The sombre confirmation by South Africa’s Finance Minister Nhlanhla Nene that he has quietly started calling in the nearly R1.3 billion invested in the national media giant Independent Newspapers should trigger alarm bells ringing from national newsrooms right up to the floor of parliament and way beyond into the marketplace of popular discussion.
It is pretty serious stuff. Political ramifications abound, freedom of the press can be compromised and free speech could be at risk. What if this is a sinister ploy by the ruling ANC government to bring down the country’s most influential and biggest newspaper group for their own selfish ends to dilute criticism as South Africa heads towards a potentially critical election in 2019. What better way of silencing a critical press than by ripping out its heart?
After months of speculation about the future direction and viability of Independent Media, this latest episode of unfolding drama has potentially serious ramifications for press freedom in the evolution of the Rainbow Nation. It could well spell disaster for Dr Iqbal Surve, the charismatic leader who barely five years ago wrested control of arguably South Africa’s most profitable and respectable newspaper group out of Irish hands.
In confirming the deal, Surve was quoted as saying: “I am delighted that I have the opportunity to bring these newspapers, this national asset, back to South Africa. I am bringing Independent back home.” But, sadly, the age of the media baron is long dead and buried. And any resemblance that Surve may have had of being another Lord Beaverbrook, William Randall Hearst or even, God forbid, Rupert Murdoch, in the making has the odds now heavily stacked against him.
In a reply to a question on notice by Democratic Alliance MP Alf Lees, Mr Nene confirmed the Public Investment Corporation (PIC), the country's biggest asset management firm that controls the pension savings of government employees through the Government Employees Pension Fund (GEPF) had invested nearly R1.3 billion in the Independent Media Group.
The PIC’s exposure to Independent Media is as follows:
· R166 333 000 – direct equity (25 per cent)
· R579 683 083 – debt loan
· R183 000 000 – debt loan
· R346 096 192 – debt converted to bridge finance
According to reports, the PIC acquired a 25 per cent stake in Independent Media, while Sekunjalo’s majority share had been largely funded by the PIC.
In the unfortunate situation where Independent Media falters or is unable to meet its debt to the PIC, thousands of government workers will be baying for blood if they should lose their pension money. This will translate into yet another disaster for the African National Congress government that is already under siege with claims of rampant corruption, graft, theft and nepotism. It spells more bad news for the ANC as an election looms. Already there have been demands made of the national broadcaster SABC to consider allocating increased coverage to the ANC come election time.
From his bunker in Dublin, owner Tony O’Reilly could see the writing on the wall. Digitalization coupled with the complex transformation in post-apartheid South Africa – as much in the national news rooms as in society in general – was a recipe for disaster. There were no rivers of gold in the advertising columns.
Here was a struggling newspaper group that had fallen from its pinnacle of grace and glory. It was a newspaper group that was hindered on all sides by sharply falling advertising revenue, a drop in readership and a drop in sales.
Factor in the effect of new technology and the need to transform the newsrooms into a modern and competitive working model was costly. Even more damaging was the ever rising cost of newsprint, a staffing conundrum that saw an exodus of senior staff to more lucrative employment opportunities and a general turnaround in the fortunes of newspapers around the globe.
But along came Surve and his cronies in the form of Sekunjalo Media Consortium as a majority shareholder backed up with the deep pockets of the Public Investment Corporation (PIC).
On its website, Independent Media is described one of South Africa’s leading multi-platform content companies. Its stable of fine, quality publications include 20 of the country’s most prominent newspapers with The Star in Johannesburg, Cape Times and Cape Argus in Cape Town and The Mercury in Durban firmly entrenched in millions of households throughout South Africans. African Independent is the only title which serves the African continent and I'solezwe lesiXhosa provides daily news to the 3.5 million literate Xhosas in the Eastern Cape. Business Report is South Africa's largest business newspaper with 1.2 million readers.
Independent Online, popularly known as IOL, is Independent’s current digital offering, and brings millions of readers breaking news as events happen in the country and around the world. With a growing daily unique online audience it is one of the largest news and information websites in South Africa.
So it begs the question why would the PIC as an administrator of pension money that belongs to working class government employees place so much trust in Independent and gamble on the success of a struggling media group.
But there is no need to search far. The PIC is not averse to losing money. The funds that invest money with the Public Investment Corporation lost more than R100 billion when former President Jacob Zuma fired Finance Minister Nene on 9 December 2015. According to Daniel Matjila, CEO of the PIC, the Government Employees Pension Fund lost R95 billion, the UIF lost R7 billion, the Compensation Fund lost R3 billion, while other funds saw R1.2 billion slide away.
Dr Kolbe is a writer and media commentator.