Making a Plan

You’d think that media in the business of covering business would be doing a bit better. On the face of it there’s no reason they shouldn’t be. We know - because they tell us - that the economy is booming.
We also know that this is the media type that punts capitalism’s upside, unpacks a company’s prospects, works out optimal cost to income ratios. If anyone should be able to milk the good times, it’s them.

But the factors that get in the way of these brands showing a growth rate equal to that of other media sectors have not obligingly disappeared. As former Finance Week deputy editor Amanda Vermeulen wrote in The Media last January, we have a stock exchange that has halved in size over the last five years, a news service (Sens) that has removed a captive source of financial advertising, and marketers that are diverting more of their spend into lifestyle brands. Further, there is general agreement that the long-debated revocation of a JSE Securities Exchange rule, which requires listed companies to publish and pay for certain financial announcements in the print media, will soon take effect.

All of which is compounded by intense competition for readers and revenues in a segment that many argue is overtraded. At last count (including the business sections of wider titles) there were four print dailies, five weeklies and a new almost-monthly, plus at least six daily broadcasts on major radio stations, a number of primetime television slots and a dedicated television channel.

According to Alec Hogg, CEO of Moneyweb Ltd., the company that dominates financial news on the internet and supplies content to one newspaper (The Citizen) and two of the radio shows (Radio 2000 and RSG) mentioned above, the current buoyancy in the market is doing nothing more than keeping some of these brands afloat. “It’s a function of the economy,” remarks Hogg. “[Naspers CEO] Koos Bekker was saying on our radio show last night that in many spaces he is expecting to lose titles when there’s a downturn. And there will be a downturn.”

Beneath the surface, then, it’s apparent that business media isn’t necessarily the best place to be if long-term returns are the goal. So how does the list of pitfalls make Maverick‘s publisher Branko Brkic feel? Entering the space last October, with a glossy magazine that drops an inordinate chunk of change on presentation and gets distributed at the novel frequency of every four weeks, Brkic acknowledges that “there is going to be a bloodbath pretty soon.” Naturally, he doesn’t reckon he’ll be the one doing the bleeding.

Brkic points out that Maverick “does not limit itself” to covering JSE companies alone, since that would be to ignore “a seriously interesting and hugely important part of the business reality in South Africa”. He also avers that publishing financial results has never been considered part of his business model.

Brkic is all too aware that the sector has lost huge revenue to lifestyle media, and says there’s a good reason for it: “current business publications not offering an insightful and exciting read that also looks very good.” His aim, he says, is to woo advertisers back by doing just that.

Being original, or maverick, has already won Brkic a few notable fans—but an equal number have been conclusively and unsurprisingly alienated. For instance, the magazine’s rate card came out last year with the pay-off line that here was a title “for people with brains and money”, adding that such a class excluded drivers of a certain model of car. The Media was lucky enough to get forwarded the curt response of the manufacturer’s media agent, who, after subtly referring to the size of her client’s budget, suggested an alternative line: “The magazine with staff with no brains…and soon no money…”

And while Brkic goes about creating friends and enemies - in the hope of repaying his funder, who has invested “somewhere in the ballpark” of R11-million - some of the more established titles are also acknowledging the need for a shake-up. The re-branding and consolidation of Finance Week and Finansies & Tegniek into one title, Finweek, was perhaps the most noticeable development of 2005, and had the effect of giving Media24 the edge over archrival, BDFM’s Financial Mail, for the first time in decades (combined figures for the ABC period January to June 2005 places Finweek at 29,995 copy sales, more than 4,000 ahead of Financial Mail).

Says Finweek publisher Tim Spira: “There seems to be near-universal agreement that the new brand works, and although I cannot back this up with any stats, I would hazard a guess that brand awareness is higher now than before the re-branding, which is quite a feat when one considers that the previous brands were around for a quarter century.”

Clearly, a big part of the assumed feat was the marketing blitz announcing the new incarnation - while Spira won’t put a figure on the budget, he does offer the following: “it’s safe to say this is the biggest above-the-line campaign we’ve done for at least 5 years.”

Which implies what about Finweek‘s health? There’s been talk from insiders that the old magazines had been running at a steady loss, that they could very well be early victims of the expected downturn. So is the latest spending spree a last-gasp effort at revival? Not quite, says Spira. “It’s true that Finance Week and Finansies & Tegniek had been through some tough times, as have others in the space. At this point, I am happy to report that we have been making a positive contribution to Media24’s bottom line for some time now— I believe that if we stick to our current course our profitability shall continue to grow.”

Perhaps. This “current course” encompasses a willingness to sell false covers to advertisers, something that’s anathema to the purists and could easily push loyal readers away. Still, on the false cover sold to Santam, which went out to subscribers (85 percent of Finweek‘s circulation base) last October, Spira says he’s not aware of any negative feedback. “I believe it was quite clear to our subscribers that the false cover was an advertisement and that the real cover lay underneath. It’s much the same as delivering the magazine in a client-branded envelope, which we do from time to time, as do countless other magazines and newspapers. Had subscribers complained we would certainly have reviewed our policy—”

Whatever side you take in that debate, it’s hard to argue that Finweek‘s broad plans are anything but a logical response to the sector’s challenges - this year they’ll be pushing the reinvigorated brand further into additional media channels, such as radio, the internet and television, and they’re confident that advertisers will bite at the enhanced value.

Competitors BDFM would do well to close the door on them. While the Johncom-run division are now in the cross-media pound seats - with Classic FM on radio, Summit in television, and Financial Mail and Business Day in print - there have been sustained industry grumblings about their inability to merge these brands into attractive and workable packages, a complaint that could be borne out by the apparent lack of a group-wide internet strategy.

Innovation at BDFM, it seems, doesn’t happen at the corporate level. The major development out of the group in the first quarter of 2006 will be the launch of The Weekender, a new Saturday paper that’s entirely the responsibility of Business Day editor Peter Bruce.

“We’re going after the lifestyle spend,” says Bruce. “Our market research was comprehensive. We were told not to use the Business Day brand as people are sick of business on the weekend. If we can get it into the homes we will have made a massive breakthrough—Once the family realises that the people in this newsroom are reasonable journalists, we will be able to gain a foothold.”

Qualifying it as “a modest proposal”, Bruce adds that The Weekender has secured a three-year investment on a projected circulation of 30,000. “The board has been supportive,” he says, “we are all determined to make it work. In a way the Independent group has allowed us in there.”

Given his much lower copy sales targets, and the clear implication that this’ll be a way more niched product, Bruce’s veiled reference to the Saturday Star may not be entirely appropriate. More to the point is the effect the new brand will have on Business Day itself. “The paper will be produced by our newsroom. Friday is a pretty dead day now. The big question is what it does to our Monday edition. That is our weakest edition editorially and we need to set it up as an agenda-setting paper, so we will probably get the people editing The Weekender to do Monday as well.”

That said, there are more plans for the main title than just a recharged start to the week. Conceding that “the obligation [of listed companies] to publish financial announcements will go,” Bruce will be extending coverage in Business Day beyond the JSE. “We will look at companies in the non-listed sector if they’re doing interesting things, rather than just ignore them,” he says. Further, with reference to his statement that local newspapers are way too cheap, that he’d like to edit the paper “to the point where it’s worth charging R10 a pop for”, Bruce says he’ll be making the title more investor and reader friendly. “We will change the way we look at business in Business Day. There is no tradition in this country of understanding a company’s strategy, of how hard it is to run.”

As with Finweek and Maverick, Business Day‘s plans are a head-on and commonsense response to the sector’s structural stumbling blocks. But if anyone knows how to innovate in the space - maybe because he’s faced potential disaster more frequently than everybody else - it’s Hogg. Early last year, having lost his popular business slot on Classic FM, Hogg was again firmly against the ropes and was forced to broadcast on ailing community station Radio Today. The 20 percent stake Moneyweb held in Classic had also become a key part of the listed company’s annual results, and many were asking if this was the end for a company that had been reinventing itself since 1997.

Then, after posting its first ever loss in the year to March 2005, Moneyweb returned to profitability in the six months to September 2005. The listeners that had fled because of Radio Today’s poor AM signal had returned after a timely deal with SABC national station Radio 2000, and FNB had quickly come in as the show’s headline sponsor.

“We went to Radio 2000 with a proposal similar to the one we already had at RSG,” says Hogg. “At RSG, revenue-wise, we’re on risk while at Radio 2000 we’re guaranteed a certain amount. We made their budget for them in one deal.”

Hogg defines the agreements with Radio 2000 and RSG as “partnerships”, with Moneyweb handling the content and both sides doing the sales. The deal with The Citizen newspaper is more of a joint venture. “Staff is employed by the joint venture. They handle the advertising and we handle the editorial. The costs go to the JV, which we both capitalise. It’s 50/50 and we like that. Terry Moolman goes into stuff for the long-term.”

Two more deals with SABC are now in the pipeline. Moneyweb will be cooperating with Indian station Lotus FM on a personal finance programme from the first quarter of 2006, and they’re a long way down the track with Sotho brand Lesedi FM. Still, it’s the internet that Hogg’s betting on, and he’s waiting for the medium to properly kick in. “People don’t have time to go through broadsheets. We’ll give Business Day a good run for their money in the years ahead, I have no doubt.”

But Bruce won’t be sitting around idly. There’s something he has no doubt about either, and it gets to the essence of the sector. “If you don’t try replace revenue now, you will be in trouble.”

Making a Plan

If you want to make a quick buck, so the saying goes, stay out of media. If your heart’s set, we could add, stay out of business media. The stumbling blocks to profit in the sector are legion, and it’s not as if there’s a lack of competition. Here Kevin Bloom looks at some brands that have come up with innovative responses to the challenges.

You’d think that media in the business of covering business would be doing a bit better. On the face of it there’s no reason they shouldn’t be. We know - because they tell us - that the economy is booming. We also know that this is the media type that punts capitalism’s upside, unpacks a company’s prospects, works out optimal cost to income ratios. If anyone should be able to milk the good times, it’s them.

But the factors that get in the way of these brands showing a growth rate equal to that of other media sectors have not obligingly disappeared. As former Finance Week deputy editor Amanda Vermeulen wrote in The Media last January, we have a stock exchange that has halved in size over the last five years, a news service (Sens) that has removed a captive source of financial advertising, and marketers that are diverting more of their spend into lifestyle brands. Further, there is general agreement that the long-debated revocation of a JSE Securities Exchange rule, which requires listed companies to publish and pay for certain financial announcements in the print media, will soon take effect.

All of which is compounded by intense competition for readers and revenues in a segment that many argue is overtraded. At last count (including the business sections of wider titles) there were four print dailies, five weeklies and a new almost-monthly, plus at least six daily broadcasts on major radio stations, a number of primetime television slots and a dedicated television channel.

According to Alec Hogg, CEO of Moneyweb Ltd., the company that dominates financial news on the internet and supplies content to one newspaper (The Citizen) and two of the radio shows (Radio 2000 and RSG) mentioned above, the current buoyancy in the market is doing nothing more than keeping some of these brands afloat. “It’s a function of the economy,” remarks Hogg. “[Naspers CEO] Koos Bekker was saying on our radio show last night that in many spaces he is expecting to lose titles when there’s a downturn. And there will be a downturn.”

Beneath the surface, then, it’s apparent that business media isn’t necessarily the best place to be if long-term returns are the goal. So how does the list of pitfalls make Maverick‘s publisher Branko Brkic feel? Entering the space last October, with a glossy magazine that drops an inordinate chunk of change on presentation and gets distributed at the novel frequency of every four weeks, Brkic acknowledges that “there is going to be a bloodbath pretty soon.” Naturally, he doesn’t reckon he’ll be the one doing the bleeding.

Brkic points out that Maverick “does not limit itself” to covering JSE companies alone, since that would be to ignore “a seriously interesting and hugely important part of the business reality in South Africa”. He also avers that publishing financial results has never been considered part of his business model.

Brkic is all too aware that the sector has lost huge revenue to lifestyle media, and says there’s a good reason for it: “current business publications not offering an insightful and exciting read that also looks very good.” His aim, he says, is to woo advertisers back by doing just that.

Being original, or maverick, has already won Brkic a few notable fans—but an equal number have been conclusively and unsurprisingly alienated. For instance, the magazine’s rate card came out last year with the pay-off line that here was a title “for people with brains and money”, adding that such a class excluded drivers of a certain model of car. The Media was lucky enough to get forwarded the curt response of the manufacturer’s media agent, who, after subtly referring to the size of her client’s budget, suggested an alternative line: “The magazine with staff with no brains…and soon no money…”

And while Brkic goes about creating friends and enemies - in the hope of repaying his funder, who has invested “somewhere in the ballpark” of R11-million - some of the more established titles are also acknowledging the need for a shake-up. The re-branding and consolidation of Finance Week and Finansies & Tegniek into one title, Finweek, was perhaps the most noticeable development of 2005, and had the effect of giving Media24 the edge over archrival, BDFM’s Financial Mail, for the first time in decades (combined figures for the ABC period January to June 2005 places Finweek at 29,995 copy sales, more than 4,000 ahead of Financial Mail).

Says Finweek publisher Tim Spira: “There seems to be near-universal agreement that the new brand works, and although I cannot back this up with any stats, I would hazard a guess that brand awareness is higher now than before the re-branding, which is quite a feat when one considers that the previous brands were around for a quarter century.”

Clearly, a big part of the assumed feat was the marketing blitz announcing the new incarnation - while Spira won’t put a figure on the budget, he does offer the following: “it’s safe to say this is the biggest above-the-line campaign we’ve done for at least 5 years.”

Which implies what about Finweek‘s health? There’s been talk from insiders that the old magazines had been running at a steady loss, that they could very well be early victims of the expected downturn. So is the latest spending spree a last-gasp effort at revival? Not quite, says Spira. “It’s true that Finance Week and Finansies & Tegniek had been through some tough times, as have others in the space. At this point, I am happy to report that we have been making a positive contribution to Media24’s bottom line for some time now— I believe that if we stick to our current course our profitability shall continue to grow.”

Perhaps. This “current course” encompasses a willingness to sell false covers to advertisers, something that’s anathema to the purists and could easily push loyal readers away. Still, on the false cover sold to Santam, which went out to subscribers (85 percent of Finweek‘s circulation base) last October, Spira says he’s not aware of any negative feedback. “I believe it was quite clear to our subscribers that the false cover was an advertisement and that the real cover lay underneath. It’s much the same as delivering the magazine in a client-branded envelope, which we do from time to time, as do countless other magazines and newspapers. Had subscribers complained we would certainly have reviewed our policy—”

Whatever side you take in that debate, it’s hard to argue that Finweek‘s broad plans are anything but a logical response to the sector’s challenges - this year they’ll be pushing the reinvigorated brand further into additional media channels, such as radio, the internet and television, and they’re confident that advertisers will bite at the enhanced value.

Competitors BDFM would do well to close the door on them. While the Johncom-run division are now in the cross-media pound seats - with Classic FM on radio, Summit in television, and Financial Mail and Business Day in print - there have been sustained industry grumblings about their inability to merge these brands into attractive and workable packages, a complaint that could be borne out by the apparent lack of a group-wide internet strategy.

Innovation at BDFM, it seems, doesn’t happen at the corporate level. The major development out of the group in the first quarter of 2006 will be the launch of The Weekender, a new Saturday paper that’s entirely the responsibility of Business Day editor Peter Bruce.

“We’re going after the lifestyle spend,” says Bruce. “Our market research was comprehensive. We were told not to use the Business Day brand as people are sick of business on the weekend. If we can get it into the homes we will have made a massive breakthrough—Once the family realises that the people in this newsroom are reasonable journalists, we will be able to gain a foothold.”

Qualifying it as “a modest proposal”, Bruce adds that The Weekender has secured a three-year investment on a projected circulation of 30,000. “The board has been supportive,” he says, “we are all determined to make it work. In a way the Independent group has allowed us in there.”

Given his much lower copy sales targets, and the clear implication that this’ll be a way more niched product, Bruce’s veiled reference to the Saturday Star may not be entirely appropriate. More to the point is the effect the new brand will have on Business Day itself. “The paper will be produced by our newsroom. Friday is a pretty dead day now. The big question is what it does to our Monday edition. That is our weakest edition editorially and we need to set it up as an agenda-setting paper, so we will probably get the people editing The Weekender to do Monday as well.”

That said, there are more plans for the main title than just a recharged start to the week. Conceding that “the obligation [of listed companies] to publish financial announcements will go,” Bruce will be extending coverage in Business Day beyond the JSE. “We will look at companies in the non-listed sector if they’re doing interesting things, rather than just ignore them,” he says. Further, with reference to his statement that local newspapers are way too cheap, that he’d like to edit the paper “to the point where it’s worth charging R10 a pop for”, Bruce says he’ll be making the title more investor and reader friendly. “We will change the way we look at business in Business Day. There is no tradition in this country of understanding a company’s strategy, of how hard it is to run.”

As with Finweek and Maverick, Business Day‘s plans are a head-on and commonsense response to the sector’s structural stumbling blocks. But if anyone knows how to innovate in the space - maybe because he’s faced potential disaster more frequently than everybody else - it’s Hogg. Early last year, having lost his popular business slot on Classic FM, Hogg was again firmly against the ropes and was forced to broadcast on ailing community station Radio Today. The 20 percent stake Moneyweb held in Classic had also become a key part of the listed company’s annual results, and many were asking if this was the end for a company that had been reinventing itself since 1997.

Then, after posting its first ever loss in the year to March 2005, Moneyweb returned to profitability in the six months to September 2005. The listeners that had fled because of Radio Today’s poor AM signal had returned after a timely deal with SABC national station Radio 2000, and FNB had quickly come in as the show’s headline sponsor.

“We went to Radio 2000 with a proposal similar to the one we already had at RSG,” says Hogg. “At RSG, revenue-wise, we’re on risk while at Radio 2000 we’re guaranteed a certain amount. We made their budget for them in one deal.”

Hogg defines the agreements with Radio 2000 and RSG as “partnerships”, with Moneyweb handling the content and both sides doing the sales. The deal with The Citizen newspaper is more of a joint venture. “Staff is employed by the joint venture. They handle the advertising and we handle the editorial. The costs go to the JV, which we both capitalise. It’s 50/50 and we like that. Terry Moolman goes into stuff for the long-term.”

Two more deals with SABC are now in the pipeline. Moneyweb will be cooperating with Indian station Lotus FM on a personal finance programme from the first quarter of 2006, and they’re a long way down the track with Sotho brand Lesedi FM. Still, it’s the internet that Hogg’s betting on, and he’s waiting for the medium to properly kick in. “People don’t have time to go through broadsheets. We’ll give Business Day a good run for their money in the years ahead, I have no doubt.”

But Bruce won’t be sitting around idly. There’s something he has no doubt about either, and it gets to the essence of the sector. “If you don’t try replace revenue now, you will be in trouble.”

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