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South Africa: Kaya FM, a Nice Addition to Primedia Collection

Amid the headache of trying to delist Primedia from the JSE, there is one last irritation the company cannot seem to get rid of -- African Media Entertainment's (AME's) obsession with Kaya FM. Following a private equity buyout by the Mineworkers Investment Company and the Primedia's Kirsh family, Primedia has pretty much fallen off the radar screens of most analysts.

But if it was still a listed company -- and indeed, even as a nonlisted entity -- the general impression is that losing out on a R19m, 24.9% stake in the Gauteng station would be little more than a blip on those screens. Primedia owns Highveld 94.7 and Talk Radio 702 -- both predominantly white in their profile. Kaya FM would make a nice addition, adding a number of middle- to upper-income black listeners to the mix. AME has argued that Primedia may become too dominant in Gauteng as a result of owning a stake in Kaya FM, hence the appeal court's decision to get the Competition Tribunal to reassess its decision once again.

Primedia believes its Highveld 94.7 "white" profile is completely different to Kaya's "black" profile in advertisers' eyes. Whether that still will be the case in 10 years' time is another question. At R19m and considering the growth in the black middle class, it would be a nice asset to have, and fairly inexpensive too. But Talk Radio 702 has successfully raised its nonwhite listenership over the past few years -- it sits at about 35% black and 53% white.

(Business Day (Johannesburg), 22 November 2007)

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