Iqbal Survé, whose Sekunjalo conglomerate’s R2bn offer for the local Independent Group has been accepted by the newspaper publisher’s troubled Irish owners, is nothing if not ambitious and patient.
In an interview with The New Age yesterday, Survé was under no illusions that turning his new acquisition around would take time. First, though, the acquisition has to go through the regulatory hoops, particularly those of the Competition Commission – a process that could take anything from three to six months.
Asked about the R2bn price, Survé was happy that it was reasonable even though it came in several hundred million rands below those of others who had approached the Irish owners. The R2.4bn and R2.6bn that others had apparently been toying with were “crazy”, he said.
Sekunjalo had used Citibank and its own 20-strong team of experts to complete a due diligence of Independent, a process that had taken some three months. And Survé made clear the importance of bringing ownership back to South Africa. Previously, strategy has been set in Ireland, now restrictions no longer exist.
But what now? First there’s the not inconsiderable matter of restoring confidence in the group – confidence of employees just as much as of outsiders. Fundamental to that will be to plough revenues back into the business.
Among the earlier tasks will be to converge the group’s website with its print titles - something that was not achieved under foreign management. As Survé says: “We understand South Africa and Africa as a whole.
“We have good people in the business and I am confident we can work together to implement the ideas I have. We understand the issues.”
“First will be to meet with employees to explain what we hope to achieve and to allay any worries that might come with a change of ownership.”
On the production side, there’s the matter of the group’s own presses, all of which have been allowed to deteriorate and that, probably, have no more than a couple of year’s working life left. Replacing them might not make commercial sense, but the group has printing contracts with outsiders such as Caxton.
“Our strategy is expansionist. In addition to growing the existing newspaper titles, there are opportunities in vernacular newspapers here and in other countries.” He mentioned Angola, Tanzania and Mozambique.
But as far as Survé’s vision goes, he doesn’t see the best strategy for media growth as being confined solely to the Independent Group.
“We hope to be highly collaborative with other media houses, including The New Age, on ways of growing the media offering. It’s time to take a pro-South African and pro-African approach.
“And we have a responsibility to help improve literacy here and in other parts of the continent.”
Survé says he is patient and that he takes a long view on business – 10 years or more – and that this will be his approach at the Independent.
He’ll need the patience of Job. Halting, let alone reversing, the decline in circulation figures that have plagued Independent’s titles will be a major task.
When Irish multimillionaire Tony “Beanz” O’Reilly – married to an heir of one of Greece’s then largest shipping outfits – caused his Independent Newspapers publishing group to pay some £19m for 31% of the then-named Argus Group in 1994, the razzmatazz was nauseating.
Apart from the tasteless son et lumière show that flashed over a Braamfontein high rise, there were seemingly unending glutinous declarations of the skills and investment benefits that would come from the investment.
It didn’t. Rather, it turned out to be the sort of “investment” that the country could well do without.
In 1994, O’Reilly put his socially ambitious poodle, Ivan Fallon, to run the group and to oversee what would be a steady milking of revenues and total disregard for any real developments.
The presses would either be allowed to deteriorate or were sold, as were other real estate assets such as the historic Cape Times building in Cape Town.
Five years after the first Irish purchase, O’Reilly snapped up the remaining 69% of the South African publisher and delisted it from the JSE. Everything, including what would turn out to be a persistent milking of the group, was no longer publicly visible.
And the milking needed to help support O’Reilly’s ill-managed and sputtering Irish interests could get under way. Profits left the country holus-bolus and needed local investment in the business was largely passed over.
When O’Reilly first appeared on the South African scene, he and Fallon loudly proclaimed that the Argus’s attraction lay in its dominant position in the country’s English-language press firmament.
O’Reilly invoked his claimed close friendship with Nelson Mandela and made sickening declarations of his confidence in the new South Africa. It was all hogwash.
By way of example, back when O’Reilly came lumbering in, The Star newspaper had a daily circulation of more than 200000. Today, if truth were told, it’s less than half that figure.
As a whole, back in 1994, the group owned 12 newspapers, published 4 million copies a week and could count on more than two-thirds of the daily market in the country’s four main metropolitan areas. Annual revenues were in the region of £135m, generating a pretax profit of £10.5m. And it employed about 5000 people. Today, employee numbers are only one third of that.
Blame the collapse of newspaper sales on the advent of electronic media if you will. But the group’s bosses either failed to see or, more likely, swept under the carpet new opportunities that might have called for a commitment to ploughing revenues back into the business.
Eventually, in 2009, O’Reilly was ignominiously ousted from the Irish parent, while Fallon, brother of the more successful, entrepreneurial and less crass Padraic, was simultaneously booted out of the CEO’s office to pursue alternative career opportunities.
Between them, O’Reilly and Fallon had succeeded in driving the entire Irish group into the ground, leaving it with hundreds of millions in debt. Rebuilding the business and taking it forward will now call on all of Survé’s business skills. But, at least the group will now be run by people who understand South Africa and not by a bunch of Irish parvenus.