The media sector continues to produce positive results, thanks to lower interest rates. The favourable economic environment has led to an upswing in consumer spending on media items, and advertisements by retailers have followed.
Big media players such as Naspers, Johnnic Communications, Primedia and Kagiso continued to play their cards right, enabling them to churn out fat profits. However, an enabling environment does not guarantee success. Moneyweb's earnings dropped 17% last year due to an ill-judged split from Classic FM.
Naspers is not called SA's leading media company for nothing. It led the pack by recording net profits of R947,1m in the past 12 months. Turnover grew 5% to R12,8bn.
Naspers has interests in print, pay television and the Internet. It is the majority shareholder in the monopolistic satellite television company, MultiChoice, which runs DStv, and has operations in most parts of Africa, China, Thailand, Greece and Cyprus. Naspers, through its MIH subsidiary, has 9,9% of Beijing Media and holds a significant stake in Tencent, which contributed R457m to group revenue in 2004. Naspers generates almost R2bn from its foreign operations.
There was drama with the unbundling of Johnnic Holdings' prized media asset, Johncom. This led to speculation about a takeover of the unbundled Johncom by Caxton, or by Marcel Golding's HCI. Caxton shareholders approved a doubling of the group's share capital, giving the company authority to issue shares worth R8bn - more than sufficient to lodge a serious bid for Johncom, if it wanted to.
As if unconcerned about all these happenings, Johncom marched forward with its operational consolidation and rationalisation. It consolidated assets bought from Nail - Sowetan and Sunday World. It also focused on expanding its operations into East Africa.
In the six months to September, Johncom reported an increase in headline earnings to R124m and headline earnings per share jumped by a similar margin from 14c to 119c. This was with small contributions from the new assets.
Its fierce rival in the cinema industry, Primedia, also extended its good run, with revenue for six months to December being slightly more than R1bn for the first time.
Primedia continues to churn out good results. Looking at the overall year's figures, the company's net profit rose 24% to R165,6m from R132m.
Another interesting development was free-to-air broadcaster e.tv breaking its duck and reporting its first-ever profit. This was good news for the media sector and a further confirmation of the sector's buoyancy. The year-end bank balance of investment company HCI - the major shareholder in e.tv - was boosted by a R21m profit from the TV station. e.tv made a further contribution of R61m to HCI headline profit in the six months to September 2004.
Moneyweb's move from the FM platform offered by Classic FM to a community station on medium-wave did not work. Founder Alec Hogg has moved again, this time to the SABC, which means cashflow should improve.
The next 12 months should be interesting: the Independent Communications Authority of SA has invited interested parties to bid for new commercial radio licences in the Limpopo, Mpumalanga, North West and Northern Cape provinces.
