Caroline Southey has been reading Katharine Graham’s autobiography. Titled Personal History, the book is the story of the former publisher of The Washington Post. It’s the story of how an ailing newspaper was brought, under a woman’s stewardship, to international prominence through such epoch-making media events as the Pentagon Papers and Watergate.
As the first female editor of the Financial Mail, Personal History is a book with which Southey strongly identifies. Like Graham, she lost her husband in tragic circumstances. And, like Graham, she’s after success in the tough and ungrateful world of hard news, where men are characteristically the bosses.
Graham’s lesson, says Southey, is that it’s possible to triumph against the current of self-doubt, failure and insecurity. “It’s the passion for the profession and the strong skills base that matter, be it male or female,” she declares.
Having joined the Financial Mail in 1997 after a 15-year stint at the Financial Times in London, Southey’s own skills base is firmly established. Her passion is equally evident. “I’m an adrenaline junkie,” she says. “I love to be ahead of competitors in the business of financial journalism. I marvel in the ‘aha’ factor in life.”
Still, in a game where ‘being ahead’ means spotting and interpreting trends in the corporate landscape, Southey will need to draw on deeper strengths than experience and drive. She will also need courage and stamina to face the trends that affect her directly.
The big trend at the moment, one that hurts all media, is the tight advertising market. On this score, Southey admits that although the Financial Mail is profitable, the title hasn’t met all the expectations of its owners.
And these owners are probably as lukewarm about Business Day, the other financial title owned by BDFM Publishers (a joint venture between Johnnic and the UK publishing group Pearsons).
Peter Bruce, editor of the Business Day, sits two floors below Southey in the Johnnic Publishing building. He’s a big man, cordial and charismatic. On the state of the financial press in general he says: “We’re doing what we can to make it an excellent profession. We’re hiring the best and the brightest journalists to report on financial matters.” But as big, charming, and male as he is in late 2001 Bruce was faced with the reality of having to retrench around fifteen percent of his own editorial staff, to stem the losses being incurred by the paper. In reaction to the downturn in adspend, operational expenditure for the 2002 fiscal year on Business Day had been reduced by R7 million from the R37 million budgeted for 2001.
The JSE Rule
Tony Koenderman, editor of the Financial Mail’s advertising and marketing section, says that one of the most important issues facing Business Day, besides recruiting and keeping a pool of talented journalists, is the revision of the Johannesburg Stock Exchange rule. The old rule obligated all JSE listed companies to publish their financial results in the newsprint media. Its modification is expected to have a severe affect on already dwindling advertising revenues.
Addressing Business Day journalists in 2001 about the reasons for the impending retrenchments, editor Bruce referred to the rule. “In addition to the current downturn,” he told his nervous staff, “Business Day faces two serious financial threats next year – the price of our newsprint is due to rise by at least 20 per cent and, from next October, the obligation on companies listed on the JSE to place their financial notices in newspapers is lifted. Estimates of the impact of the latter on our revenue range from falls of 10 percent to 20 percent.”
Sake, the Afrikaans business title distributed with Naspers newspapers Beeld, Volksblad and Die Burger, is also being pushed against the ropes. On Sake-Beeld alone the revenue flows from the JSE rule are sizeable, somewhere around 25 percent of the total. Flip Meyer, the group financial editor, believes the old JSE rule has to stay, that such decisions could threaten the fragile financial press market. To his business, it’s a matter of survival. “Something has to be done about it,” he says.
Something is being done about it. Johnnic (BDFM’s parent), Naspers (Sake, Finance Week and Finansies & Tegniek) and Independent Newspapers (Business Report) have formed a lobby to convince JSE regulators to reconsider the situation or find accommodating measures. Their central argument is that the revised JSE rule could discourage transparency and corporate accountability. Further, the rule could be detrimental to small investors, who may have to spend money to find the required financial results information.
Alec Hogg, founder and chairman of Moneyweb, dismisses these arguments as “absurd and illogical.” He is firmly in favour of the revision. “Why not give companies the ability to choose how to relate to their shareholders via the print media? Business shouldn’t be forced to advertise with a few newspapers,” he says.
Hogg asserts that the old rule is monolithic. He challenges the financial press to practice the capitalistic behaviour they’re asking their readers and companies to uphold. Mainly, he says, they should welcome liberalisation and free market competition in the advertising arena. (It bears mentioning that Hogg’s financial outfit has been unfairly competing with the big companies for years now, and may be a long-term beneficiary of the new rule).
The Competitive Arena
Along with his colleagues and competitors at the big media groups, Business Report’s operations manager Marc Corcoran is concerned about the potential impact of revision of the JSE rule on his bottom line. Corcoran admits to depressed revenue. “We’re not doing as well as last year. We’re trying to manage costs at this stage,” he says.
Corcoran confirms that consolidation is likewise the strategy for Business Report’s editorial. It’s about back-to-basics business journalism – explaining complex business issues with simplicity to attract more readers. That said, the real challenge for Business Report editor Alide Dasnois and carrier editors at, amongst others, The Star, Pretoria News, Cape Argus and The Mercury will be to work ever closer to position the national financial title in what are essentially localised brands.
Importantly, while dealing with their internal strategic challenges, Independent Newspapers are well aware that consolidated editorial products do not guarantee success in a somewhat crowded financial media market. The competition is tough. It’s local, linguistic and international and it’s across mediums.
Locally, Business Report’s strongest competitor is Business Day, which has always presented itself as the leading financial newspaper in terms of influence. To this Corcoran responds that Business Report is the leader in size and volume as it carries a comparative advantage of 7 to 1 in circulation reach over Business Day.
Business Report wouldn’t be on such solid ground if it used this ‘ratio’ defense against the Business Times, the third title in Johnnic Publishing’s financial stable. Distributed with the Sunday Times, the Business Times has circulation of around 500,000 per week. Luckily for Independent Newspapers, though, the Business Times is seemingly uninterested in joining the deathless battle between Business Day and Business Report. More than frequency differentiates the former from the dominant dailies: there’s also the issue of editorial focus and revenue base. “Most of the financial media tends to focus on investment rather than business stories, but there are many business owners who don’t invest,” says Business Times editor Jabulani Sikhakhane. “Writing for them [the business owners], one has a much bigger audience.” As for the revenue base, Sikhakhane is unperturbed by the new JSE rule. “The Business Times is driven in the main by job placement,” he emphasises.
Outside of the perennial spat between Johnnic and Independent, competition amongst newsprint titles takes place in the linguistic arena and this game is still between English and Afrikaans. Here, Business Report scrums down against Sake for national readership. Yet beneath the jostling there seems to be an unwritten arrangement. While the Naspers title’s sales brochures emphasise that Afrikaans is widely spoken in rural areas (this alongside the statistics showing their unequalled reach into all South African provinces), Business Report concentrates on the major urban centres, where the (more lucrative) audiences of their carrier newspapers are situated.
Less agreeably, the linguistic competition for weekly magazine readership pits Naspers against BDFM. In terms of circulation Finansies & Tegniek, the Afrikaans sister publication of Finance Week, has always lagged around half that of the Financial Mail, with the latter consistently posting figures near 30,000 per week. An interesting point about this space is that Rikus Delport, editor of both Finance Week and Finansies & Tegniek, is as unconcerned as Sikhakhane about the revised JSE rule. Delport welcomes the change as an opportunity for a new revenue stream.
Then comes the international front. Financial and business media products like the Financial Times, Fortune and The Economist have a strong following. As much as our own girls (and boys) wouldn’t care to admit it, the overseas bunch are real grown-ups. Of course, there will always be a demand for home-spun financial content, but the entrenched presence of satellite advertising sales offices such as AOL Time Warner’s (selling space to local companies in Fortune and Time) is testimony to the fact that these titles eat into the circulation and advertising revenues of their South African counterparts.
Finally, there’s the cross-medium competition. The DSTV bouquet offers business news from international giants CNN, BBC, Sky, CNBC and Bloomberg, which just about kills any ability the financial press may once have had to be first with the time-sensitive global economic and business indicators. Summit TV, also carried by DSTV, isn’t a threat in terms of delivery times, but it does offer in-depth analysis of local commercial and economic concerns, a domain traditionally the preserve of print.
Another non-print competitor, and one that takes on the financial titles more directly, is Moneyweb. Since 1997, Moneyweb has been aggressively providing a solid array of financial news products, initially from its website, then into radio through Classic FM. Alec Hogg, founder and chairman, says that the online and radio businesses are the most profitable. A listed company, Moneyweb’s revenues for the financial year ended March 31st 2002 were almost R14 million, with a before tax profit of R1.7 million. In terms of revenue size, this places them in the same ballpark as Finance Week [see table].
Suffice to say that Moneyweb, although small, has managed to carve a niche for itself. And it’s steadily growing. The company is moving into new premises in Rosebank, close to some of its competitors. Abroad, it’s solidifying its position with Miningweb.com, an online content provider to the mining industry. In fact, Moneyweb is building a strong audience both locally and globally. “50 percent of our audience is global,” says Hogg.
The chairman adds that while the focus of Moneyweb is firmly rooted in the online and radio business models, the company has launched new print products. “We launched Moneyweb Digest, a weekly, and Mowneyweb Trust, a quarterly publication on trust funds,” he says.
Hogg is confident that Moneyweb is on the right track, and that its diversification strategy will help it survive the tough advertising slump. And, as mentioned, he believes the new JSE rule, when enacted, will help Moneyweb compete on an equal footing with the larger financial media companies.
The Rand, Kevin Wakeford, and the Hacks
Although way behind the Business Report, Business Day and Financial Mail in revenue terms, one area where Moneyweb beats the pants off competitors is reader participation. A search on the website for ‘Wakeford’ gets 250 results, the large majority of which are comments from readers like ‘Ou Boet,’ saying things like “hey Mr. ‘Full Disclosure’ Wakeford, why are you embarrassed to reveal your source?”
‘Ou Boet’ was of course referring to the rand probe, and the allegations made by then chief executive of the South African Chamber of Business Kevin Wakeford that wrongdoings in the foreign exchange markets helped trigger 2001’s 37 percent fall in the currency. Wakeford had written a letter to President Mbeki in which he suggested there was a “strong likelihood” that Deutsche Bank and Sasol had colluded to push the rand lower, although he wouldn’t reveal his source
The financial press struggled to get answers. On the whole, coverage of the story was very dismissive of Wakeford and accusations of conspiracy abounded. This in turn fuelled speculation that either the financial press knew and would eventually write about it, or was itself manipulated. As of late, sources known to The Media still maintain that powerful interests with large advertising budgets were keeping the press from telling the truth of the rand’s fall.
Then there’s another take. Many believe that the poor economic literacy of financial journalists was partly to blame for the sudden collapse. The argument is that the financial press, while refuting Wakeford’s allegations, was struggling to come up with the explanation desperately needed by its readers.
In the end, strangely enough, a financial press that hardly trusts government went to overwhelming lengths to get the answers from financial experts employed by the government. In a Q & A interview with the treasury director general Maria Ramos, Southey then executive editor of the Financial Mail asked 20 pertinent questions on the collapse of the rand.
“In a rather – it must be admitted – desperate bid to find answers to the rand’s fall, I set about writing down the 20 most obvious questions on the subject,” says Southey. “Nobody, it appeared, had satisfactorily covered some of the basics. Speculation, yes. Loads of advice too. But little explanation. The next step was finding somebody to answer these questions.” When she found Ramos, whom she admired for “a brilliant brain, a keen understanding of the market, as well as proximity to events unmatched by other possible choices,” Southey got her answers.
The piece ran as Financial Mail’s lead story in the issue of January 11th 2002, with the barker “All you need to know” on the cover, and the header “The Real, the rational and the unreasonable” in the body. Ramos’s response to the direct question on the reason for the rand’s collapse placed ‘sentiment’ a specific second in the hierarchy of importance, behind the more general influence of the globalised marketplace. The treasury director general pointed out that “equity and bond investors in New York, London and Boston all said they couldn’t understand why South Africans were so negative about their own country.”
The sixth item on Ramos’s list was the inverse of that observation. “Nobody expects African countries to do the right thing, to do well,” she explained. “Virtually every other emerging-market economy has bigger problems, but they are not subjected to the same scepticism.”
Perhaps it’s here that the role of the financial press comes into sharper focus. Mathatha Tsedu, editor of the Sundays Times, is adamant that the financial press owners have to allocate sufficient resources to train new black journalists and pay more attention to the larger economic transformation issues.
“Perceptions move markets,” says Tsedu. “They are crucial to the economy of this country. And the question of who’s writing the financial and economic stories is also crucial. When more black and representative financial journalists write about the market, the majority will get their cues.”
Significantly, following the debate on the demise of the rand, there have been notable studies on the correlation between business confidence, consumer confidence (or public perception) and the influence of the major financial titles. Media Tenor, an institute for media analysis, found that “while the media and the economic situation generally go hand in hand (economy down/reporting negative, economy positive/reporting positive), this has not been the case with reportage on the currency.” Concerning the recent strengthening of the rand, the study states: “[I]t seems the positive reporting affected public perception, and shows that the media can indeed contribute to a positive awareness threshold.”
All About the Money?
Evidently, Randgate has cracked open the proverbial can. There’s a multitude of questions to ask about the future of the financial press in South Africa. Amongst others: Is it transforming with the society it’s supposed to serve? Should it be an agent of change for South Africa as a whole? If so, for what purpose in the short and long term? Should it chronicle for the rich or the masses? Can it continue covering with sniping scepticism the plight of the hopeless continent, or should it create the necessary economic understanding that will genuinely help South Africa and by extension the rest of Africa efficiently use financial and economic information to develop the continent?
“It’s a business,” says Kevin Wakeford in response to the thrust of these concerns, “the financial press will not change so easily.”
Margaret Legum of the South African New Economics Foundation is more blunt. “There won’t be any radical innovators to challenge financial orthodoxies in the financial press in South Africa. Many of the players in the financial press get their bread and butter from the big corporates they cover. Why would they shake the status quo? They won’t bother about any transformation at all. Their audiences are not the masses. Proprietors know that, advertisers and editors too. So why bother much?”
Why bother, indeed. The unavoidable reality is that the financial press functions on the same business model as media in general. It is not
excluded from the harsh free-market principles it writes about. In it’s space, as in the rest of the media world, the fight for adspend is vicious and client marketing budgets are tight.
And then there are the working journalists. In the newsrooms, there’s still the danger of mixing journalism with politics. Here, the mantra ‘it might be economics, but it’s still journalism’ stands sacred. Michael Coulson, deputy editor of the Financial Mail, argues from this perspective when he says: “Our role as financial journalists is to tell financial stories and make sure in the process our readers understand them and use them for financial gains, if they can. Our role is not to change South Africa. We can’t do that. The politicians have been elected to do so.”
So it’s a tough one. Clearly, the financial media attracts a lot more heat than the rest of the media world. It carries more weight, bears a bigger responsibility.
‘Cos that’s where they write about the money.
* Koffi M. Kouakou is a writer with a background in technology, media and developmental communications. He is a columnist on New Africa, a London-based magazine on African affairs, and Business in Africa, a monthly dedicated to continental business practices in the age of the African Union. Kouakou also serves as a consultant to the World Bank.