Times Media Group says it has begun the sale process for two brands within its books division – Van Schaik and Exclusive Books.
In February, the online retail division of Exclusive Books, Exclus1ves, said it was shutting down several channels, namely film, music and games to focus on its core strength, books.
On Wednesday (13 March), the media group reported that overall revenue moved marginally higher to R3.154 billion for the six months ended December 2012, from R3.052 billion in 2011.
However, Profit from operations declined to R77 million from R191 million, TMG said.
Times Media Group acquired the entire issued ordinary share capital of Avusa in September last year.
“All four divisions within TMG (media, retail solutions, books and entertainment) face challenging and evolving markets. Our first objective has been to identify those divisions where we have critical mass, strong market share and solid brands, and successfully position them for the future.
“It is our view that we need to focus on those divisions where we have the ability to generate positive returns on the capital invested, and enable a swift turnaround,” TMG said in a statement.
TMG said it aims to reduce the central costs of the group head office through restructuring, in order to achieve the right cost base across the divisions.
Phase 2 of its restructuring process might involve acquisitions or mergers to enhance the group’s offering, or include partnerships with key players in order to share risk in a fast-evolving market, it said.
“Across the group, all businesses have been reviewed and their non-core assets identified for sale.
“The sales will be performed in a responsible manner and will take into account the various stakeholder interests including those of employees, customers and suppliers. All sales will ensure that the group receives fair value,” TMG said.
The media group said that the likes of the Sunday Times, Sowetan, The Times and Times Live occupy strong positions and are profitable cash generators.
“Our objective is to grow and develop these divisions through innovation and differentiation, allowing the Group to enhance its market leadership and generate higher returns for shareholders”.
The group said that for its book division, which includes Exclusive Books, Van Schaik Bookstore and Random House Struik, amongst others, and the Entertainment division, which incorporates Nu Metro Cinemas, “we have already embarked on the sale of the various companies that make up these two divisions”.
For the reporting period, TMG said that segmental profit from operations before exceptional items for its books division improved to R36 million, from R13 million before.
The book retail businesses of Van Schaik Bookstore and Exclusive Books performed well in a tough market. Van Schaik Bookstore, the academic book retail business, recorded good growth, TMG noted.
“We have, however, begun the sale process for Van Schaik and Exclusive Books,” Times Media Group said.
Times Media Group said that its Nu Metro Cinemas business is a potentially very valuable business.
It said that an analysis of the Nu Metro group and its individual cinemas indicated that certain leases required renegotiation, as they represent the greatest liability and cost to the business.
“We have already succeeded in renegotiating certain key site leases, which represent a large saving.”
It noted that the industry is moving away from the traditional 35mm film towards digital projection.
“The upgrade to digital projection would involve a once-off capital expenditure charge to the business. Given the slow decline in cinema attendance, we will be closing down the marginal sites that are neither sustainable, nor able to provide a return on the capital which is necessary to digitise or upgrade these cinemas,” the group said.
The group said its outdoor advertising businesses, namely Airport Media and Boo Media, are viewed to be non-core to the business, “and we have initiated a sale process”.
BDFM is a separate joint venture with UK publisher, Pearson Overseas Holdings Limited. BDFM consists of Business Day, Financial Mail, Summit TV, Ignition and the Home Channel.
TMG owns 50% of BDFM, with Pearson Overseas Holdings Limited owning the balance.
“BDFM has struggled over the last number of years and in the past six months has continued along the same vein. Business Day recently lost a large source of revenue as a result of the JSE rules governing financial notices. The business has undergone a voluntary retrenchment program and cost review,” TMG said.
It added however, that BDLive, has proved a “big success”, becoming one of South Africa’s leading business websites over a short period of time.
The group added that BDFM’s business channel, Summit TV, will shortly be renamed Business Day Television or BDTV.
TMG said that although the turnaround is already in process, “management believes it will take time to complete given the number of smaller companies and complexities involved in the various businesses”.
The group said that debt reduction remains a key area of management focus, with significant success already achieved to date.
“TMG is a leverage opportunity, which means that, as the acquisition finance is repaid, the equity value of the group will increase,” it said.