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CLEAR LISTING SIGNAL

FUNDS COULD BE RAISED FOR AFRICAN EXPANSION

Is it time – notwithstanding current market conditions – for Hosken Consolidated Investments (HCI) to consider a separate listing on the JSE for its free-to-air television subsidiary, e.tv?

In the year to end March 2009, e.tv again performed solidly (unlike the shabby performance delivered by the SABC) with gains in market share in television adspend as well as viewership.

Commentary on HCI’s results highlighted the fact that a key part of e.tv’s strong showing was the performance of the one year-old e-News channel.

HCI CEO Johnny Copelyn notes that while e.tv took some five years to become profitable, it’s expected that e-News will turn positive in the near future.

It seems, though, that starting up e-News did not weigh too heavily on the continued growth in HCI’s media businesses.

In the year to end March 2009, HCI’s media interests – held in 63% held Sabido – lifted revenues 20% to Rl,5bn with pre-tax profits coming in slightly higher at R466m (last year R459m).

Sabido’s other interests include e.sat, Viamedia, YFM, Sasani Studios, a 42,5% stake in the Cape Town Film Studios as well as a 49% interest in the Gaborone Broadcasting Company.

During the year e.sat, a 100% subsidiary of Sabido, was awarded a satellite pay-TV licence.

While quality new listings like BAT and Vodacom have received warm receptions, most market watchers would argue that the current investment climate would not be the best time to list Sabido – especially when performance could be impinged by a downswing in the adspend cycle.

But Finweek believes there’s merit in HCI (and VenFin, which holds a significant minority interest in Sabido) contemplating listing its media assets.

For one thing, Sabido is a great asset that currently plays second fiddle to HCI’s sizeable gaming and leisure assets – and as such is perhaps not fully recognised by the market.

There’s also the ‘looking good’ factor to consider, with e.tv shaping up as a slick and profitable media machine – thanks largely to what has transpired – both financially and strategically – at the SABC of late.

In addition, Sabido – presuming that both HCI and VenFin still want to hold meaningful stakes in the company – could use a listing to raise fresh funding. Naturally this funding could come in very handy in the start-up phase for e-News, but more important in supporting Sabido’s expansion into African markets.

Sabido has pursued potential investments in free-to-air television and radio broadcasting in various African countries. At last count Sabido was in the process of acquiring interests in West Africa and other parts of the continent.

Source: Finweek – Marc Hasenfuss