Media+groups+look+after+money+first,+Crotty,+BRep



=Media groups look after their own interests first=


 * Business Report, Johannesburg, February 1, 2006**


 * By Ann Crotty**

During the brief skirmish with PSG, Naspers's directors made much of the claim that independence "is of great strategic and practical value to media companies, both in the local and international arena".

But they failed to explain why. Was it to protect the Afrikaans language and heritage? Was it to protect Naspers from a Murdoch-type predator who would want to launch a dodgy, no-news-value, low-end, remarkably successful daily newspaper that would restrict coverage to such gripping items as body-theft by aliens?

The group subsequently said the desire to be unassailable was driven by a need to avoid "compromising the group's ability to do business in several countries". It seemed that established and potentially highly profitable joint ventures with parties in India and China might suffer from perceptions that Naspers could end up in the hands of a raider.

But surely in a global market characterised by sometimes frenzied merger and acquisition activity even the Indians and Chinese realise this is an inevitable aspect of doing business? And it's hardly plausible that Naspers's partners in India or China have strong views on its editorial stance.

No, it's much more likely that the directors' control concerns were private ones related to protecting their particular management style, and not public ones related to protecting diversity of ownership and editorial quality.

The notion that a media group plays a special role in society and should be sheltered from hostile attacks is extremely appealing to a journalist.

It prompts the vain hope that this much-put-upon segment of society might be afforded some special status; that readers might stop focusing on all the little misStakes we make; that there might be an end to the snide whispering when we sneak into a room.

But while all of us in the print media would like to believe the industry is a little special, the sad reality is that it really is no different to the baked beans business.

This reality is dictated by the inescapable need for any industry to make profits for its shareholders in order to survive. The only way to escape such strictures is to create the sort of trust structures under which the UK's Economist and Guardian are controlled and managed.

These trusts do not have to answer to the often short-term demands of fickle shareholders who are trying to anticipate the equally fickle demands of consumers.

Ironically, if Naspers's control had centred on a trust and not all sorts of unlisted shares, it might not have been able to support the exceptionally profitable, but at times nerve-racking, growth path chief executive Koos Bekker has taken it on.

So when there is talk of the need to protect the control of the media it seems the protection is wanted for the guys who manage or control the group and not for any public interest values.

Across the globe there are all sorts of contrived shareholder structures that aim to secure control in the hands of the entrepreneurial families that founded particular media groups.

This is how the Bankcroft family controls The Wall Street Journal, the descendants of Adolph Ochs control The New York Times, and the Graham family controls The Washington Post.

The Mohn family and the Bertelsmann Foundation control the Bertelsmann Group, the world's third-largest media conglomerate. Then there's Rupert Murdoch's News Corporation, whose media assets are spread across the globe.

Besides the quirky element of US xenophobia that required Murdoch to become an American citizen to control a media group in that country, efforts to control the media are generally not much different from the Pikwik structure that allows the founding Ackerman family to control Pick 'n Pay.

In South Africa the print media is dominated by the Independent Group, Johnnic Communications (Johncom), Caxton and Naspers. Only Johncom's control structure is open to assault.

The Independent, which owns Business Report, is 100 percent owned by the Independent Media Group based in the UK and Ireland, while Caxton's control is held tightly in the hands of the Moolman-Coburn Partnership.

Naspers's control was regarded as tightly secured in a complex web of cross-holdings of unlisted shares until PSG's Jannie Mouton decided to see how secure it was.

To shore up an apparent weakness in the structure, two key Naspers executives, Bekker and Cobus Stofberg, provided Sanlam with a huge profit on half of its unlisted Naspers-related shares in a deal that presumably gave them first option to buy the rest.

The sad reality is that financial imperatives trump social and political requirements. Management's focus is not on producing a better newspaper but on generating more profits. For this reason individuals who control papers should not be relied on to protect the public interest and so should receive no public dispensations.

In the absence of Guardian-type trusts, we must rely on strong public regulatory bodies such as the competition authorities to protect the public interest.


 * From: http://busrep.co.za/index.php?fSectionId=553&fArticleId=3091322**

830 words