6 July 2009
Johannesburg — FROM being the rather dowdy owner of mainly Afrikaans newspapers and some glossy magazines, Naspers is now primarily a pay-TV and internet company.
It proved its resilience when releasing its results last week, growing revenue 30% to R26,7bn for the year to March. Core headline earnings grew 9% to R4,4bn.
The company owes its success in large part to CEO Koos Bekker, whose strategic vision has seen the Naspers group transform into one of the most forward-thinking local groups.
A breakdown of revenue by business, assuming all investments are properly consolidated, shows that TV and internet operations would contribute 65% of revenue, according to a graph included in a presentation of Naspers' financial results.
According to a similar graph showing revenue by type, 56% of the group's revenue came from subscriptions, instant messaging, games and e-commerce, and only 16% of revenue came from advertising.
Naspers owns MultiChoice, operator of DStv, and M-Net, the only pay-TV options in SA. It has also invested heavily in emerging markets, with a print media operation, Abril, in Brazil and minority stakes in a host of internet businesses such as Tencent in China.
It spent 200m on acquisitions during the past financial year, mainly internet-based, but also one print media operation, Xin An Media in China.
"One of Koos Bekker's strengths is to see how the media world will evolve over time," said Gavin Joubert, a portfolio manager for Coronation Fund Managers , last week.
Naspers bought its stake in Tencent, its Chinese internet operation, in 2000, long before China was fashionable and when the internet was still in its infancy, Joubert said.
Bekker has had three major successes in his career so far: starting pay- TV in SA 25 years ago, with the founding of M-Net; being a founding shareholder in M-Cell, which is now MTN; and now Tencent, Joubert said.
Naspers' share of Tencent's earnings amounted to R1,2bn in the year to March, a 114% increase.
"He gets the trends before anyone else does. He's made mistakes but he gets the big trends right," Joubert said.
With internet penetration in China at 20%, Naspers will do well if Tencent can hold on to its dominant position as the market expands, he said.
China already has more than 250- million internet users, despite this low penetration level, and outnumbers the US with its 220-million internet users and 70% penetration.
In a conference call last week, an analyst asked whether Naspers -- its overseas investments are mainly through minority stakes -- would consider taking majority ownership in assets such as Tencent, of which it owns 35%. "In media, unlike other industries, there is a strong component of local knowledge and a local cultural feel is important. We're happy to follow competent managers," Antonie Roux, CEO of Naspers' internet operations, said in response.
Roux said Naspers tends to invest in internet companies that are already profitable and can start paying dividends fairly soon.
"In the future, pay TV and internet will influence each other and internet will become a competitor," he said, adding that this was starting to happen already with Disney's platform.
Local media houses have yet to emulate Naspers, approaching internet businesses with caution. Avusa , which reported its annual results two weeks ago, remains primarily invested in print, retail and the loss-making Nu Metro.
Prakash Desai, CEO of Avusa, said at a results presentation that Avusa was making "prudent" investments into digital and would transform into a multi-media business. Exclusive Books' online store would be expanded to offer products such as DVDs and music.
Further growth in its online mapping business seems likely. It already has The Times, a multimedia offering which combines a daily paper with blogs, videos and podcasts.
Kagiso Media , on the other hand, which owns mainly radio stations such as Jacaranda 94.2 and East Coast Radio, has formed a new division to drive convergence between its radio stations and the internet.
Rob Nagel, portfolio manager at Cadiz Asset Management, said that Naspers' results had been good overall but he was disappointed with Abril, Naspers' Brazilian operation.
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