The Independent Media group, publisher of among others The Star, Isolezwe and The Cape Times, has retrenched 141 staffers, about a third of its workforce, and reneged on the terms of the retrenchment payments leading to former employees laying a complaint at the CCMA.
The brutal retrenchment exercise follows a dramatic decline in newspaper readership across the entire group, compounded by what media analysts describe as gross mismanagement of the group over the past decade. The controlling shareholder of the group is Sekunjalo Investment, which is ultimately controlled by businessman Iqbal Survé.
The retrenchment exercise constitutes a blow to the Public Investment Corporation (PIC), which manages state employees pensions, since it owns 25% of the company and spent roughly R800-million in investment and loans to facilitate the R2-billion purchase of the group in 2013. Two Chinese state companies, China International Television Corporation and the China Africa Development Fund own the remaining 20% of the group.
Former staff, who asked to remain anonymous, said they were instructed to reapply for their jobs in terms of Section 189 of the Labour Relations Act, and there were 84 unsuccessful applications. There were also 44 voluntary severance packages and 13 terminations.
The terms were a one-month notice pay, and a week’s remuneration for every year of service, outstanding backpay and a R2,500 Pick ‘n Pay voucher. Staff said when they initially tried to use the voucher, they had not been filled, but the cash has subsequently been deposited.
The company said it would make the retrenchment payments in three equal tranches that would reflect in accounts on 1 November and two months after that. One of those periods has now passed and former staff say nothing has been paid, which has led to them instituting a complaint with the CCMA. Neither CEO Takudzwa Hove nor HR manager Lucien Jacobs responded to emails requesting comment.
The company has seen catastrophic declines in the readership of particularly its suburban newspapers, with the Star, once the group’s flagship newspaper with a weekday circulation of about 145,000 in 2011, recording an average daily, paid readership of about 12,000 in the second quarter this year, according to the Audit Bureau of Circulations’ second quarter 2023 figures.
Other newspapers have also seen declines in circulation as the digital revolution intensifies, but nothing remotely comparable to this scale. Die Burger, for example, was recording sales of around 60,000 in 2011 and recorded a paid readership of about 25,000 in the second quarter of this year. There have also been retrenchments at other news organisations, including the SABC and Sunday Times owner Arena Holdings.
There is also concern that some of the assets of the company, including the online service, IOL, have been shifted to companies in the AYO Group, a different group controlled by Survé, after subsidiaries of AYO were recorded in the companies’ reporting documents as having equity stake in that online news business.
The catastrophic decline in readership, successive late payments of staff salaries, and non-payment of the retrenchment cheques of former staff open the question of whether the group is in contravention of Section 22 of the Companies Act, which prohibits “reckless trading”.
The section says a company must not (a) carry on its business recklessly, with gross negligence, with intent to defraud any person or for any fraudulent purpose; or (b) trade under insolvent circumstances. In these circumstances, directors can become personally liable. DM
- The dates retrenchment payments were due to be paid has been corrected.