Media24 faces heat

2013-11-24 14:00

Pricing conduct?comes under the spotlight. Lloyd Gedye unpacks story so far

Competition Commission's case

On October 31 2011, the competition commission referred a case against Media?24 to the competition tribunal.

It alleged that Media24’s pricing conduct – between 2004 and 2009 – in the community newspaper advertising market in the goldfields area contravened the Competition Act.

The commission alleges Media24 used a lossmaking community newspaper, Goudveld Forum, as a “fighting brand” to undercut advertising rates of independent community newspaper Gold-Net News.

This forced Gold-Net News out of the market in April 2009.

The affidavit reads: “Its purpose fulfilled, Media24 decided to close down the Forum title shortly thereafter, in January 2010, and commenced the recoupment of the profit sacrifice it had incurred as a result of its strategy.”

Media24's case

The company denies the claims and is defending itself before the tribunal. It claims the closure of Forum in 2010 had nothing to do with the fact that Gold-Net News closed in 2009.

Advocate Schalk Burger, representing Media24, said: “When Gold-Net News appeared in 2000, there were already at least three established community newspapers: Vista, Vista Tuesday and Forum. Vista had been on the market for 30 years, Forum for 18 years. In this landscape Gold-Net News’ prospects of survival, in my view, were limited.”

Media24 argues that it was not Forum’s advertising rates, but other factors, that forced Gold-Net News to shut down, including problems with distribution and printing quality, the lack of national advertising, and a high salary bill.

The Three Community Newspapers


A free weekly tabloid founded in 1971 by Hans Steyl. It was bought by Media24 in 1999. The newspaper focused on news from the local communities and used to distribute 35?000 copies a week.

»?Goudveld Forum

Forum was established in 1983 by Media24 and was a free weekly tabloid. It focused on soft human-interest stories and sport. It stopped publishing in January 2010. Between 2003 and 2005, Forum was distributing 30?000 copies a week; and between 2006 and 2009, this dropped to 23?0000 copies.

»?Gold-Net News

Founded under the name Net News, this free weekly tabloid was founded in 1999 by ex-Media24 staffer Leda Joubert. Steyl would eventually join as manager and when it hit financial difficulties in November 2000, he took it over and changed the name to Gold-Net News.

It focused on local hard news and distributed 35?000 copies a week. It shut down in January 2009.

The Cast of Characters

[So far, the hearing continues]

»?Wian Bonthuyzen

Wian Bonthuyzen is a former senior manager for the community newspapers division of Volksblad in Free State. Bonthuyzen testified that Forum was making such a loss due to the nature of the cuts it made to its advertising rates, he had to cover it up by allocating half of the electricity, water and staff salaries from Forum to Vista and manipulating printing costs too.

Bonthuyzen testified that when he joined Volksblad in 1999, Forum was already making a loss and it was important to make it look like it was turning around.

He testified that Forum’s discounts on advertising rates were as much as 50% in order to combat Gold-Net News. “We just had to keep on the pressure and sooner or later they would be out of the market,” he said.

Under cross-examination it emerged Bonthuyzen had offered to assist Media 24 to prepare for its case in the tribunal, but wanted up to R320?000 compensation for it. Bonthuyzen testified that he had given his life to Media 24 and that they “nailed” him by bringing charges against him after he left in 2008.

»?Naas du Preez

Bonthuyzen testified how he used to meet his superior Naas du Preez, who has since died, under the lapa at the Volksblad office in Bloemfontein and they would smoke cigarettes and plot the downfall of

­Gold-Net News. Bonthuyzen also detailed a strategy meeting where Volksblad’s then editor, news editor and a junior staff member met with Du Preez and himself, and agreed to aggressively target Gold-Net News.

»?Hans Steyl

Having built up the Vista Newspaper brand during the 70s and 80s, Steyl, the original complainant in this case, took over Gold-Net News in 2000.

Steyl said Gold-Net News could not compete with Forum on advertising rates because its printing costs were higher than the rates being charged by Forum.

»?Aunischa Van Eck

Van Eck, the regional sales manager for Volksblad who submitted the responding affidavit on behalf on Media24, said: “There is no truth in the allegation that Media24 kept Forum open to inhibit or deter competition with Vista.”

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