M-Net: Money and the box
Koos Bekker created what would become the largest emerging-market media company in the world
Not long after M-Net’s 1986 launch, Koos Bekker, its CEO at the time, found himself wondering whether, if the lemon creams were cut from the office coffee supplies, the company could be saved. That’s how dire the situation was, Bekker said at M-Net’s 30th anniversary dinner last week.
The first broadcast was the Currie Cup final between Western Province and Transvaal in October 1986. But, Bekker told me later, "by February 1987 our viewing audience was so pathetic we had to give make-good ads to advertisers on the basis of one-paid, two-free."
It got worse: "By March 1987 our trading results were: turnover of half a million rand, loss of R3,5m for the month. Since our backers were newspaper groups of small to moderate size, they couldn’t bear that sort of bleeding. We were a few weeks away from the end."
Then came the advent of new technology – well-made decoders for single homes – and a change in strategy – from selling to blocks of flats which required 90% sign-up to selling to individual homes. The decoders "sold sweetly, since we now needed to persuade only a single guy and it didn’t matter what his neighbours thought".
Despite those difficult early years M-Net "scraped through by the skin of [its] teeth, and by the end of 1988 was breaking even on a monthly basis," Bekker said.
The gala dinner was a star-studded affair, hosted by a holographic Trevor Noah and Ashley Hayden, while Lira, Mango Groove’s Claire Johnston, Nigerian Star 2Baba and The Parlotones performed.
There were the TV stars of the past three decades, and four of the six original 1986 staff, who still work for the company, came onto the stage with Bekker and the original chairman, Ton Vosloo.
That kind of personal gesture is what has characterised Bekker’s career as one of the country’s most successful businessmen.
He returned from completing an MBA at Columbia in the US and set up M-Net, one of the first two pay-TV channels that weren’t American.
Bekker pitched his idea for pay-television (based on HBO, which he’d seen in the US) to Vosloo, the newspaper editor turned CEO of Nasionale Pers (Naspers), then one of the country’s big four newspaper groups. Vosloo was desperately looking for a new revenue source, which government would give the big newspaper groups through the M-Net licence, as compensation for the advertising revenue then being diverted to television by the still new SABC.
Later, satellite division DStv would be one of the first channels globally to start broadcasting using digital — and not the then dominant analogue — transmission. This showed a key willingness to try new technology, and it would characterise Bekker’s remarkable ride in creating what would become the largest emerging-market media company in the world.
But back at home, M-Net is the company South Africans either love or love to hate. Noah’s hologram message had him relating how he grew up with M-Net, hilariously recalling the free-to-air Open Time as if it had been a cultural treasure.
Among the adverts from the 1980s playing on wall-sized screens was the M-Net-licensed A Kind Of Magic performed by Queen . It was something of a coup — Queen, arguably the biggest rock band in the world at the time, singing your station’s anthem. Or that advert with the various animals "lip syncing" to a song with the payoff line "If there’s magic out there, we’ll find it." Cultural treasures indeed.
But on radio talk shows and social media people are decrying the cost of the service and the "endless reruns". I often travel to the US and the UK, whose pay-TV is supposedly the gold standard. I’ve spent a week sick in bed in an Austin hotel, and another at a friend’s in London. That’s the kind of deep exposure one gets to a TV service when you’ve got a sinus infection in a foreign country. Quality-wise, DStv is way better. And cheaper. South Africans don’t know what a good deal they’re getting with DStv.
The "Express From The US" service is a case in point. The popular TV shows appear on your decoder the very next morning, in case you can’t get to work without catching up with Game of Thrones. (We won’t judge you.)
At the anniversary party, Vosloo told an amusing anecdote about how "our business colleague" Johann Rupert called "the new company in Johannesburg" and asked the receptionist to speak to "Mr Bekker". When she confessed she didn’t know who that was, he said: "Mr Koos Bekker." She replied: "Oh, you mean Koos."
The evening was a nostalgic romp through M-Net’s marketing theme for three decades revolving around the "magic" of television, but was as much a reminder of Bekker’s business acumen.
M-Net made its first profit in 1990 and listed a year later. Ten years after M-Net’s launch, Vosloo would hand his CEO mantle to Bekker to run the wider Naspers business, the media company that was started in 1915. Bekker, who along the way was a founding director of cellular network MTN, would become one of the country’s most celebrated businessmen, growing Naspers into the largest emerging-markets media company in the world. For a long time, though, before the Internet truly took off, the jewel in Naspers’s crown was MultiChoice-owned DStv.
But in 2000, when the entire group made a loss, Naspers’s shares dropped to below R12. You could have bought the whole company for R2bn. "We were deep it the dwang," Bekker says. Naspers shut down businesses and got out of unprofitable countries outside Africa.
"In the middle of 2000, we raised $30m and invested it all in Tencent."
And the rest is history. Naspers owns a third of Tencent, whose WeChat app has over 700m users and is indispensable for someone living in China, where it is used for messaging, m-commerce transactions and voice calling. You order takeways and uber-like taxis, and communicate with friends. Once again Bekker spotted the next technology curve. Tencent’s sterling results last week — a 43% rise in third-quarter profit — gave Naspers’s share price a 4% surge.
Earlier this year, Naspers broke through the magical R1trillion valuation. It is the seventh-largest Internet company in the world. Since SABMiller’s acquisition by AB InBev went through earlier this year, Naspers has become the most valuable listed company in Africa, and has the largest market cap for a media company outside the US and China.
Vosloo credits Naspers’s rise and rise to the culture of "equality ... introduced to this business right in the beginning, thanks to Koos. He set the pace for how the public company in the new, coming SA would have to look. No discrimination whatsoever."
Adds Vosloo: "Of course he was known as Koos, and everybody says: ‘Koos Says So’."
In fact, "Koos Says So" would become a business mantra for M-Net and later Naspers; and his judgment would prove invaluable.
But so too was his personal touch. "Koos had an ox slaughtered and braaied in the [M-Net] courtyard," says Vosloo. "The thing that was most innovative was that all folks got a parcel of six mealies" from Bekker’s family farm, a tradition that still continues. However, joked Vosloo: "The Financial Mail wrote a snippety little piece: ‘Naspers and M-Net are now so poor, they pay the guys a parcel of mealies’."
But it was Bekker’s open-mindedness that Vosloo praised most: "[His] outlook of [all of us] being together and equal, and [there being] no discrimination, set the pace and the scene like no other public company had done up to that time. "So in that sense, M-Net is the great pioneer that led us into the new SA." It’s no small irony, given Naspers’s broederbond roots.
From M-Net’s first broadcast — of a rugby final, for which Bekker wore a waistcoat with Transvaal’s red strip on one side and Western Province’s blue stripes on the other — to the country’s most successful TV station and now media company, it’s been a 30-year validation of Bekker. As they say at Naspers, Koos Says So.
What it means: Koos Bekker created what would become the largest emerging-market media company in the world.
• Shapshak is editor-in-chief and publisher of Stuff magazine.