The now-approved merger between Tiso Capital and New Africa Investment Limited (Nail) would bring a “healthy consolidation” to the South African media industry, a leading analyst said this week.
The comment came after the Competition Tribunal conditionally approved the R1-billion transaction, bringing to an end months of uncertainty.
The tribunal’s conditions are designed to address the Competition Commission’s concerns about cross-ownership of radio and outdoor advertising assets. They relate specifically to the Mineworkers Investment Consortium (MIC), a member of the Tiso Consortium and a significant shareholder in Primedia, which is interested in buying some of Nail’s assets.
Other potential buyers of the assets are Johnnic Communications and Kagiso Media, partners in a joint venture that tabled a losing bid for Nail.
The tribunal has instructed MIC not to have representatives on the Nail board or to vote on any matter relating to Nail’s assets. It must, in addition, not deliberate on the operation and subsequent sale of stakes in Kfm, Jacaranda fm and adult contemporary station Kaya fm.
Primedia is expected to take up a controlling stake in Cape-based Kfm, while rival Kagiso should take over Jacaranda, in which it already has an interest. Primedia will then take up Nail’s 50% stake in Nail Outdoor. All three transactions are subject to regulatory approval.
The most keenly watched spin-off from the Tiso-Nail merger, however, is Johncom’s purchase of the Sowetan and of the remaining half of Sowetan Sunday World. If these sales materialise as expected, they will create critical mass for Primedia and Kagiso in radio and Johncom in the print media.
The analyst warned that the radio assets were good value, but that Johncom’s purchase of the Sowetan was not a straightforward exercise. “It depends whether they can integrate the newspaper cost-effectively into their operation, and then turn it around,” he said.
Johncom’s mix of titles was “not optimal”, the analyst added.