Newspapers still in the money in South Africa

The South African media industry will keep an eye on how new owners move to combat dwindling circulation and advertising revenues.(Oupa Nkosi, M&G)

The South African media industry will keep an eye on how new owners move to combat dwindling circulation and advertising revenues.(Oupa Nkosi, M&G)

Independent South Africa made an operating profit of more than ­R380-million last year, enough proof, perhaps, for those businesspeople who still have faith in newspapers. But it was R60-million less than the year before, begging the question: Is it all downhill from here?

The South African operation's Dublin-based parent, Independent News & Media, has put the local group on the block in an effort to pay down its R4.2-billion debt.

The Sekunjalo consortium is reportedly in the running to purchase Independent South Africa and is said to have the backing of Middle Eastern investors. Canadian and Silicon Valley billionaires are also involved.

Iqbal Survé, founder and chairperson of the Sekunjalo group, told the Mail & Guardian he was unable to comment and an announcement would be made in due course.

Investment flow
Survé is also a chairperson of the Saudi Arabia South Africa Business Council, which set up a R20-billion holding company this year in a bid to deepen trade and investment flow between the two countries.

At the company launch in June, Minister of Trade and Industry Rob Davies said the joint venture was in line with South Africa's strategy of seeking out new sources of investment and trade with dynamic economies. "The African continent is the new great frontier," he said, "and South Africa has a pivotal role to play."

Sekunjalo is made up of companies, investments and funds. Its investments include stakes in companies such as Siemens, Nokia, British Telecom and Saab Defence, and interests in fishing, healthcare and biotechnology.

Survé is known for his "African optimism" and regularly says the print media is not dead. He believes there are huge opportunities in Africa to intelligently combine print and media to reach a wider audience.

The South African media industry will keep an eye on how new owners move to combat dwindling circulation and advertising revenues.

Massive investment
Independent South Africa's fortunes have been mixed. The group will require massive investment to upgrade its assets. It reported that circulation volumes were down by 4.4% in its 2011 annual report, but noted that its ­isiZulu newspaper, Isolezwe, grew its circulation by 7.2%. Advertising revenue fell by 2.1%, but digital revenues showed growth of 18.8%. During the year in question, Independent Online built nine new title sites, seven mobile sites and apps for iPad and iPhone. It remained the second-largest online news portal in South Africa.

Rival media house Avusa has a market cap of about R2.8-billion and operating profit in its media component was R153-million in the year ended March 2011, up from R127-million. In contrast to the 17% decrease in 2010, advertising revenues rose by 10% year on year. Revenue rose by 7% and Avusa's core media circulation has grown.

Newspapers provided the largest portion of revenue for South Africa's other media giant, Media24, it said in its latest annual report for the year ended 31 March 2011. Although its consolidated operating prot decreased to R370-million, the group's trading prot increased by 19.2% year on year if abnormal items are excluded.

Newspapers contributed 36.5% to Media24's R7.1-billion revenue stream.

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

Client Media Releases

Roadshows create awareness of Sanral's youth programmes
Business models and books to abandon
FTI offers discounted Business Analysis courses
SENTECH achieves another clean audit
Makhamisa Foods at America's food and beverage show
Health industry consolidation boosts AfroCentric performance
The Fourth Industrial Revolution and knowledge management