pearson is considering bidding solely for Business Day because it is nervous about the changes and upheaval which have occurred of late at Financial Mail, resulting in its editor, Nigel Bruce, and editor-at-large, David Gleason, jumping ship for a rival publication.
Pearson, which was due to seal the deal with TML on Thursday, did not do so. Terry Moolman, Caxton’s joint managing director, told a Mail & Guardian reporter that he was still making up his mind about whether his company would apply for an injunction to stop the Pearson deal going ahead.
But he admitted to advising Pearson not to proceed without consulting him. “All we’re saying is `let’s just think about this’,” he said.
Moolman said the deal with Pearson, for an undisclosed sum, may go ahead sometime in the future but only with Caxton at the table.
The Independent Group, which acquired Argus Newspapers in 1994, was hardest hit by the judgment.
It will have to retrench employees on its regional supplements, magazines and freesheets. It is believed that 15 employees have already been told that they will be out of a job by the year-end, although 11 vacancies have been created in the company for which the retrenchees can apply.
But Gauteng Newspapers’ managing director Deon Du Plessis was quoted as saying the company will not send people out on to the street and that every effort will be made to find them jobs.
Caxton joint managing director Noel Coburn says Caxton is still planning to sue the Independent Group for damages and lost revenue during the years that The Star ran regional supplements.
The regional supplements caused Caxton to suffer a major financial loss.
“They had a very aggressive pricing policy which took quite a lot of advertising money away from us. If they [the supplements] had not been there, that advertising money would have come to us,” says Coburn.
He adds that the court found the restraint of trade still valid, despite the change of ownership where Argus Newspapers became Independent Newspapers with subdivisions including Gauteng and Natal Newspapers.
“It’s like a servitude which is valid despite a change of ownership. The fact that the shareholders have changed does not release the contractual obligations of business,” he said, adding that the agreement was breached by the Independent Group without any consultation with Caxtons.
“They never came to talk to us. We went to them on our knees. Documents show we proposed a negotiated settlement and they weren’t interested. They’ve done extremely well out of us over the years.
“Given the court found the agreement valid and binding, we are in a strong position.”
Coburn would not say whether Caxton would now pursue TML’s magazine group, a move that has been rumoured in the media industry.
“We’ve not looked at the judgment for any further implications. We have to think about the options. I can’t say nothing has been contemplated.”
But he has warned that the group may be speculating on how the original agreement affects Gauteng Newspapers’s magazine ventures -such as the Sunday Life insert in the Sunday Independent and other magazines in the provisionally liquidated Penta Publications, including, among others, De Kat and Tribute.
“We have drawn attention to them [Gauteng Newspapers] that there are clauses in the [1980 restraint of trade] agreement that we want obeyed. We believe if they continue magazine publishing then we could go back to court.”