23 January 2013

South Africa: The Ag Should Investigate Government Advertising in the New Age

Democratic Alliance leader, Helen Zille has written to President Jacob Zuma asking for a Judicial Commission of Inquiry to investigate how the New ... ( Resource: The Democratic Alliance Seeks Inquiry into Funding for The New Age Newspaper )

press release

The DA has conducted an extensive analysis of the New Age's advertising for the period between 31 October 2012 and 15 November 2012. This two-week period was randomly selected. We believe it to be representative of the New Age's advertising in general.

After conducting this analysis, we have concluded that government is overspending on advertising in the New Age given its uncertified readership levels. Because government advertising vastly outstrips advertising from other sources in the New Age, it is fair to conclude that the New Age is almost entirely dependent on public money to remain afloat.

Our analysis* of the advertising in the New Age has found that the paper sold 75351 square centimetres of advertising during those two weeks. Government bought roughly 77.5% of that space, or 58416 square centimetres. Companies with ties to the Gupta family, like JIC Mining Services, bought out 6.7% of that space. Other private sector actors bought out the remaining 15.8% or 11882 square centimetres.

This means that more than 80% of advertising space in the New Age is bought up by either government or the Guptas.

The DA has also roughly estimated** the likely revenue accrued from advertising in these two weeks. Using the New Age's 2012 advertising rate card, and accounting for the size, location and nature of the advertising, we estimate that the New Age received roughly R6.8 million in advertising revenue during these two weeks. Using the assumptions above, one can calculate that government contributed R5.2 million (76%), companies related to the Gupta family contributed R420000 (6%) and other companies contributed R1.2 million (18%). Again, our rough estimates indicate that the New Age is completely dependent on government advertising for its survival.

The fact that the SABC has given the New Age an incredibly preferential deal with its "business breakfasts" would also suggest that the New Age is receiving preferential treatment from government in terms of advertising and cooperation.

But what is most concerning is that the New Age's circulation figures have never been certified by the Audit Bureau of Circulations. Without this certification, no one can be certain as to what exactly the New Age's readership is. So there is no way government can know how many people are being reached by this advertising. And therefore one has to question the massive expenditure by government on advertising in this newspaper.

I will write to the AG today to request a thorough investigation of all government expenditure on advertising in the New Age. We believe that it amounts to fruitless and wasteful expenditure given that the circulation figures have not been certified by the Audit Bureau of Circulations. The reach of this advertising is therefore essentially unknown.

In particular, we will request that the Auditor General:

Invoke the powers granted to him in terms of section 15 of the Public Audit Act to request all documentation pertaining to each government department's, and their sub-entities', decision to purchase advertising in the New Age. Why did government choose the New Age over other competitors even though the New Age did not have an Audit Bureau of Circulations certificate?

Carry out this investigation as a "special audit" in terms of section 29 of the Public Audit Act, to ensure that it is dealt with as a matter of urgency within the Auditor-General's office.

Place special focus on the advertising expenditure of the State-Owned Entities in the New Age. Our analysis has shown significant expenditure by these entities.

Investigate all direct and indirect contributions to the New Age relating to the "New Age Business Breakfasts", including the sponsorships from various SOE's and the SABC's decision to gift the airtime to the New Age for free.

We do not question the fairness of the New Age's coverage. In my capacity as National Spokesperson I have often interacted with the New Age's editorial team and its journalists. I have found them to be professional and their coverage to be fair and balanced.

What we do question is the ongoing financial dealings between the Gupta family, government and the New Age. The Gupta family are known benefactors of the ANC, and ANC-run government entities are spending large sums of money on a newspaper owned by the Gupta family. This symbiotic relationship is highly questionable.

The AG must investigate the flow of money from government departments to the New Age, to determine what the extent of the expenditure is, what the justification for the expenditure is, and whether it is in fact fruitless and wasteful expenditure.

Methodological notes:

* The DA used the New Age Cape Town edition for this analysis. All government-owned or government-related entities' advertisements, such as Telkom, SABC and Transnet were counted as government advertisements. All advertisements were measured by hand and catalogued. These are therefore only rough estimates.

** Revenue estimates are based on the New Age advertising rate of R83 per square centimetre. Loading for specific page numbers was considered. The true advertising revenue could differ dramatically if special rates were negotiated. Hence these numbers are also only estimates given information publicly available.

Mmusi Maimane, DA National Spokesperson

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