Naspers success nothing to do with new South Africa, Publishing or even Afrikaans!

In an article by John McDuling for Quartz, he inadvertently admits the lie and deceit that large traditional news corporations like Naspers, USA Today, WSJ, etc. have to undergo to continue pretending success at serving its loyal readers, for the sake of its share price.

He starts by pointing out that last week, America’s biggest newspaper by total circulation, USA Today, was effectively discarded by its owner. News Corp,while the owner of the second biggest, the Wall Street Journal (WSJ), suffered another revenue decline. Yesterday, the New York Times’ media critic, David Carr, sounded the death knell for print newspapers, while viral content site Buzzfeed raised $50 million to accelerate its world domination through your Facebook newsfeed.

Then after stating the obvious that the trend is undeniable, he somehow makes a leap that investment success is success at being a publishing company:

“Traditional newspapers and print publishers are struggling, while internet companies are flourishing. But it didn’t have to be this way. The two sectors don’t have to be at war, and the best evidence of that can be found in South Africa.

The astonishing transformation of the South African media company Naspers, the company, which owns more than 50 domestic newspaper titles, began nearly a century ago as the mouthpiece of British South Africa’s apartheid regime, but through some extremely clever (some might say lucky) investment advice, it has transformed itself into a genuine global digital media giant. It now owns one of Africa’s biggest pay TV businesses, but more importantly, is the single biggest investor in the Chinese internet powerhouse Tencent. In 2001, Naspers paid just $34 million for a 46.5% stake in Tencent, which owns, among other properties, the highly successful WeChat messaging platform. Today its stake in the business is worth more than $50 billion.

Naspers was also (indirectly, through an investment in Russian internet company mail.ru) an early investor in Facebook. Other bets it has placed, in key emerging markets such as India and Brazil, have yet to pay off. But the lesson for legacy media companies (and any incumbent, in any industry) is still crystal clear. Transformation is possible, and diversification is wise.

The success of Naspers does not guarantee the future of its newspapers (which, unlike its American corporate peers, the company still controls). But it does appear to have given the company a lot more flexibility in managing them. There is little pressure from the company’s shareholder base to do anything too radical, because Naspers has been a mind-blowingly good investment—thanks to Tencent. The stock hit another high on Monday and is up by more than 3,000% over the past decade.”

It is patently clear that Naspers has not only long since discarded its loyal base of Afrikaans readers, but has also moved on from its “mass market”, which it started serving in 1994. When South Africa was handed over to the ANC and Mandela along with the 40 million newly “civilised” potential customers, NASPERS quickly acquired access to this mass market after a series of aquisitions and aggressive takeovers, to which the writer can personally attest.

It seems however that nobody has bothered to tell all NASPERS’ century long loyal customers, nor its new mass market, that they are no longer relevant nor even required for NASPERS to achieve their bottom line. Some in the Afrikaner community have in recent years become aware that their news no longer reflects their lives and aspirations and some have accused Naspers, which also operates as News24.com, of being prejudiced against them and whites in general. They have formed a facebook group called Boikott Naspers and quickly garnered 23,000 members. Indications are that their efforts are working with NASPERS closing title after title down, the most recent being the quiet withdrawal of Die Beeld from circulation in Kwazulu-Natal province.

Naspers is now clearly yet another multi-national corporation with very little national character or loyalty and are firmly on the globalisation bandwagon, along with all the negative side effects that brings. As the chart below shows, the only single reason why Naspers is NOT yet another ailing traditional publisher, is simply due to one very lucky investment in a Chinese Internet company. Given that Naspers are a client of a top Investment Banking firm in London, it is unlikely Naspers can even claim any credit for this fortuitous move either. Everything else pales in comparison. It seems if readers still want some kind of connection with their news provider, they will have to go elsewhere, or go online…

 

DV

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  • Ed

    Fitch cuts South Africa’s Naspers’ debt to “junk” status

    JOHANNESBURG (Reuters) – Credit rating agency Fitch on Wednesday cut its rating on South Africa’s Naspers’ senior unsecured debt to non investment grade or “junk status”, citing a deterioration in its profitability due to hefty investment in development.

    Fitch cut its rating to BB+ from BBB-, it said in a statement.

    http://af.reuters.com/article/investingNews/idAFKBN0GD0LD20140813