EDITORIAL: Naspers cannot wash its hands
These are no ordinary times and Naspers is no ordinary company
Naspers CEO Bob van Dijk’s attempt to pass the buck for DStv’s arrangement with the Gupta-linked ANN7 news channel is disingenuous. While it may be technically arguable that a continuation of the arrangement is a matter for the board of DStv operator MultiChoice, Van Dijk’s assertion that it is inappropriate for Naspers to intervene is nonsense.
In the first instance, it is the Naspers board’s duty to oversee the commercial performance of its 80%-owned subsidiary’s endeavours. If Van Dijk does not see that ANN7 is a commercial disaster — that it is nothing but a propaganda device for Gupta-linked government and business entities — he is looking the other way. MultiChoice has already poured millions of rand into its special relationship with ANN7 and intends keeping it up, while it is patently obvious the news channel will draw neither viewers nor revenue to DStv.
In any decently run business, this would be case closed. If there is more to the matter, though — that is, if MultiChoice’s investment in ANN7 is not a commercial endeavour but is, say, a strategic move benefiting Naspers, shareholders and DStv, fee-paying viewers should be told. Specifically, MultiChoice should come clean about its arrangement with ANN7 and the veracity or otherwise of its role in influencing or dictating government policy on the encryption of set-top boxes.
Considering that, by MultiChoice’s own admission, it is not its policy to pay for news channels, what else could the money be for? Naspers’s announcement that MultiChoice’s board will conduct its own investigation provides no comfort.
Clearly, it is up to Naspers’s board to take responsibility. When Naspers responded with an intemperate statement to the media that some of the commentary was "clearly intended to apply pressure on Naspers to force MultiChoice to take … ANN7 off the air", it is accurate: there is a clear and resounding call for Naspers to do just that. Such pressure is reasonable and fair.
Ordinarily, shareholders and other interested parties such as viewers remain regrettably aloof from corporate governance issues, happily accepting their dividends and grumpily tolerating poor offerings from a pay-TV monopoly. But these are no ordinary times and Naspers is no ordinary company. It is the biggest company in Africa, having benefited chiefly from its exposure to China’s internet business Tencent, which makes it vulnerable despite its bulk.
Naspers’s market capitalisation now represents about 19% of the all share on the JSE, valuing it at about R1.6-trillion; when its share price moves on the JSE, the entire exchange moves. This would explain the degree of discomfort its bigger shareholders, such as Sanlam and the Public Investment Corporation, express about Naspers and the way it does business. It means Naspers has an extraordinary responsibility, not only to its shareholders and via MultiChoice to a great number of South Africans, but also as a business leader.
There is a good chance that if Naspers does not act now the fallout will be far greater for the group
At a time when state capture and corruption has brought the South African economy to the brink of implosion, any association a business might have, however remotely, with questionable business practices undermines the business community’s credibility in its call for an end to corporate and government malfeasance. The last thing Naspers and SA needs is for the group to join McKinsey, SAP, KPMG and Bell Pottinger in disrepute.
On Friday afternoon, Naspers’s share price had fallen 5.3% to R3,561 for the week following the news of the MultiChoice-ANN7 arrangement. This may seem to be a disproportionately drastic reaction to news that had no immediately apparent material effect, but shareholders do know risk when they see it.
The reaction reflects how seriously financial markets and the investment community view state capture and corruption. There is a good chance that if Naspers does not act now the fallout will be far greater for the group and for everyone with an interest in the company.