Kagiso Media eyes the outdoors
September 25, 2009
By Thabiso Mochiko
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KAGISO Media will piggyback on the presence of its subsidiaries LexisNexis and Urban Brew outside South Africa to get radio licences and outdoor advertising opportunities.
This is according to Murphy Morobe, Kagiso Media's chief executive.
Urban Brew produces television programmes and is assisting in the setting up of satellite television in Sudan. It has a presence in Kenya. LexisNexis provides a range of online content, including law-related material and operates in Nigeria, Ghana and Mauritius.
"We have been looking for opportunities in east Africa. Having LexisNexis and Urban Brew in those countries has brought valuation information and understanding of those markets. Where there are radio licence prospects, we will not hesitate," said Morobe.
He added that the strategy was to find the right local partners in those countries.
Kagiso Media will also venture into outdoor or billboard advertising in the continent as it believes that the South African market is saturated. It will sell its shares in Kagiso Outdoor, the holding company of Merafe Outdoor, formerly Clear Channel Merafe, because of long payback periods.
Kagiso Media, the owner of Jacaranda FM, will also apply for new regional radio stations in Gauteng, the Western Cape and KwaZulu-Natal. "When it comes to radio, we will always have an appetite," Morobe said.
But it will own minority stakes as broadcasting regulations limit control to only two FM licences. The group would look at areas where there were better prospects to succeed and find segments that would not lead to cannibalisation of its existing portfolio.
Over the past year, Kagiso Media has been diversifying into other areas to mitigate the advertising revenue losses that are being felt by media houses.
It bought 50.1 percent in Urban Brew for R75 million in November last year and in March it bought a 50.1 percent share of Gloo Design Agency for R6m. During the year to June, Kagiso Media sold loss-making Kagiso Exhibitions and Events Solutions and Johannesburg International Motor Show, realising a profit after tax from discontinued operations of R9m.
However, Morobe said the jury was out on whether Kagiso's non-broadcasting assets would contribute more than the radio assets. "The cash generation profile of radio is still exceptionally attractive," he said.
Kagiso Media fell 0.59 percent to R13.52 on Wednesday.
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