- June 10, 2001
- Posted by: admin
- Category: Media & Broadcasting
Johannesburg – New Africa Investments Limited (Nail) has emerged as the strongest contender for the Warner Brothers stake in independent television broadcaster e.tv. Zwelakhe Sisulu, Nail’s acting chairman, said it had negotiated with e.tv management over the past 18 months to buy into the station. This week Warner Brothers said it was selling its 12 percent stake in Midi Television, e-tv’s holding company. The stake has been valued at between R120 million and R180 million. “We have shown an interest in e.tv in the past, but our priority is the bedding down of our Kagiso acquisition,” Sisulu said. Nail recently bought Kagiso Media for R377 million cash and expects to tie up the deal by year-end once the competition and communications authorities have given their blessing. “We would be willing to liberate assets in radio and media to take up an e.tv stake,” Sisulu said. Johnnic Communications (Johncom), a potential rival for the stake, said 12 percent was too small. Paul Edwards, the chief executive of Johncom’s holding company, Johnnic, said it was not usually interested in passive investments. Johnnic has said it was looking to exit its 4 percent stake in MIH, the Nasdaq-listed television platforms operator. The Rembrandt Group and Hosken Consolidated Investments (HCI), the trade union and black empowerment group that controls Midi, are likely to have preferential rights to acquire the shares available. Last year Rembrandt recapitalised e.tv by R280 million, which was equal to 26 percent of the broadcaster’s equity. This valued it at about R1 billion. Meanwhile, another stake in e.tv may soon be freed. The Mineworkers’ Investment Company (MIC) could soon place a “for sale” sign on its 21 percent stake in HCI after conflict between the two executive camps. Paul Nkuna, the chairman of the MIC, said the relationship between MIC and HCI management had “broken down irretrievably”. Media analysts said the Rembrandt Group and HCI would be the only other interested buyers. But the Independent Communications Authority of South Africa has already opposed Rembrandt’s proposal that it convert its R280 million loan to Midi into 26 percent equity in Sabido because it would dilute the black shareholders’ stake and HCI would only raise the money by selling its 5 percent in Vodacom. Warner, which blamed local limitations on foreign ownership in broadcasting for its exit, said the e.tv stake did not fit with its strategic shift towards majority holdings. Chris Moerdyk, the media and marketing editor of The Star, said as long as e.tv “is crippled by ludicrous regulation, it does not have a snowball’s hope in hell of making money. “There is little doubt that Warner is bailing out because there is simply no prospect of ever getting any kind of return on their investment,” he said.
Source: Business Report – Sherilee Bridge and Nathi Sukazi