Compared with the turmoil on international markets SA's media environment remains relatively sanguine, with corporate merger & acquisition activity limited of late.

Within the space of a week, four of the world's biggest media names were recently involved in deals that herald a significant shift away from traditional business models in the industry. Rupert Murdoch's US$5bn offer for Dow Jones, owner of the Wall Street Journal, and Thomson's £8,7bn takeover of rival data provider Reuters, is only the beginning of what many analysts believe will be a major consolidation of the industry worldwide.

Perhaps more than most, Murdoch has realised that content can't be limited to a single medium and he has acquired some of the top brands in the business - BSkyB, Fox and MySpace, among others. Does all this really matter to the relatively staid SA market, where the Internet remains a tool of a privileged few and the majority get their news via newspapers, radio and TV? It would not appear so, given that most SA media groups remain effectively single-medium operators: Johncom, Caxton/CTP and Independent in print; Primedia and Kagiso in radio; and HCI, via e.tv, in television.

Cadiz African Harvest fund manager Rajay Ambekar says the technology platform is "not much of an issue here, with minimal Web and broadband penetration. For the medium term it is not a threat".

But in the longer term SA will inevitably follow global trends and there is only one SA media company that appears ready for it - Naspers, with its footprint in print, the Internet and television. Not only is Naspers founder Koos Bekker endeavouring to expand the group across various media, but like Murdoch he is also growing it geographically. Bekker, who is currently on a year's sabbatical, has developed a "Bricsa" strategy for the group, with investments in Brazil, Russia, India, China and Southern Africa. Its MultiChoice pay-TV arm has had exposure to African and Middle Eastern markets for decades.

Domestically the company is continuously looking for new opportunities - witness last year's R3,2bn deal with Johncom in which it bought the 38,6% of M-Net/SuperSport it did not own.

Naspers has been the highest-rated stock on the JSE's media sector for years. Apart from its global and technical spread, investors like the fact that, unlike its competitors, the group does not rely heavily on advertising revenue, so is less prone to cyclical shifts. In the 2006 interims, adspend accounted for 14% of income before tax. Even at price:earnings multiples of 20, Ambekar rates Naspers as a buy. Bekker has created a media company with long-term vision.

The appeal of many other JSE media groups is mainly speculative rather than strong, long-term organic growth.

Analysts rank Johncom as a good buy. It has, in the Sunday Times, a cash cow that will underpin future earnings growth. But it is an acquisition target. "Most media companies have a solid controlling structure in place, but Johncom has no single large shareholder, which makes it susceptible to a bid," says Ambekar.

It's also trading at a discount to net asset value and through the M-Net deal is sitting with R4bn of Naspers stock (at Naspers' current share price). Its 38% holding in Caxton/CTP adds R3,1bn in value. The passive investments combined are worth over R7bn while the operational businesses are valued at just over R2,5bn.

Rumours have been circulating for years that a BEE consortium comprising Cyril Ramaphosa, Patrice Motsepe and Tokyo Sexwale will make a bid for Johncom. More recently the company has also been cited as an ideal private equity acquisition, given its diverse corporate portfolio (print media, Nu Metro, Exclusive Books, Gallo) that seemingly don't offer much synergy and could easily be hived off.

Johncom's new structure, announced in April, also makes an offer more likely. The company will spin off its media interests into a separate company, while the CTP/Caxton shares will be retained in the existing entity. The BEE deal is expected once the media businesses are listed separately.

With 38% in Caxton as its only asset, the revamped Johncom will run foul of JSE rules. Johncom management is looking at various options - unbundling Caxton is the most obvious. On the other hand, Caxton might want to buy back the shares, which could make the group an interesting investment opportunity.