Pearson Overseas Holdings, which no longer has any financial stake in the media company BDFM, retains the majority say over the hiring and firing of editors at key financial publications as well as in the mediation of disputes at the South African operation.
In a sales agreement that the media expert Anton Harber on his blog has called "strange", Pearson has been given the right, apparently in perpetuity, to appoint two members of a three member independent committee, with the remaining appointee being selected by the board of the Times Media Group (TMG).
But TMG's chief executive officer, Andrew Bonamour, insists there is nothing unusual about the deal, saying that it was intended to protect editorial independence and was a "very common occurrence in the United Kingdom and Australia".
Bonamour did not clarify whether Pearson would retain its rights indefinitely, although it does appear from the SENS (JSE news service) statement that it was a condition of the sale; he said only that the "sales agreement has yet to be concluded".
The agreement sees Pearson, which sold its 50% stake in BDFM in April this year to TMG, hold sway not only over who is appointed editor of Business Day and the Financial Mail and to the African Broadcasting Channel, which owns Summit Television among others, but will also have the deciding vote in the case of any dispute relating to BDFM's editorial charter.
The deal was struck through TMG's subsidiary, Avusa Publishing Proprietary Limited, and might lead to differences of opinion in the future. Pearson, for example, has been very supportive of Peter Bruce, the BDFM publisher and editor-in-chief of Business Day, during his years as editor of Business Day.
Pearson's subsidiary, the FT Group, which includes the Financial Times, was actually the shareholder of the BDFM stake. It also has a separate 50% stake in the London-based Economist Group.
It was rumoured for some time that Pearson was looking to sell its holding in BDFM and other local publications in order to focus more on producing global news and analysis.
One expert said it was possible that TMG agreed to the terms of the deal to avoid Pearson selling the stake to another buyer. The deal gives TMG 100% control.
Bonamour said the result of the deal was that BDFM would no longer exist as a separate unit — it would be absorbed into the TMG structure and the BDFM board would be disbanded. Bruce would no longer retain his briefly-held position as BDFM's publisher.
"Why would we buy something to leave it as is?" asked Bonamour. In terms of the SENS announcement in April, the absorption of BDFM into TMG made economic sense.
In its statement, TMG said: "Newspapers and the entire news industry are undergoing fundamental structural change, requiring new investment, new ways of doing business, and often, difficult decisions."
The statement went on to say that the acquisition of BDFM would allow for "economies of scale, an integrated platform and operational synergies and will permit BDFM … to accelerate its digital transformation".
Business Day was compelled to reconsider its strategy and focus more on its digital offering after a change to stock exchange rules, which made it possible for companies to publish their financial results online and to publish a truncated report in print, reduced its income from advertising by 40%.
TMG also believes it can develop and enhance the television offering of the African Broadcasting Channel, which has been underfunded for several years.