South Africa’s Media 24 has ended its presence in Kenya’s competitive publishing industry following its closure of East Africa Magazines — the publisher of True Love, Drum and Move.
The firm on Monday attributed its exit to lower revenues and rising operational costs as it joined a growing list of magazines such as Eve, Economic Review, Adam and Cosmopolitan that have folded up in recent years.
“We are in the process of closing down the business. We have informed the staff about it. This means that the April editions of True Love, Drum and Move magazines will be the last to sell in Kenya” general manager Kobus Louwrens said on Monday.
The move, which comes barley months after the South African firm took full control of the publisher that it co-owned with Nation Media Group (NMG)—East Africa’s largest media house, has left 45 workers jobless, including 10 journalists.
Media24 previously held a 49 per cent stake in EAM, leaving NMG with a controlling 51 per cent, in a partnership founded in Nairobi in 2005 to publish the East African editions of True Love and Drum magazines.
But Kenya’s soft economy—that has depressed advertising and circulation revenues—coupled with the country’s low appetite for magazines has made it difficult for high-cost publishers to return a profit.
At the point of take-over in November, Mr Louwrens, said the move was targeted at establishing a strong presence in East Africa.
“We see a long term future for our investments in East Africa” said Mr Louwrens when he commented on the take-over that came just a fortnight after the publisher discontinued the publication of two titles— Adam, a men’s magazine and a travel and tour magazine, Twende, citing high cost of production and sluggish revenues
Mr Louwrens said South African media firm Naspers group, the owners of Media 24, pulled the plug on the East Africa Magazines division because of little return on investments.
“Naspers Group, through Media 24 has injected a significant amount of money for the running of the magazine titles under East African Magazines, but the returns were low and our projections were not favourable enough to warrant further injection of funds” he said.
This came as the Naspers, which is listed at Johannesburg Stock Exchange (JSE), noted that its publishing division was facing challenges in the wake of the global economic meltdown.
“The operations in South Africa showed no top line growth due to weak advertising revenues, whilst operating profits before amortisation and other gains/losses were down 27 per cent,” said Nasper in a note to JSE in November 26 while announcing it half results.
Media 24’s takeover of EAM was viewed as largely driven by a development in which Jetsam—one of South Africa’s major distribution companies with roots in Botswana, Malawi, Swaziland and Zambia, took over the distribution of magazines published or imported by EAM.
Jetsam took over the EAM magazines distribution business from the Nation Media Group in what analysts say was the first signs that South Africa wanted a full control of the business.
The move to close East African Magazines adds to a lengthy roll of South African firms that have found it difficult to navigate the local business terrain, especially those that have preferred to ship in managers from South Africa to steer their local shops.
They include Supreme furniture, retail chain Cash and Carry and beverage giant SAB Miller.