Wide scale retrenchments on the cards but media workers will only know their fate in January 2009. This as Naspers loses R500m in a failed German mobile television bid.
With a reported 3,8% drop in headline earnings Naspers (JSE:NPN) is "cutting costs to the bone" and laying off staff while making heavy losses in a failed German mobile TV bid.
With print advertising around the world going into free fall Naspers is set to cut up to 20% of jobs in its newspaper division according to A newswire service which reports that a memo sent to employees confirmed that employment would be reduced and that executives had briefed workers last week on possible job cuts.
A source phoned me on condition of anonymity and said that 11 colleagues had already lost their jobs when the English version of Die Kaapse Son closed down a week ago.
"We hear that 80 media workers will lose their jobs at Burger, Beeld, Volksblad and Rapport," said the source. "The morale here is incredibly bad because management have told us they will only inform workers whose jobs will be lost in January. We're highly stressed and it's going to be a bleak Christmas for all of us."
The source said that Burger, Beeld, Volksblad and Rapport would be consolidated and that sub-editors at those papers would more than likely lose their positions as a "super subs" office was being created to handle copy for these print titles.
"We hear that Burger, Beeld, Volksblad and Rapport will merge to become one paper. The uncertainly is terrible and people are living in fear that they will come back from holiday to no job and no means of supporting their families," said the source.
According to an undated memo from Abraham van Zyl, head of newspapers at Media24 Beeld, Die Burger, Volksblad and Rapport have been hard hit by the economic slump, falling circulations and a decrease in advertising. The newswire service reports that ad spending in South Africa fell 8% from January to August 2008.
Francois Groepe, CEO of Media24, declined to confirm the percentage of staff being cut. Job reductions started last year and "further reductions are under way", he said in an e-mailed response to questions. "We will not announce the number or percentage of staff reductions," Groepe said. "Headcount information will however be disclosed in our annual financial statements as has been our practice in the past."
These announcements come as former financial journalist and Naspers staffer Christo Volschenk reports from Germany that Naspers has been loosing money hand over fist in that region. "Naspers blows R500m and no one says a word" writes Volschenk on his blog detailing that no one picked up the losses while reporting on Naspers' financials for the six months up to December 2008. "The loss was not as insignificant. In fact, a packet of money was lost. In the interim report released Thursday a loss of R279m was shown for the year up to March 2008 and another R216m for the six months up to end September 2008," says Volschenk.
"It's not quite clear from the report whether one should add the two numbers to get to the overall amount pumped into the project, or whether only the last R216m should be connected to the project. (The licence was awarded in January 2008, so the project only really "got going" this year.) In the interim report Naspers simply said the post "refers mostly to our withdrawal from a German mobile TV project". If one must infer from that (as I think one should), that R495m was pumped into the sand, all I can say is: Shame on the SA business media for not reporting more extensively on this project (until now). Even if only half was lost, shareholders would still have liked to know about the project. For perspective: The MWEB Africa Group was recently valued at R610m," adds Volschenk.
Speaking on SAfm Market Update this past Wednesday Naspers CEO Koos Bekker said of the failed mobile TV bid: "The problem there was the German stake is divided in 16 [metropolitan areas]. They differ, they are stringent, they force us to do business with people at uneconomic rate, and it's basically a walk away from the licence."