South Africa: Print under pressure

South Africa’s print media is going through some difficult times, with a number of titles struggling with declining circulation, lower revenue and the looming possibility of stricter regulation. However, the sector does continue to hold encouraging potential for growth, particularly for weekly print outlets.

According to the latest circulation figures issued by the Audit Bureau of Circulations (ABC) in August, this year has seen mixed news for the country’s print media, with sales in some segments rising as others are taking a sharp dive.

The ABC data showed a continuing decline in daily paper sales, with circulation down 126,000 in the second quarter, following a fall of 70,000 in the first quarter. Of the six top-selling daily newspapers listed by the ABC, only the Zulu title Isolezwe posted solid growth, with sales up by 9.5%. The Daily Sun, South Africa’s best selling paper, posted average daily sales of 381,000, well down from the almost 500,000 sold daily in 2009. Sales also slumped for a number of Afrikaans titles, including Volksblad, whose circulation was down 19%.

Among the reasons given for the drop are the rise of the internet and other forms of new media and the fact that electronic media is increasingly becoming the main source of obtaining news and information.

But the news for print media was not entirely negative. Weekly titles lifted their combined circulation by 15%, with Ilanga boosting sales by 32%, Soccer Laduma by 20% and the Mail & Guardian by 5%.

The strong performance by a number of Zulu titles could signify a trend that might help reverse declining sales, as it would open up a much larger market for both national publishers and community titles. Increasing affluence within the black community and the growing number of black writers, editors and managers in the media also has the potential to generate greater demand for targeted content.

Gordon Paterson, the vice-president of the ABC, says this may well be the case, telling local media that the “rise in copy sales could be a groundswell of curiosity from the people feeling good to read newspapers printed in their own languages, which is fantastic”.

Also hopeful about an improvement was Abraham van Zyl, the CEO of Media24 Newspapers. After many of Media24’s lead titles returned lower than expected sales, which he claimed resulted from “glitches” in its distribution network and the rebranding of some publications, van Zyl said on August 17 that he is confident circulation will rebound in the second half of the year.

“Obviously we are disappointed that some of our circulations have not recovered as quickly as we had hoped,” he said after the latest figures were released. “However, we are quite confident that we will see a pick-up in numbers as we move into the next quarter.”

Just as worrying as reports of dwindling circulation are the results of a study conducted by Media Manager Online, a local media information company, which showed media inflation – the rise in the amount of money it takes to reach the same number of clients – had risen sharply and now threatens to undermine the cost effectiveness of print media, as well as cut into returns on investment.

According to the study, issued at the end of September, the cost of advertising in South Africa’s print media climbed by 6.7% in the first half of 2011, well above the 5.3% year-on-year inflation rate as of the end of August. However, the overall media inflation rate is only part of the story, with the amount of money it takes to reach daily newspaper readers up by 17.46%, a problem magnified by dwindling readership.

Overall, taking into account the increasing costs and falling returns, the report found that the amount of money required to reach readers through print had soared by 13.4%, compared to a far more moderate 4.5% increase for radio and a 2.8% fall for television.

Rising inflation and falling sales are not the only problems making headlines for South Africa’s print media. Independent Newspapers, Media24, Caxton and Avusa, the country’s leading newspaper publishers that together account for almost 88% of circulation and a sizeable chunk of advertising revenue, have been pressured recently with claims that they are limiting media diversity by setting lower rates for ads and sales, thereby undercutting smaller community papers.

Although they deny these claims, which received an airing at a parliamentary hearing into media diversity in late September, the companies could still face calls for tighter regulation over ownership and market concentration.

It is too early to say what, if any, recommendations may come out of the parliamentary hearings, but is clear that the government favours less concentrated media ownership. This uncertainty may affect the share prices of listed media houses and could also prompt publishers to diversify their title range to tap further into the wider South African readership.

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