Independent contract comes as a relief to Novus
Printing and manufacturing group Novus Holdings, which is struggling to replace the loss of annual revenue of R560m from its printing contract with Media24, has won the contract to print Independent Media’s newspapers and magazines for five years from August 1 2018.
The new contract will provide some comfort for the debt-free group, which remains susceptible to takeover following the 2017 decision by Naspers to reduce its holding from 68% to 17% in line with a ruling from the competition authorities.
Novus would not provide details of the value of the contract with Independent Media but one industry source said the newspaper portion was worth about R20m a month, with the magazines expected to contribute a smaller amount.
The contract will also make a much smaller contribution to Novus profit at around R20m a year. The Media24 contract accounted for 21% of Novus’s revenue until April 1 2018 when large portions of it were transferred to Caxton.
Novus CEO Neil Birch said that the contract would mitigate the reduction of the Media24 printing agreement in certain regions and would provide the opportunity to recreate a number of jobs recently lost in the printing division.
"This contract is proof that the group is moving in the right direction, especially as we contemplate the impact of a shifting operating landscape on our business and redefine how we respond to these challenges."
The contract involves printing all of the Independent Media’s newspapers and magazines in Cape Town and the Pretoria News and Diamond Fields Advertiser in Gauteng, which is currently being done by Caxton.
This will give Novus a dominant position in the print media market in Cape Town as it has held on to Media24’s business in the Cape.
"The contract will increase the capacity utilisation at the Paarl Coldset plant in Paarden Eiland by 30% to 90% and will allow for 66 job opportunities," said Birch.
In the most recent financial year printing accounted for 84% of Novus’s total revenue of R4.3bn. Management wants to reduce this to 50% by diversifying into other areas.
Meanwhile, Birch said that he could not comment on speculation about a possible merger between Novus and Business Day’s publisher Tiso Blackstar.
Tiso Blackstar CEO Andrew Bonamour declined to comment on the merger speculation, but said that if the industry wanted to be sustainable printing, publishing and distribution should be integrated.