It's good news that the Independent titles in SA may be up for sale, writes Anton Harber in Business Day. Their current owner, Tony o'Reilly, has treated them like an extractive industry for some years to finance loss-making part of his empire elsehwere. It is to be hoped that a new owner will treat the journalism on these papers with a little more respect.
BEST news of the week is that Tony OÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ReillyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s Independent News & Media may have to sell its South African assets, including its 14 newspaper titles. Most South Africans will celebrate the possible homecoming of these assets ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â and the prospect of a new media owner emerging.
The global parent company of Independent News & Media is in trouble, losing money, unable to pay its debts and facing a deadline at the end of this week to do something about it. It has a ÃƒÆ’Ã‚Â 200m bond to pay, having already missed one deadline, and little prospect of making it this time. And that is less than 20% of its total debt.
Although OÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢Reilly at first reorganised, invested in and grew the South African company that Anglo American gifted to him, for the past few years he has treated it like an extractive industry ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â pulling out every ounce of profit he could to subsidise his failing London newspapers. Despite massive profits from this country, the South African operation has suffered cost-cutting to the point at which all the papers have been hurt and some have become sad shadows of themselves.
Most tragic is the flagship Sunday Independent, which has not even had a full-time editor for years, and is down to a reporting staff of about two people. OÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢Reilly has wreaked havoc and destruction on South African journalism to turn healthy returns into obscene profits.
IndependentÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s South African newspapers are the most profitable in the global group, with margins of more than 20%. They contributed ÃƒÆ’Ã‚Â 26m to the international groupÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s profits last year, an increase of more than 30% over the previous year. In this time, very little has been invested in infrastructure, with the result that the printing presses are decrepit and the Sauer Street headquarters are like an office squatter camp.
There was speculation this week that this would lead to the companyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s bankruptcy. I think it more likely that OÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ReillyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s long-time rival and the next biggest shareholder, Denis OÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢Brien, will seize control. He is likely to be less sentimental than OÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢Reilly in sorting out the problems, selling assets to reduce debt or closing losing ones such as the London Independent and Independent on Sunday.
There have also been suggestions that one of our other media groups ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â Avusa , Caxton or Media24 ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Â would like to step in and buy up the local assets, but I doubt that competition law will allow it.
That means it might be wide open for a new black empowerment owner. LetÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s hope so.
The purchase is not without difficulty. The price tag could be high, given the local newspapersÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ performance, and raising a loan at a time of global uncertainty for the future of the newspaper industry may be difficult. The new owner will also have to finance investment in infrastructure.
Although the papers enjoy a monopoly in most cities outside Johannesburg, they are highly dependent on classified advertising, which is the first thing to move to the internet. The papers are therefore vulnerable to the imminent growth in local bandwidth.
A likely scenario is that a buyer will junk the presses and contract out the printing. Caxton is sitting pretty: as the player with major print capacity it is likely to benefit from whoever buys the operation.
There will be an outcry from some quarters over a black buyer on the basis that it is likely to be someone with links to the African National Congress (ANC).
Let me anticipate this by saying that almost any black buyer is likely to have links of some sort with the ANC. In fact, almost any buyer is going to have some political links somewhere. What matters most is how the new owner treats the newspapers, and respects the work of journalists, not their party membership.
The hope of having someone in charge who cares enough about the quality of our newspapers and journalism to invest in their future outweighs all else.
n It is worth a visit to my website of the week, AmericaÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s leading news source, www.theonion.com, which this week claims to have been bought out by the Chinese.
* Harber is Caxton Professor of Journalism at Wits University and blogs at www.theharbinger.co.za. This column first appeared in Business day on 22 July 2009.