South Africa: Kagiso 'Still in Line' for Clear Channel Stake

Investment

Kagiso Media was still in line for an empowerment stake in Independent Media's outdoor advertising business Clear Channel Independent, Kagiso CEO Murphy Morobe said last week. This follows the announcement of the company's interim results for the six months to December.

"It is still on the table. We are looking at our acquisition mix going forward, and may want to prioritise certain of these. But we are still in discussions," he said.

Last year, Kagiso bought a stake in Clear Channel Merafe, a subsidiary of Clear Channel Independent. Business Day was told that the local subsidiary of UK-based Independent News & Media Group was considering Kagiso as an empowerment partner in Clear Channel's local operations as a whole.

Independent said last month that it would buy the remaining 50% it did not already own in Clear Channel Independent from its US-based holding company for an estimated $126,7m, a move that would further open Clear Channel to an empowerment partner.

On acquisitions, Morobe said: "We are looking at different options, but we want to utilise as much of our own cash as possible to avoid going into debt."

The company funds anything below R10m from cash reserves. Anything larger requires preferential share issues. Morobe said the company might need a greater level of gearing to keep up with media industry developments.

Kagiso had cash reserves of R135m, of which R46m would go towards satisfying a 35c dividend to ordinary shareholders, as well as a further amount for preference shareholders, Morobe said. The company reported revenue of R411,8m, an increase of 11,4% on the previous corresponding period.

Radio broadcasting operations made the biggest revenue contribution, rising 10,9% to R243m, while information services, including Butterworth's Lexis Nexis, increased more than 29,5% to R102m . Clear Channel Merafe contributed interim results for the first time, with revenue of R27,9m. The only operation to post a loss for the period was Kagiso Exhibitions and Events .

Following this section's poor performance, the company said management would reconsider certain hosted events, and establish by year-end whether or not to continue hosting them . However, Morobe said that in the light of the 2010 Soccer World Cup, he believed that the business still held value.

Kagiso Media, together with MSG Afrika Media, bought a 50,1% stake in outdoor advertising company Clear Channel Merafe last year, making it a frontrunner for a formal empowerment stake in Clear Channel Independent.

Business Day