In early 2012, much of the Western world was still reeling from the effects of the 2008 financial markets crash, and the subsequent global economic slowdown. Other than the housing market and banking itself, no industry was hit harder by the effects of the ensuing recession than media.

Our industry relies heavily on the health of the general economy, and the ability and willingness of consumers to spend and take on credit. We almost never do well in the context of a recession or reduced consumer spending.

It was, therefore, unsurprising that at this time, a lot of media investors were looking for a way out of their exposure to this vulnerable (at least in their eyes) industry. Foreign investors, in particular, were growing wary of transnational media assets. It was in this climate that Independent News & Media (INM), the Dublin-based owners of Independent News & Media South Africa (INMSA), decided they would sell the group they had acquired in 1994, at the dawn of South Africa’s democracy. The initial price demanded for INM’s ownership of the INMSA was e280 million (about R3.4bn at 2012 exchange rates). Independent is South Africa’s largest publisher of newspapers.

It accounts for almost a quarter of all newspapers sold in the country, and over 60 percent of all English-language papers sold. Newspaper advertising is under pressure both here and abroad, but Independent’s share of the South African advertising pie holds steady at almost 45 percent of the total (for paid-for newspapers).

Thus an asset of great commercial and strategic value became available in mid-2012 when the Irish group decided to sell.

Changing hands

Whether the seller could have realised the R3.4bn asking price is an interesting but idle point. In the end, events conspired to dampen the appetite of some overseas groups who were in the bidding to acquire Independent and eventually to depress the price at which the group changed hands.

Read the full article here