Times Media wants to hold the winning content cards

28 September 2014 - 02:06 By BRENDAN PEACOCK
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ACES HIGH: Times Media Group's offices in Rosebank, Johannesburg
ACES HIGH: Times Media Group's offices in Rosebank, Johannesburg
Image: Picture: VATHISWA RUSELO

TIMES Media Group's full-year results showed healthy improvements in earnings - particularly in the broadcast and content space.

TIMES Media Group's full-year results showed healthy improvements in earnings - particularly in the broadcast and content space.

While TMG, the owner of this newspaper, disposed of several businesses in the last year, CEO Andrew Bonamour said it would be a mistake to conflate the group's increases in revenue and profitability with the sales of these entities.

"We pride ourselves on being good sellers, and some of these were quite difficult sales with not many buyers around, but the core of these results excludes many of these once-off events.

"We grew media, we enhanced the margins in media, we're investing back into media in the form of talent and training.

"Compared with competitors, we've taken market share and we're doing well in an environment where there's no profit to be made from news. I expect some consolidation in South African print media."

On that note, he said TMG's scale remained relatively small, with a R2.6-billion market cap.

"A merger or acquisition to increase our scale would be the ideal outcome."

He added: "We owned some rights for films and TV series, and we've set about achieving scale in the content we own. We want to be able to make money from that content."

This includes the content it will offer over its newly launched Vidi video-on-demand service, although this doesn't come without challenges. The availability and quality of bandwidth, as well as royalty collection in some African territories, may temporarily constrict growth in such services.

But Bonamour is optimistic that broadcasting profits will eclipse those of its print media entities within two years.

Broadcasting and content contributed R42-million to pre-tax earnings in the last year - a 500% increase from the previous year - compared with R182-million from media, up 8%.

He said TMG had approached broadband providers across Africa, was working on Android and Apple apps and wanted to plant its flag in readiness for the technology for content delivery to improve.

"Video-on-demand is the disrupter, it's the way things are going.

"The technology and content will both get better. It's been very difficult for pay-TV providers to make that step down to video-on-demand, and we have the rights to be a home entertainment provider with the early-mover advantage."

The group also recently bought the Bula music catalogue to complement its Gallo Record Company.

"I want TMG to be an all-rights distributor of content, through various platforms.

"Bula more than doubled our music catalogue size."

While he expects print media's growth curve to hug inflation, being able to sell content via broadcasting channels will begin to have a palpable impact by 2016's results, he said.

TMG has made what Bonamour called "beachhead" investments in western and eastern Africa - Ghana and Kenya, particularly - that span radio and television.

"Radio gets a disproportionately high percentage of advertising spend in Africa because print distribution is so difficult and costly, and I think television will catch up quickly.

"We're in the business of selling advertising, like Google is. We now have to get everything to integrate and make sure it works," he said.

"We've become a much leaner structure with entrepreneurial flair - we can react quickly. The newspaper business is stronger and it's generating cash."

In the past year the group spent R20-million on retrenchments, which Bonamour said had come to an end.

The group will also benefit from a reversal of some post-retirement provisions, which in these full-year results reflected a non-cash improvement of R194-million in the group's cost structure.

It cut operating costs by R122-million compared with 2013, down to R644-million.

A final gross dividend of 35c per share was announced and the group has cut its long-term debt from R1-billion two years ago to R292-million at present.

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