It’s sure hotting up in Media Land as The Guardian reports that Independent News & Media is trying to extend its financial freeze (for the second time) and that it is using proceeds from the sale of part of a shareholding in an Indian newspaper to pay off the €15m working capital facility that the company secured from its banks when the "standstill" was first struck in May. Read The Guardian story here.
I’m no financial guru (I do have calls out to a couple and will update you later) but this sounds very, very bad to me. Does this company have any cash flow if it’s selling assets to cover its operational costs?
Meanwhile, Business Day reports that Moeletsi Mbeki, the brother of Thabo, says he would love to lay his hands on the Independent’s SA operations but denies having approached Caxton to put together a potential offer. The paper also reports that Black Management Forum leader Jimmy Manyi told them: “There are many black investors who will be interested in buying the Independent’s local assets. There is no shortage of black investors out there.” Go to the story here.
The Independent’s SA newspapers include The Star, Pretoria News, Cape Times and The Mercury.
I have been pouring over the Independent’s annual results for the year to 31 December 2008 as much was made in response to my weekly Moneyweb column in the comments of the profitability of the Evil Empire’s SA operation. Now this a layman’s perspective but here goes:
The SA operation is a good earner with excellent margins. It brought in 69.1m euros in operating profit after exceptionals for the year ending Dec 31 2008. The UK operations (chalking up a loss of 205.4m euros) was an absolute dog and Australasia and Ireland brought in some bucks but their margins look quite low.
My question is what kind of multinational is this that its South African operation is one of the best performers? We are a tiny media market and then there’s the vagaries of the rand. Surely this in itself tells us the company is in big trouble?
Anton Harber pointed out yesterday on his blog that the Independent have been putting off some massive capital expenditure in SA (in the form of the aging Sauer Street press and its building).
I couldn’t help but notice from the annual results that the exceptional items bill for SA was the lowest of the 4 geographical regions (3m euros).
I think if an attractive offer or two came along, the Irish will consider it gratefully and who knows what Denis O’Brien hopes to achieve out of this but he has said he’s not sentimental about keeping loss-making titles going?
I also discovered from the results that the Independent empire has been in deep shit since last year. After exceptional items, the company as a whole made a loss of 159.4m euros for 2008 compared with a profit of 195.7m euros in 2007.
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