Too big for our boots?

April 17th, 2008

The ANC and the Government have been expressing two general concerns about our media: that there is too great a consolidation of powerful media groups, and that they are out of touch with the reality of our country. Are they right?

The concern about the consolidation of media companies into large and very powerful conglomerates is a global concern, arising mostly out of what are called the Big Six: the giant industrial groups which dominate international media. These are Rupert Murdoch’s News Corporation, Time Warner, Vivendi, Disney, Viacom and Bertelsmann.

Each of these is a mighty conglomerate with massive interests in a huge range of media and enormous influence in both news and entertainment.

The situation in South Africa, however, is complicated. The number of media outlets has grown significantly since 1994, particularly with the licensing of a lot more broadcasters, the growth of the internet and the boom in the newspaper market. Just this week, another newspaper hit the streets when the Times moved from being a freebee for Sunday Times subscribers to one available for a price on the streets. As we speak, satellite broadcasters like Telkom Media are undertaking massive investments to widen the range of pay-TV options.

We can count two giant media companies (SABC and Naspers), and three medium-sized (Avusa, formerly Johncom, Independent and Caxton). But one change which has happened is that there are a number of next-level media companies which have sprung up, largely as a result of the government imposing BEE criteria on new broadcasting licenses. These include Kagiso Media, HCI (owners of eTV and Yfm) and AME. Primedia used to be among the mid-sized but after shedding its international interests, has re-joined this latter group.

But the trends are not consistent. In broadcasting, the SABC may still have far more stations than anyone else and command more than 50% of the advertising market, but this has shrunk from about 90% a decade ago and there is certainly more diversity than there was when they exercised a near-monopoly.

In newspapers, Naspers’ Media 24 has a stranglehold on the Afrikaans market (following the demise of their rival Perskor), and also now sells more English-language papers than anyone else, largely because of the success of the Daily Sun. In total, I calculate that they sell 50% of all of our newspapers.

This is a big shift. The Independent Group still has more titles in more places, and Avusa still has the giant Sunday Times (which by itself takes, I estimate, nearly 10% of the country’s newspaper advertising revenue), but Media24 is getting the nation’s eyeballs.

The magazine market is very fragmented, but Naspers has dominance (even when you take account of their recent shenanigans with circulation numbers). They take over 40% of the advertising revenue, far ahead of their nearest rival, Avusa, which draws about 11%. Media 24 also leads the internet, market and the hugely lucrative pay-TV market through Multichoice, MNet and Supersport, though this is a monopoly about to be challenged.

Naspers’ international interests, combined with their goal of being the leading media player in the developing world, put them in a different league from the rest of the country’s media companies. Their market value of some R60-bn puts them way ahead of their nearest media sector rivals on the JSE, Caxtons and Avusa, worth just under R7-bn and R6-bn respectively.

Avusa has multiple interests in everything from cinema distribution to book sales, but this company may be heading for a break-up rather than a consolidation, depending on who gets control of it. Already they have sold their pay-TV interests and are separating out their cross-holding with Caxtons.

The strength of these companies is a mixed blessing. While it can make the cost of entry for new media outlets high, it also ensures that any government which wants to take on the media has to deal with formidable and well-resourced opponents. The Sunday Times would have found it much harder to embarrass the powerful as they have in recent months if editor Mondli Makhanya did not have major corporate backing.

Also, the bigger the company, the more it is able to experiment with new ventures. The Naspers group has been the boldest, sinking huge amounts of money into new media and new newspaper titles, taking risks where others have feared to tread.

All of this does signal a need to take a close look at the industry before jumping to conclusions about the big companies. In coming weeks, I will examine the charge that our media is “out of step� with the rest of the country.

*This column first appeared in Business Day, 20 Feb 2008

Entry Filed under: Anton Harber, Media regulation