After the Bell: Why Naspers should sell its newspapers rather than close them down

I have often wondered why Apple has shops. Apple is perhaps the most consequential consumer electronics company in the world today. In a sense, of course, it’s a retailer that sells products, so, you know, shops. But since its whole raison d’etre is modern, online electronics, why bother? Sell the stuff online, for heaven’s sake.

Yet, not only does Apple have shops, it has fantastic shops with a distinctive design and character, so much so that other sellers of consumer electronics have also decided they should have their own branded shops. So now we have Samsung shops and Microsoft shops. There are about 500 Apple stores in 20 countries around the world and, on top of that, a whole bunch of authorised resellers. 

Not surprisingly, this came out of the brain of Apple co-founder Steve Jobs, who worried in the early days of the company that big-box electronics stores had poorly trained staff and that the whole experience neither fostered customer loyalty to Apple nor did it differentiate the Mac user experience from Windows. 

Famously, Michael Dell adopted a direct-to-consumer sales model for his eponymous computer brand and he actually criticised Apple for its approach. The victor, it goes without saying, has been Apple. Dell Computers still exists and, while the company is not doing badly, it had revenue of about $80-billion last year compared with Apple’s revenue of just under $400-billion for the same period. 

This debate reminds me of the current depressing news that Naspers is going to close a bunch of its newspapers. It’s pretty obvious to anyone who has had the misfortune of deciding to try to make a living out of written journalism, but newspapers are in terrible shape. The argument now is whether they have a future at all. 

Equally obviously, I have a biased view of this debate. I have spent my entire adult life in newspaper newsrooms. I still remember the day I walked into the offices of our university student newspaper, Dome. I suddenly felt at home. From the hallowed vantage point of those crummy offices, I could participate but stand aside; I could make a meaningful contribution, but yet not have to bear the constrictions of office; and, most importantly, I could be untrammelled and think freely. In the context of the morass of late apartheid chaos, this seemed a sliver of hope and a precious opportunity. 

Fast-forward 40 years, and these slender little monuments to freedom of thought are crumbling. Newspaper circulations are now tiny fractions of what they once were and there almost is no more difficult question in all of modern commerce than: What business model can possibly replace the newspaper industry? 

Naspers is planning to close at least four titles - City Press, Beeld, Rapport and The Daily Sun - to operate them as online-only publications. Volksblad and Die Burger Oos Kaap already operate online-only. Business Day reported on Monday morning that Drum and True Love magazines, which have been converted to online publications, might close completely. It’s hard to know exactly, but possibly 500 jobs are on the line.

It has to be said that Naspers, or at least its news division, Media24, really fluffed the announcement, because there is a distribution business called On the Dot which they are planning to sell to Novus, which was once part of the group. So, consequently, there will be a Competition Commission hearing at which Naspers is now going to have the pleasure of being raked over the coals. 

And they are coals. Already, former editors have protested against the summary executions of these newspapers, asking the Media24 board to reconsider the decision to allow for wider consultation and reflection. Finally, this weekend, Naspers chairman Koos Bekker entered the public debate in an editorial in City Press. 

You have to say, as justifications go for large retrenchment exercises, the editorial is a little odd – somewhat like Bekker himself. He spends a lot of time talking about the history of print, and the Sumarians, the Egyptians, and papyrus and parchment. Of course, the Gutenberg press is part of the story, and how printing took off around the world.

But, finally, he gets to the point: “At its peak, City Press sold 350,000 copies every Sunday. That has now tumbled to 11,718 (barely 4%). We have enjoyed superb editors such as Percy Qoboza, Khulu Sibiya, Mathatha Tsedu, Ferial Haffajee and Mondli Makhanya – with excellent staff. Point to note: despite such excellent reporting, 24 out of every 25 readers of City Press have already stopped buying the printed newspaper and now prefer their news electronically.

“Such paltry paper sales mean that printing presses now run only briefly at night but still require a full crew; delivery trucks drive around half-empty, burning diesel; many a café or supermarket will no longer reserve display space for a newspaper if only five copies sell each day. Currently, an annual loss of R12-million is forecast for City Press, with R18-million coming next year.” 

And finally, the crunch: “Within a few years, no economy the size of South Africa’s will have any daily newspaper being sold on the street. Longer term, not even the US.” 

I understand all of this, of course; nobody in the news industry doesn’t. But what I don’t understand is why Naspers have turned down the offer that printing house Caxton has made to buy the papers. Caxton clearly believes there is something to be saved here. As an old mate in the industry says, it’s almost as if Bekker is predicting the end of the industry and acting unilaterally to confirm his own prediction. 

Of course, newspapers won’t be what they were in the past, but for a printing house, there may be some vertical integration to be found. Newspapers, even in their shrunken state, could be comparable to the Apple store – a kind of “front-of-house” to galvanise the appeal and character of the product. Caxton could be wrong about this, but why not let them try? 

And this is my experience with publishers; when they fail, they are so afraid that someone else might succeed in their stead (and that they will look stupid), that they would rather close the product than allow the brand to slip out of their sweaty grasp.  

Interestingly, Bekker made a revealing error in his editorial. He said Rapport’s circulation was once more than 400,000 and is now “down to 36,592”. Actually, the latest circulation figures for the first quarter of this year show Rapport’s circulation at around 56,000. It’s possible that sales have collapsed over the past two months, but then what does that say about managing a brand? Lots of newspapers in SA have survived on a lot less than that for decades.

I suspect this is typical of Bekker, who has made fabulous bets based on his instincts – and those instincts have been astoundingly lucrative to his shareholders. But in the effort to justify those instincts, he is anticipating himself and could be unnecessarily jeopardising a crucial voice in our country that, by the way, was the foundation of everything that came after. 

If Media24 wants to exit the printed space, fine. But then have the courage to hand over the titles to people who think they can do better. DM