Splitting HairsA new front in the Sunday papers war |
But Avusa's Mike Robertson says it's about meeting competition law.
EAST LONDON - There's nothing like a bit of corporate combat to kick off the year. If, like many in South Africa, you were still on holiday last week you might have missed this story on Fin24: veteran media writer Tony Koenderman on the Audit Bureau of Circulation relaxing its rules so that anything sold for less than 50% of its cover price can be counted as ABC-endorsed copy sales.
The juicy bit is that it was Avusa (JSE:AVU) that drove the change, arguing that the rule was anti-competitive. So it appears that Avusa, the owner of the Sunday Times, the Sowetan and Sunday World, has kicked down a key pillar of the strategy of its rival, the Naspers (JSE:NPN)-owned Media24, which has been pushing for some time now that "core circulation" be the standard.
Core circulation is copy sales sans third-party bulk (selling copies of your publication to a third party for them to give away - or not) and what is called "print media in education" sales or PMIE. The latter means bulk deals that go to disadvantaged schools that newspapers can count as circulation and simultaneously trumpet as helping to improve literacy.
As I wrote in a column last year, Media24 stole the march in July on everyone else in the newspaper industry and said that its advertising division would take out third-party bulk and PMIE sales from the circulation figures of its Sunday papers so that advertisers could focus on core circulation. The five papers are the Sunday Sun, City Press, Ilanga Langesonto, Rapport and Sondag.
In fact, the ABC numbers had started offering a breakdown of sales figures that separated out the third-party bulk and PMIE since the beginning of 2009. Media24, it seemed, had hit on a wily strategy as its arch rival on a Sunday, Avusa's Sunday Times, has the most to lose because its high percentage of bulking - especially with City Press now improving under Ferial Haffajee. City Press is definitely a lot tighter and harder under Haffajee, previously the editor of the Mail & Guardian.
There are many critics of the ABC's recent move, saying that it creates the opportunity for abuse and to confuse - just as bulking does. It could be used to mask declining circulation, they say, and that it will dilute what advertisers really care about: demographics.
"It is a shame that they've gone this route as it does certainly muddy the waters," says Richard Lord, associate media director at The MediaShop, one of the country's biggest media planners. (Media planners advise advertisers where and how to advertise to best reach their target audience. When it comes to print they look at ABC sales and Amps readership figures to determine what is called "reach" - how many people of the target demographic can be reached through a certain amount of sold copies.
"It devalues an ABC certificate," says Lord, "as most planners will feel that a publication that people are paying their hard-earned cash to buy is worth far more than a free or significantly discounted title. It absolutely does dilute the demographic profile of a title as it means that they will now sell copies to people who might not otherwise have been able to afford it...so if I am wanting to buy an affluent audience and now the publication is being given away to everybody, I am no longer certain that I am buying that affluent audience."
So there's much grumbling and Media24's Linda Gibson, head of the company's sales division, told Koenderman: "I have to ask whether it was the right thing for ABC to go along with the Avusa suggestion. Now the industry is up in arms. They are losing their currency. Now people can start doing all sorts of knock- and-drop publications."
There was something missing in the Fin24 story though, and that is Avusa's comment so I tracked down the head of the company's media division, Mike Robertson (on holiday). He said that Avusa pushed for this because the board instructed the company to get the ABC rules changed to meet the requirements of competition law, that it does not muddy the waters as demographics are deduced from Amps figures and he dismissed the view that the move is in response to Media24's strategy to emphasise core circulation.
"The competition lawyers say that their interpretation is that (the 50% rule) is industry bodies - which is what we are - colluding to make sure that consumers can't get a product as cheaply as possible."
The UK, the US and Australia have also done away with the 50% rule, said Robertson, and Avusa was keen for South Africa to adopt the British system, whereby ABC figures are broken down into price bands so that titles disclose exactly how many copies are sold at varying prices.
However, the ABC in South Africa had said the British system would be too complicated for them to implement. Robertson said he had sympathy for the local ABC's concern and that in Britain, the ABC was more sophisticated and better funded.
When asked if Avusa is committed to pursuing the course of getting the ABC, which is funded by the media industry, to adopt the British system, Robertson said: "We would like to get something like that, yes - maybe a variation of it, one that is not as complicated as the British one."
On the view that this move was part of the Sunday papers war between Avusa and Media24, Robertson said this: "We're a listed company and when our board instructs us to change your practices so that you're in accordance with the law, we don't have the option of saying ‘no'."
On the view that people in media and advertising circles are suspicious of the move because it comes from Avusa, which employs bulking more than most others in the industry, Robertson said: "We have a very different view on bulking and, quite frankly, quite a lot of the media industry have a different view to Media24. I'm not going to have my strategy determined by a competitor."
I asked what is good, in Avusa's view, about bulking when it drives up your costs with printing and distribution costs.
"Not necessarily," he said. "Your delivery costs come down quite a lot because you're delivering to one (bulk) point and if you're delivering to a core target audience, then you're delivering the right kind of audience. There are many ways of getting to your market. If you take the Daily Dispatch (in East London), which we sell for a relatively low cover price, the Sunday Times, which we sell for a relatively high cover price, and The Times, which we deliver for free to (Sunday Times) subscribers, all of them are - if you take East London as an example - targeting relatively the same audience. It doesn't mean the Sunday Times is more legitimate than the Dispatch because it's sold for a higher cover price.
"We carefully choose what kind of place we're selling (bulk copies) in and, once again, the only way you can determine whether you're delivering the right kind of audience or not is using Amps."
So maybe 2010 will shape up to be a battle between Amps and ABCs. In any event it's going to be an interesting year for media circles.
*Media columnist Gill Moodie spent 14 years as a salaried hack in print media in South Africa and the UK before escaping to the blogosphere and freelance journalism. She is the publisher of Grubstreet http://grubstreet.co.za/ in between unpacking and packing the infernal dishwasher and bringing up a four-year-old with attitude.
Intraday
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