South African media is very often its own worst enemy. Over the last few months we have watched a major restructuring at Times Media Group and the industry is now captivated by the takeover of the Independent Group by Iqbal Survé. These deals have resulted in a variety of back and forward columns and opinion pieces from various role players and in a lot of cases, they have made the sector look a lot worse than it really is. Frankly I don’t have a dog in this fight around the Independent deal, but a recent opinion piece from Xolani Qubeka the chief executive of the Black Business Council, can’t pass without comment.
Qubeka writes: “We are reminded of the recent bid by Bidvest to acquire Adcock Ingram’s business with an unsolicited R6.2 billion offer, and, if I recall, to date no one has sought to know where the funding would have come from. After all, both Bidvest chief executive Brian Joffe and Survé are established business moguls with proven entrepreneurial track records.”
Do they both have entrepreneurial track records? Definitely.
Funding – here is the issue – and if you don’t understand it then don’t comment on it or use throwaway lines like this.
In March 2013 when Bidvest released company financial results for the six months to 31 December 2012, the group had cash assets of R5.7bn. and a market capitalisation of R75.89bn. In a year, Bivest generates R4.4bn in cash in a year. Yes they can probably swallow a R6.2bn acquisition.
Sekunjalo on the other hand has a credibility issue because of its listed and un-listed asset structure.
Sekunjalo Investments, which is listed on the JSE, has a market capitalisation of R259m and cash on hand of R35.6m.
What Survé has in unlisted assets is a mystery and this is why there are calls for transparency. People can only make calls on what they can see. It is natural to be curious where somebody who will be responsible for the jobs at Independent Group, will be getting their funding.
Here is an interesting statistic: If one took R10000 and invested it in Bidvest 5 years ago and put another R10000 into Survé through his listed assets, the Joffe R10000 would be worth R21846 excluding dividends while the Survé R10000 would be worth R7910.
We could debate the economics of the market and investment merits of Sekunjalo and Bidvest for hours – the point is that what the market can see of Sekunjalo and Survé in the public space is not a R2bn entrepreneur. People need to be able to trust what they are seeing especially with claims that he is politically well connected.
I also take issue with this comment from Qubeka: “Media ownership is not rocket science or the preserve of a chosen class. Black people in this country have owned, controlled and grown more sophisticated businesses than media companies.”
Comparing it to a cellular operator like MTN, which is technically licensed by government to print money, is awfully immature.
Media is in fact one of the most complicated industries in which to operate globally and this is one of the reasons why there have been few new credible entrants into the market. Commoditised content, falling ad revenues, shrinking news rooms have all contributed to a tougher marketplace. Throw in the fact that by its nature, the role of the “Third Estate” is often to sacrifice profit for the truth and you start to realise how complicated the market is.
How many media companies lost income from Eskom or other government entities when they revealed shady business dealings or fought long protracted court battles seeking access to information? Who were they fighting for? South Africans of all colour.
How often have editors and editors in this country had to butt heads with senior government or business officials to fight for this democracy? Perhaps you can remind us again who was responsible for uncovering “GuptaGate” antics.
Look at the PowerFM radio launch this week - people of all races are excited to see a black-owned radio entity shaking things up here.
Are there problems in this industry? Certainly.
Does the sector need to transform itself? Absolutely.
However to argue that media is a “simple” industry holds no water. In fact it has often been the sector which has been called on to stand up for our fragile democracy when business and political leaders didn’t. I understand what you are arguing, but think a little bit harder about your argument before making unsubstantiated claims as it doesn't contribute to the debate.