/ 2 November 2012

Naspers: Going for a global empire

Media mogul Koos Bekker
Media mogul Koos Bekker

Koos Bekker is now among South Africa's richest people. He is also one of the world's best-rewarded executives, his share options netting him a profit of just more than a R1billion this year alone. He was named South Africa's entrepreneur of the year in 2006 and regularly makes Forbes's list of the 20 most powerful people in Africa. In fact, the magazine went so far as to call him the "Rupert Murdoch of this continent".

But it is not a fair comparison. He does not have or use the political power of a Rupert Murdoch, partly because most of his newspapers are Afrikaans and no longer have the clout they once had. The mass-market tabloid Daily Sun and the upmarket Sunday broadsheet City Press are of growing influence, but that influence is not wielded directly by him. Nor does he have Murdoch's faux dislike for the establishment, of which he is very much a part.

He is erudite and stylish and does not share the Australian's brashness. Murdoch is a late adaptor to new technology, whereas Bekker makes his mark by an aggressive pursuit of it. Murdoch throws money at newspapers in the major Western metropolises such as the London Times and The Wall Street Journal, which give him political influence and respectability, whereas Bekker throws money at smart young entrepreneurs and engineers in the developing world. Murdoch's newspapers reflect his social and political views; Bekker's do not necessarily. Bekker himself shows little respect for Murdoch: "He is an ideologue and that is dangerous," he told me.

But like all media moguls, both Murdoch and Bekker have to negotiate complex working relations with those in power wherever they operate. They are defined in many ways by how they handle power: how they use it and how they relate to it.

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Naspers, started almost a century ago as a key part of the Afrikaner nationalist project, was rooted in the social and political milieu of apartheid's ruling clans, as was Bekker himself, having grown up on a Heidelberg farm, the son of a farmer, teacher and national intelligence man.

Licensing and regulation
But Naspers did more than just survive the transition to democracy; unlike its rival, Perskor, which disappeared, it thrived. It did this mainly by maintaining its pay-television monopoly for 15 years in the face of a new government whose stated policy was to open up the broadcasting market. One reason for this, or so it is claimed, is that it never incorporated local news into its programming, something that might have attracted unfavourable attention from those in power. It is a view that Bekker disputes. When Naspers got its licence, he says, the National Party government prevented it from doing news during prime time. It was, he says, "like saying you could open a restaurant but not at meal hours". In the 1990s, when things were opening up, M-Net put together a news team and planned to launch a nightly news programme. Bekker says they pulled the plug because of the costs.

It is an answer that will not satisfy those who think that Naspers chose to avoid television news because of the risk to its relationships with those who controlled licensing and regulation.

Going into Africa in the early 1990s, Naspers had to negotiate some complex arrangements with those in power. In Namibia, its 49% partner is the investment arm of Swapo, the ruling party. In fact, Naspers operates in many countries that foreign investors find difficult. Google, for example, abandoned China because it could not live with the levels of censorship. Because social media is the arena in which Chinese censorship and control is fought out, this puts Naspers's Tencent investment at the heart of Chinese politics. In fact, one could go further: as a social media platform seeking to comply with Chinese laws, Tencent must actually police China's censorship rules.

China uses its "great firewall" to screen international material before it enters the country, but internally it forces operators to monitor content and enforce the rules. "These domestic companies are the stewards and handmaidens, the tools and enforcers of China's inner layer of internet censorship," writes Rebecca MacKinnon in her book Consent of the Networked. "Why hire government employees to carry out censorship and surveillance when companies can be compelled to do it?"

Tencent is required to use a combination of keyword searches and human editors to "identify objectionable material and remove it from the internet completely". Indeed, an insider has told me of a large room in Tencent headquarters filled with people identifying and deleting content that falls foul of the strict laws. "At Tencent, they are running what is probably one of the world's biggest censorship operations," the person said.

It is not a matter of choice. "Com-panies that failed to obey government orders face different grades of punishment: from warnings or stiff fines to temporary shutdowns or revocation of the company's business license," writes MacKinnon. "Many thousands of Chinese websites and dozens of companies have been shattered because they failed to control their content adequately."

Google topic
To illustrate how tight these controls are, an exiled activist site ran a translation of the order issued by the Chinese government's state council information office when Google left the country. It banned all discussion on the Google topic, ordered all websites to be cleaned up of any text, images, sound and videos that support Google or "have a different tune from government policy", and ordered the deployment of "specific manpower to monitor Google-related information". Finally, it called on them to report timeously any "information about mass incidents" (the euphemism for protests).

"Such directives are common," MacKinnon says. "All content providers have to sign the 'voluntary' public pledge of self-discipline for the Chinese internet industry, in which they vow to avoid disrupting state security or social stability." Blog providers such as Tencent signed the Convention on Blog Service Discipline in 2007, banning the spreading of rumours or "false information". Messenger services are expected to provide information to the authorities upon request.

Ask Naspers's people about all of this and they say they leave it to their local Chinese partners to negotiate their relationship with authority. They would not dream of being involved, because they would be way out of their depth. "About censorship I can hardly comment," Bekker says. "Tencent is a listed entity, with its own board and identity." His right-hand man, Cobus Stofberg, adds: "In every country we operate in, we leave content questions to our local partners and managers. We find that they are on the ground and the best judges of how to handle issues."

Naspers's future depends on it. Eighty percent of its current market value is based on its China investment and 10% on its Russian investment. The other 10% includes all of Africa. Naspers may loom large in South Africa, but South Africa no longer looms large in the bigger corporate picture.

Their investment approach allows for this hands-off and leave-it-to-those-who-know attitude, as does their base in South Africa. Bekker says that the biggest lesson he learned from the first wave of international investments was not to try to run operations in these companies directly, but to hire smart local entrepreneurs to do it.

The censorship issue would bring a lot more scrutiny for a United States company, as Google and Yahoo! have found. Google left China because it could not live with the censorship imposed on it – but Naspers is more flexible. It helps, says Meloy Horn, the company's investor relations manager, that "South Africa has no enemies" and we are more welcome in places such as China, Russia and Brazil than, say, an American company.

One might say, generously, that this is a pragmatic attitude learnt while surviving censorship in South Africa. Or, less generously, one might say that it reflects Naspers's history as a media company schooled in thriving in closed societies.

Anton Harber is the Caxton professor of journalism at the University of the Witwatersrand and was a founding co-editor of the Weekly Mail (now the Mail & Guardian). His book Diepsloot won the Recht Malan Literary Prize and was shortlisted for the Alan Paton Award