Markets & Finance

South African media group buys stake in two radio stations

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Radio Africa Group managing director Patrick Quarcoo speaks during a past event. FILE PHOTO | NATION MEDIA GROUP

South Africa’s Times Media Group, which owns a stake in Radio Africa, plans to invest in digital broadcasting and buy into two more radio stations in East Africa.

The Johannesburg Stock Exchange-listed company in June bought a 49 per cent stake in Radio Africa Group which owns Kiss FM, East FM, 105.5 FM, Radio Jambo, X FM and Classic 105 FM, Kiss TV and The Star newspaper.

READ: SA’s Times Group acquires 49pc stake in Radio Africa

It plans to buy 49 per cent stakes in the two Ugandan radio stations— Beat FM and Capital Radio, according to the 2014 annual report.

Times Media Group (TMG)’s new investment will see the South African company have a stake in seven radio stations across Kenya and Uganda.

Times Media Group owns multiple newspaper titles in South Africa including the Sunday Times (South Africa’s largest newspaper), the Times, Business Day and the Sowetan.

Five stations

TMG said Radio Africa in Kenya boasts five market-leading radio stations and is well positioned for Kenyan and East African expansion opportunities.

“It [Radio Africa] plans to launch a digital terrestrial television (DTT) service in the near future to capitalise on growing TV advertising revenues in the region. TMG continues to follow opportunities in these regions and is due to complete the purchase of a 49 per cent stake in Beat FM and Capital Radio in Uganda shortly,” said the 2014 annual report.

The Sh1.59 billion (195 million rand) Radio Africa deal in June valued the media house in Uganda at Sh3.24 billion.

Analysts said that investing in digital platforms is meant to increase advertising revenues from the fast growing and popular source.

Internet access and a more sophisticated consumer are driving international advertising firms to engage customers through the new media.

“The emergence of world giant advertising houses such as WPP, Omnicom and French players Publicis Groupe and Havana through numerous acquisitions in various regions across the continent are rising to meet their international clients’ demands. In Kenya, the situation is not isolated,” said a report on ScanGroup by brokerage house Sterling Capital.

The report said that smartphone use in sub-Saharan Africa is expected to grow by an average rate of 40 per cent up to 2017.

Analysts at Sterling Capital say the use of smartphones may hit traditional media hard.

“There is a trend of shifting focus from paper-based advertising to the digital platform,” said Agnes Achieng, a research analyst at Sterling Capital.

Other investors are, however, bullish on print media and are adopting the free paper model.

Fusion Capital, an investment firm, bought a 40 per cent stake in Xtra Publishing, which publishes X News, a free newspaper in July.

READ: Fusion Capital buys stake in Nairobi evening paper

Fusion bought the minority stake for Sh125 million. The People newspaper has also adopted the free paper model.