New media boss either has vision or political motives

Iqbal Survé, South Africa's latest media mogul and the new owner of Independent News & Media South Africa (INM), believes there is potential for print growth in Africa, digital expansion and more vernacular-based newspapers.

Media commentators say he is either a visionary blinded by civic duty to keep the product locally owned or that, as a well-connected businessperson, he is being driven by political motives.

Survé's company, Sekunjalo Holdings, is a top-rated black economic empowerment company that is involved in a number of government ventures and projects in areas such as telecommunications, health, marine investments and technology.

Survé chairs the JSE-listed Sekunjalo Investment Limited, but the INM purchase is by Sekunjalo Holdings, rather than the listed Sekunjalo Investment Limited. Survé informed shareholders about the deal through a stock exchange news service statement. The holding group has a majority 41.38% holding in the listed company.

Because media companies typically demand transparency from the companies they write about, one could expect them to disclose their shareholders, but Survé is mum on the extent of Sekunjalo's investment in INM and the identities of the other shareholders. They are rumoured to include Saudi Arabians or Qataris.

Survé described himself as a cautious and patient investor, saying he saw the turnaround of INM as a long-term project. This could be why he has opted for equity rather than debt funding for this project. He said he plans to build the company and grow jobs.

Survé denied there was a political motive in his successful R2-billion bid for INM, saying he is a businessperson who believes that the company, with established brands such as the Star, Pretoria News and Cape Times, and an operating profit for 2011 of R380-million was a good deal.

"It's a highly profitable business … the problem was that all of it was taken out of the country by the Irish to fund other operations and no money was put back into developing the business," he said.

Survé plans not only to invest in the company to repair 10 years of a lack of investment that saw the Cape Town division seriously depleted and the neglect of the company's printing presses, but also to draw on INM's strong online presence with the IOL websites and its success with isiZulu paper Isolezwe to set up newspapers in other vernacular languages.

The print sector
​The lack of print media expansion into Africa by INM's South African competitors highlights the risks perceived by media companies such as Caxton, the Times Media Group and Media24. The print sector is also seeing restructuring. As media analyst Anton Harber said in a lighthearted commentary this week: "You have to be a little crazy to buy a newspaper in this country at this time.

Anywhere in the world, it's an industry going through a complex and unpredictable revolution where new technology is taking away the barriers of entry and making redundant everything we know about how to make it work.

"Add to that a depressing advertising market and restless politicians and you need to have a touch of insanity to take it on."

Harber said he suspects that Survé is crazy, but he "may not be crazy enough".

Khulekani Dlamini of Afena Capital said there were risks for the debt funding of a media project because of concerns that revenue might not grow at previous rates, whereas increases in cost are a certainty. That said, Dlamini believes that in current market conditions INM could have serviced a R200-million annual debt at a present price-to-earnings ratio of about seven.

A sustained decline would put pressure on the company. INM's operating profit in rand terms is down 34%, which means operating margins of 12.2%, a level not seen by INM in the past 10 years.

"The key issue is if they plan to make use of an opportunity to diversify to different media … and to grow their online offering making use of the good content and strong brand that they have," Dlamini said.

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