Naspers CEO Koos Bekker believes that, while the print media versus online debate is an emotional one, the business world is a hard place where one needs to face reality or die.
In an interview with Summit TV, Bekker said that the print media business has two forces working against it, namely that its cyclical, while the internet is increasingly eating into its revenues.
While Naspers has made no secret of the fact that it is pursuing an internet and e-commerce based strategy, it still has major interests in print media.
The group has a 30% interest in Abril, the largest magazine publisher in Brazil, publishing six of the top ten magazine titles in the country.
It also owns Media24, the largest publisher of magazines, a major publisher of newspapers and a printer and distributor of magazines, newspapers and related products in Africa.
Magazine titles include DRUM, Finweek, Huisegenoot, You, Heat, Mens Health, FairLady, and Sports Illustrated, while newspapers include Beeld, Die Burger, Rapport, City Press, and Daily Sun.
Internet to overtake TV
So confident is Bekker of the company’s strategy, he told Summit TV that Internet is set take over the TV side of the business in both revenue and profits.
“I think it will happen probably this year, because Internet is just growing so much faster. The e-commerce part is growing at about 61% (total 70%), and pay TV at about 19%.”
Indeed, in delivering impressive results for the six months ended September 2012, last week, Naspers noted that ecommerce revenues climbed 61% to R4 billion, while Pay TV revenue for the period improved 19% to R14.4 billion.
Internet revenues grew 70% to R14.1 billion. “Ten years from now, expect e-commerce to be our single biggest unit,” Bekker said.
Print an “emotional issue”
When asked his view on the the print versus online debate, Bekker said: “Its an emotional issue, but emotions shouldn’t come into it. The business world is a hard world and you have to face reality or die.”
“The reality is that the print business has two forces working against it. The one is cyclical – so in a recession people cut advertising, before they cut any other cost. So newspapers, [with] 50% of their revenue coming from advertising, are going to be quite susceptible to the pace of the economy. In a boom, newspapers boom, in a recession they suffer, and likewise magazines. So that’s the first problem.”
He noted that the second problem was the Internet eating into print’s market.
“I prefer a newspaper to any electronic means; there is nothing as nice as sitting in London with a thick FT on a Saturday morning, reading an article and ripping it out and writing a note to one of our people – but that’s because I grew up that way.”
“I was recently in both Hong Kong and New York in the last month, and young people of 25 do not read newspapers…they read it on the twitter feed, the read it on the blog, they read news sites, they read Huffington Post – but they don’t read newspapers,” Bekker said.
“We have to adjust to reality – and the way Media24 needs to do [its] business is firstly [to] ensure that the newspapers are at least at breaking-even – not to make losses – and that needs some cost-cutting.”
“Then on the Internet side, to grow [its] electronic services as fast as possible. News24 already reaches 2.5 million people every day…if [it] can build on that, there is a future,” he said.