Newsflash: Mail & Guardian sold to US media not-for-profit investment fund

In a letter to staff on Tuesday, outgoing majority owner of M&G Media Limited, Trevor Ncube said he was no longer in a position to invest in the M&G. He took control of the company in 2002 and owned a 77.69% stake, with the Media Development Investment Fund (MDIF) owning 10% and other minorities controlling 2.31%.

The MDIF has now taken over majority ownership. The deal will include the publication’s CEO Hoosain Karjieker as the local empowerment partner. The M&G has been in sales discussions for weeks.

Karjieker described the publication’s history of hard-hitting, independent journalism but said it had struggled in recent years. “The last three years have been immensely difficult. We were forced to retrench staff, while struggling to develop viable business models that support quality journalism.”

“I take full responsibility for the mistakes we made. And I know too that we were not alone in making these mistakes. Around the world media organisations everywhere are searching for the perfect solution for a commercially viable digital media publication,” said Ncube.

“Every publisher I know can relate to our own experiences – they too have embarked on digital paths that seemed so promising yet generally ended in failure.” He said the M&G might have overpaid Naspers to regain control of M&G Online and the digital strategy it then pursued was “perhaps too ambitious in retrospect”.

Ncube noted the losses incurred during the ill-fated M&G Africa project, its Pan-African news platform. Combined with declining print revenues, he said the company’s ability to function effectively was compromised. In 2015, the company restructured its staff, which led to significant editorial changes.

Looking back at his 15 years at the publication, Ncube said many of the stories the M&G broke were controversial. “But as we now know with the state capture series of stories, the M&G was brave enough to report on the stories that should have warned all of us not to assume that a pretty Constitution was enough of a safeguard against greed and corruption.”

Ncube said MDIF CEO Harlan Mandel offered a compelling plan to ensure that the publication survives and continues to take pride in independent journalism. He said he was pleased Karjieker was chosen as the empowerment partner. Karjieker will continue as M&G CEO.

MDIF is a not-for-profit investment fund based in New York and offers loans and technical assistance to media companies across the globe with the aim of promoting free and independent journalism. Since 1996, it has invested over $163-million in 113 news organisations in 39 countries.

That includes the M&G and Ncube’s Zimbabwean publications through his Alpha Media Holdings. Its website lists a range of funders and investors, notably including the Omidyar Network and Open Society Foundations. As part of the M&G deal, MDIF will de-invest from Ncube’s Zimbabwean media interests.

Mandel said: “We have invested in M&G because it is a uniquely important media organisation with a great future. Its independent reporting has a profound impact on the national debate and it is a beacon for independent journalism across the continent, and indeed the world. We are committed to building on this legacy and re-establishing  M&G  as a commercially and journalistically dynamic institution at this important time in South African politics.”

M&G editor-in-chief Khadija Patel said she it was the beginning of a new chapter. “As a small independent publisher, the M&G feels the turmoil of the global media industry acutely. This now presents us with a real opportunity to alleviate our financial difficulties.”

Karjieker said: “In the coming weeks we will begin the important work of stabilising the company in order to facilitate our core function – excellent journalism. I will be working hard to ensure that we arrive at an M&G unencumbered by financial pressure. There is so much more we can do – and now is the best time to start doing it.”

The CEO elaborated and said he did not want to divulge the new ownership percentages yet, but it included a “significant” empowerment component that meets regulatory requirements. Karjieker said MDIF was chosen as an ideal buyer because other bidders’ offers were still subject to months of due diligence and delays while the publication required more immediate stability.

“I think that, certainly, in terms of staff cuts (they) are not on the table right now,” he said. Karjieker said after two years of financial difficulties, the M&G now hopes to fill vacant positions but it still developing its new strategic plans going forward. DM

Photo: Hoosain Karjieker, CEO of the Mail & Guardian, has been identified as the US-based Media Development Investment Fund's local empowerment partner.  Photo: The Press Ombud