With Primedia likely to go private soon, Kagiso Media may fill its slot on the stock exchange, offering opportunities to investors interested in radio assets, writes Viwe Tlaleane in Business Day.
Kagiso Media has remained largely off the radar, but the imminent departure of Primedia from the JSE may mean the company will assume a more public profile.
Primedia did, after all, provide investors with access to some of the best radio assets around, including Highveld 94,7, Talk Radio 702 and CapeTalk, alongside its other assets such as Ster Kinekor and Primedia Outdoor.
Now that Primedia is likely to head into the hands of William Kirsh and his fellow private equity consortium members, media investors may be taking another look around the sector ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â a move that might benefit Kagiso.
Rivals Naspers, Johnnic Communications, Caxton or African Media Entertainment are largely nowhere in the commercial radio sector, whereas Kagiso is.
KagisoÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s assets include Jacaranda (which has a weekly audience of 2,4-million listeners), East Coast Radio (which has 1,9-million listeners), and little-known but profitable stations such as Ofm, and 33% of Cape TownÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s P4 Radio, which has been relaunched as Heart 104.9.
These assets have been the impetus behind KagisoÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s strong cash flows in recent years. Yesterday, for example, Kagiso announced that its cash flows from operating activities for the six-months to December were R104m.
The share also doesnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t seem particularly overpriced; in fact at its levels of R15 yesterday, it is less than 20% above the price at which its stock was trading a year ago. However, KagisoÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s share price did touch lows of about R10 during the year, from which it recovered later.
Given its policy of paying out high dividends and funding acquisitions by debt, KagisoÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s stock seems to represent a number of opportunities.
For one thing, talk has abounded for some time that Kagiso could form the subject of some corporate action, such as a takeover or merger with other, larger media companies with different but complementary assets.
If so, this would only fuel a further climb in KagisoÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s share price.
‖Viwe Tlaleane edits The Bottom Line. E-mail to: bottomline@ bdfm.co.za