- June 4, 2004
- Posted by: admin
- Category: Media & Broadcasting
LOSING A MEDIA EMPIRE WAS A BUSINESS LESSON
When former journalist and trade unionist Dirk Hartford started Yfm six years ago, he had no money and little knowledge of business.
Today the station is one of the biggest media brands in SA, with R46m turnover and net profit of R9m. But Hartford holds only a 3% stake in the company as he steps down to pursue other investment opportunities.
“I have achieved what I set out to do, which was building a top radio station that would reflect a post-apartheid youth culture. Now I need new challenges,” says Hartford (48).
You could say the former Marxist gave his company away at the beginning when he chose the wrong finance mechanisms. And he says that is the only thing her regrets.
“We were extremely naïve at that stage about the various mechanisms available to finance a new business an assumed banks would simply lend us the finance needed to get Yfm off the ground”, says Hartford.
Hartford and three colleagues from SABC formed Mopani Media to exploit the new opportunities in broadcasting.
“We applied for two radio stations in Johannesburg and Durban, and for a National TV licence. We won the licence in Johannesburg and set up Yfm, lost the bid in Durban and won the commercial TV bid for e.tv as part of the MIDI consortium,’ says Hartford.
The partners hadn’t bothered to look for finding, thinking that banks would readily finance them once they got the Yfm licence. They were wrong.
The banks were not interested, as Mopani Media had no surety. Hartford turned to his former trade union colleagues at the National union of Mineworker’s Hosken Consolidated Investments (HCI), a black empowerment company.
HCI came to his assistance through the Union Housing Trust (UHT), which took 40% of the equity and lent him R7,5m to get Yfm off the ground.
“There were stringent conditions attached to the loan agreement,. I learnt later that the R7,5m was only one-third of the start-up costs of all the other seven greenfield radio licences granted at the time,” says Hartford.
Industry commentators gave the new station no chance of surviving in the cut-throat broadcasting industry, because of its strong focus on kwaito music and use of inexperienced DJs.
But Yfm pulled 611 000 listeners a week after its first month on air and continued to obliterate the competition and stun the industry.
YFm became the largest regional radio station in SA after only 10 months on air. It provided a platform for dozens of young black entrepreneurs, some of whom are multimillionaires.
It also spawned some subsidiary brands – Ymag, Yworld, Ylab and dozens of unofficial brand extensions, from car washes to Laundromats, as budding entrepreneurs in the townships took the brand and applied it to their small businesses.
Hartford said this happened because Yfm instilled a culture of entrepeneurship, self belief and self-reliance in its audience.
In Yfm’s fifth year, however, Hartford was forced to borrow R5m from the Industrial Development Corp to build new studios in Rosebank. The loan owing to UHT was paid off through a rights issue, increasing the trust’s stake to 55% in Yired media, owner of Yfm.
Hartford’s fellow minority shareholders in Yired Media include the Youth Development Trust (14,6%), Multimedia (9,4%), Sam Sisonke (7,5%), Yfm employees (7%), Pierre van den Hoven (3%) and Youth Investment Network (1%).
The Y brand is now recognised throughout Southern Africa and internationally as an icon of the positive energy of post-apartheid SA youth.
Internationally channels such as CNN, BBC and Sky have repeatedly broadcast programmes featuring Y as a symbol of the new SA youth and of the future.
“Or website, www.yworld.co.za, was relaunched in August 2000 and had 1,4 million hits in its first month, disproving the theory that black youth do not have computers and do not use the internet,” says Hartford.
Ymag is distributed throughout Southern Africa and in New York, and the company is planning a Nigerian edition.
“Our aim is to position ourselves as the MTV of Africa and we are in discussions with a satellite television group, focusing on creating a Ytv channel for the African market,” says Hartford. He says starting Yfm was a “great learning experience”. He is now also wiser about what type of funding to choose to retain control the next time he has a business idea.
He is not completely list to Yfm, as he will be director of special projects with the task of growing Y brand subsidiaries and scouting for new business opportunities outside SA’s borders.
Hartford will not have a successor, as the CEO position has been phased out. Station manager Greg Maloka will take over his duties. He refutes rumours that he was forced to resign, saying the Yired Media board decided that Yfm didn’t need a CEO anymore.
Source: Financial Mail – Abdul Milazi