Moneyweb struggles to gain traction

Port Elizabeth - Latest results from Moneyweb Holdings [JSE:MNY] show that the small news company has suffered a headline loss of R2.6m in the year to June, compared to a profit of R2.6m in the 2013 financial year. This was due to the loss of a single advertising contract, which slashed revenue by nearly a third.

Revenue fell by more than R10m from R34.3m to R23.5m during the last year, with management admitting that it will be no small task to grow revenue again.

The results not only show a financial loss, but also indicate that Moneyweb is still struggling to gain traction as a financially viable independent news provider. Large media groups’ digital offerings still dominate the market for readers and advertisers.

These include Naspers’ Fin24, Times Media’s BDLive (which includes access to the respected Business Day, Financial Mail and Sunday Times Business Times) and Independent Newspapers’ IOL website.

A host of smaller competitors have also carved profitable niche markets in financial reporting and share trading services, such as Sharenet which has built a big client base by offering relevant and accurate financial information rather than trying to build revenue out of more sensational news stories.

Prize-winning journalists

Moneyweb’s reporters have won several prizes for journalism over the past years, but financial success has eluded the company. Fortunes have not improved much since its establishment in 1998 and listing on the JSE’s AltX market in 1999.

After 15 years, Moneyweb’s management is still struggling to find balance between costs and revenues with little indication that it will strike it rich in the foreseeable future, in an internet-driven business where economies of scale are of utmost importance. Management has announced that it will reduce costs by finding cheaper office space.

Over the past few years, operations have put a severe drain on the company’s cash flow. Cash outflow in the 2014 financial year amounted to R2.6m following the negative cash flow of R3.4m in 2013. Cash balances at the end of the last financial year dropped to R5.7m.

Moneyweb’s share price has dropped to 30c to value the company at around R32m, compared to a share price of 50c and a total market capitalisation of R53m a year ago.

Moneyweb has started legal action against Naspers’ Media24 (owner of Fin24), accusing Fin24 of infringement of copyright. Legal proceedings by Moneyweb against its founder Alec Hogg a year ago ended with a court order against Hogg. It was alleged that Hogg used a company client list to promote his new financial newsletter.

Moneyweb has since launched its own newsletter, Moneyweb Today. It is targeted at the small audience of share investors in competition with the myriad newsletters and websites offered by stockbrokers, investment managers and other market commentators.

 - Fin24

* Fin24 is part of Media24, a subsidiary of Naspers.

*After chasing money on the JSE for 15 years, Adriaan Kruger is now living a relaxed lifestyle in Wilderness and lectures economics part-time at NMMU.


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