Last Monday listed financial content provider Moneyweb Holdings released interim results that must have made larger media groups salivate. With the six months to September 2003 showing growth of 747% in operating income and 490% in pre-tax profit against the same period last year, the lesson is you don’t need to own the media channels to do well.
According to Business Day, Moneyweb’s CEO Edwin Jay attributes current interim operating profits of more than R1-million — from a R161 000 operating loss in the corresponding 2002 interims — to a turnaround in the advertising environment, which slumped after 9/11.
But Moneyweb’s core assets are its network of financial websites and a 19,6% share of Classic FM. No other Internet-based entity has had such growth.
Alec Hogg, Moneyweb’s chairperson, founder and majority shareholder, stresses the company’s supremacy in investment information.
“Moneyweb.co.za continues to derive benefits from its dominance of the online investment information sector, with its revenues enjoying a healthy improvement in the half year,” Hogg writes in his interim report. “The Classic Business radio show, which also holds a dominant position in its market, maintained revenues off an already high base.”
Hogg has used this “dominance” to extend into television and print. This year Moneyweb concluded revenue-sharing deals with e.tv news, where Hogg is business editor, and The Citizen newspaper, which runs business pages under the Moneyweb banner.
Says the interim report: “e.tv is off to an excellent start with high acceptance in the marketplace and satisfactory revenues,” while The Citizen revenues are “rising strongly and are already at a level that makes the partnership viable”.
The cross-medium syndication strategy, Hogg says, is like a software business, where “you don’t have the fixed costs of ownership of the distribution channels”.
Says Hogg of initial scepticism: “Nobody got it. Brands are important, but more important is the product. Many said there would be no business readers in The Citizen — we’ve proved them wrong.”
With Moneyweb’s stock price rising 20% on the results, the market now “gets it”. Institutional shareholders, including Allan Gray, Coronation and Investec, have been rewarded.
“We’ve been shareholders since the beginning,” says Walter Aylett of Coronation, whose TMT fund holds three-million shares. “We expected an upswing from the team. They’ve created a niche. Their competition is poor and fund managers look to Moneyweb for information.”
Hogg says Moneyweb will develop more products with e.tv, and the group is finalising a joint venture with an international partner on Minweb.com, a mining information portal that attracts 130 000 unique visitors a month.
Mineweb has an unusual mix of foreign visitors (95%) and local advertising (90%), that limits growth. To secure international backing, Hogg is happy to dilute shareholding.
Kevin Bloom is editor of The Media magazine. His Media Weekly column provides regular analysis of the media industry