Media24 may be forced to fund small papers

2012-04-10 00:00

PRETORIA — The Competitions Tribunal may force Media24 and the Natal Witness Printing and Publishing Company to contribute to a fund in aid of small, independent newspapers in KwaZulu-Natal and the Eastern Cape.

The fund would be administered by the Media Diversity and Development Agency (MDDA) in order to shield such smaller publications against the possible negative effects of an amalgamation of Media24 and the Natal Witness.

In closing arguments relating to the amalgamation, the Competitions Tribunal indicated that it is considering such a contribution, despite the fact that Media24 already makes the greatest financial contribution of all media houses to the MDDA’s activities.

The commission supports the amalgamation on certain conditions, while Caxton is trying to block it.

On Thursday (April 5) the tribunal requested that the Competitions Commission further investigate the available capacity of Guardian Web and Rising Sun to print community newspapers. These two printers compete with Africa Web, which forms part of Natal Witness.

The commission argued on Thursday that if Media24 acquired a total interest in Natal Witness and 85% of Africa Web, it would subordinate the interests of the printing works to the expansion of its newspaper publishing, as a larger share of the profit from the newspaper publishing would accrue to it. This could lead to its prioritising the printing of its own community newspapers, which could force small, independent newspaper publishers out of the market, as they do not have equal access to printing services.

The commission proposed that Media24’s shareholding in Africa Web be limited to 50,1%, saying that a minority shareholding of 49,9% will ensure that Africa Web will be managed to its own best advantage.

The commission is asking for mechanisms to monitor the enforcement of any conditions set, as the parties have previously only paid lip service to amalgamation conditions in other transactions.

It said Media24 and Natal Witness inflated figures relating to available printing capacity in KZN and the Eastern Cape and there is no real certainty about whether there may be more than enough printing capacity for small, independent newspaper publishers.

Caxton argued that the parties have already effected the amalgamation and that the parties neglected to submit earlier transactions to the competitions authorities for approval — deals which, Caxton says, were declarable.

Caxton asked for the deal to be denied and for Media24 to withdraw entirely from Natal Witness and Africa Web.

Advocate David Unterhalter SC, for Media24 and Natal Witness, said that in order for an amalgamation to be denied, it has to be proved that competition is decreasing. This, he said, has not been proved.

He asked for a cost order against Caxton, since the group had approached the tribunal on the pretext that the amalgamation will limit competition, while its true motivation is to eliminate strong competition.

Unterhalter indicated that the parties would agree to reduce Media24’s interest in Africa Web to 50,1%.

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