Chapter One – From strength to vulnerability

Chapter 24: Independent Newspapers takes control

It was early in 1994 that Tony O’Reilly’s Independent Newspapers of Ireland bought JCI’s 34% interest in Argus Newspapers, giving it effective control of Argus Newspapers. The price was R125-million, which was regarded in financial circles as a virtual gift, far below the value of its assets. This control was later reinforced when Independent made a general offer, which pushed its shareholding close to 60%. It later bought out minorities entirely and delisted the company from the stock exchange.

The change of control also involved untangling most of the cross-holdings of ownership between Argus and TML. Thus TML was paid a sum of R61-million in compensation for losing the 30% stake in Natal Newspapers it had acquired from Robinson, for losing its near-half stake in Pretoria News and for relinquishing ownership of the Cape Times to Argus.
A change of control was not a total surprise, but the news of the take-over was a sensation nonetheless, because of the personality involved in purchasing the company, because the low price suggested it was a deal forced by circumstances, and because many had thought Argus more valuable to JCI than TML and that TML would be the one to be sold.
As the process of democratisation in South Africa advanced in the 1990s, after the release of Nelson Mandela and the unbanning of the liberation movements, pressures for press reform were also being felt. It was well known that JCI (and Anglo American behind it) was sensitive to allegations of monopoly and was looking for a solution. The difficulty was thought to be in finding a suitable buyer who would preserve the image of liberal independence that both groups had maintained. There seemed few inside the country who could afford the purchase and who had the right credentials to provide confidence in a free press after such a take-over.
In mid-1992, I was sent by Doug Band and John Featherstone, respectively chairman and chief executive of Argus Newspapers, to attend congresses in Budapest and Prague of two international press organisations – respectively IPI and Fiej.
The purpose was to find international friends in the press who might come to the company’s defence, and kick up an international fuss, if any government action were taken against the company or the press in South Africa. But on top of that, it was to monitor attitudes to South Africa and to the South African press at these congresses.
Of particular significance to the South African press, I found, was Mandela’s speech in Prague to Fiej. In fact, it became the most important moment of my visit, because he chose there to take the offensive against white-controlled and white-edited newspapers in South Africa, pointing out that their background was so far removed from the experience of the majority of South Africans that they could not be representative.
We knew from that moment that the political pressure on the mainstream newspaper companies was going to be a feature of the future. Resulting from the report-back from my visit, the company sent Peter Sullivan (then an assistant manager at The Star, later its editor) to interview billionaire George Soros to request financial assistance in setting up a body to help diversify ownership of the press in South Africa. Argus was itself putting money into the project, but felt it needed more financial backing.
Soros at first turned down the approach flat, but was intrigued when Sullivan started leaving without arguing further. To Sullivan’s surprise, Soros then listened more closely to Argus’s reasons and offered R5-million to the fund. He had at first turned down a request for no more than R500 000.
That was one level at which Argus tried to address the question of the over-concentration of control of the press in South Africa. But it was not enough on its own. JCI continued to look for a suitable buyer for one of its newspaper companies, Argus and TML. From the outside, it was certainly not clear which of the two JCI controlled companies JCI wished to sell and which to keep, but Argus employees thought Argus would stay with JCI, because it was the bigger and financially more profitable group.
It was with some surprise therefore that the news broke of Tony O’Reilly’s purchase of control of Argus. It also caused a wave of speculation about what the change of ownership would mean for management and for editorial. Rumours abounded of O’Reilly’s style, his charm, his ruthless management methods, his considerable talents as a public speaker, and his considerable wealth. He was well known to South Africans as a sensationally fast rugby wing, who had toured South Africa with the British Lions rugby side in 1955,when he was only 19 years old. His love of South Africa sprang from that time and must have played a part in his decision to buy into a South African newspaper group even before the 1994 democratic elections had been held and while many people were extremely uncertain that the democratic process would be successfully completed.
O’Reilly’s investment was an act of faith that made a good impression on South Africans both from the old government and from the incoming ANC government. O’Reilly was reputed to have invited Nelson Mandela for an island holiday with him to gain his approval of the deal. While his hospitality to Mandela may have had some influence in clearing the way for the deal, it also left O’Reilly with the reputation of being indebted to Mandela politically. The Independent Newspapers group has suffered from allegations of being politically correct and in the pocket of ANC ever since.
First signs within the company of changed ownership came with a series of visits by O’Reilly himself, by his board members, by his family of six children and his very-rich-in-her-own-right, racehorse-owning second wife, Chrissie, as well as by a group of Irish investment analysts and bankers to see for themselves what sort of company he had bought.
O’Reilly did things in style – lavish cocktail parties culminating in the magic of O’Reilly speeches. It was a wonderful formula for projecting himself and creating a hype around the company into the greater South African community. But behind the razzmatazz, he also demanded presentations from spokesmen for each of the newspapers to help in a detailed assessment of what they had bought and what they would do with it.
The visits took place while the change of control was still going through its required processes, and it was only in the second half of 1994 that the new board was set up. There had been great speculation over who would lead the company, but Featherstone retained his position as chief executive, and all managers and editors retained their positions to start with. The board, however, was put under an Irish chairman, Liam Healy, with half the new board’s members being Irish.
The first sign of real change came when O’Reilly commissioned an Australian newspaper consultant, Chris Tippler, to conduct in-depth research into the running of the company, its practices, attitudes and policies. Tippler arrived with a number-crunching assistant. While he conducted interviews with all the managers and editors around the group, his assistant analysed the accounts of the various branches of the company.
Although I had by chance been virtually the first in the company to meet Tippler and converse with him, in that I was positioned opposite him at a company farewell dinner to the outgoing owners, I was the last at Natal Newspapers to be interviewed. This was probably because the Mercury’s offices were on the far side of the building from management, so he reached me last as he worked his way through the building.
By the time he reached me, it was clear he had already gained some quite firm perceptions. I had liked him in informal conversation at the dinner, and did not in subsequent meetings have any cause to change my view of him. I was to find out – as others in the company did – that he was totally irreverent, extremely self-confident, and not in the least afraid to say the most outrageous and undiplomatic things.
He soon acquired the nickname Rottweiler, among Argus employees and executives, because of his ability to savage people without provocation, without warning and without batting an eyelid.
His opening questions to me were in something of this style. He said his previous interviews in the building had left him with the impression that I was a troublesome editor. Could I account for that?
I was unprepared for that sort of question, so replied only that I thought that if I indeed had that reputation – and that I was unaware I had such a reputation – then it probably sprang from my promoting the Metro edition project in the face of reluctance and even lack of co-operation from some other departments. I pointed out that I had launched the project to put the Mercury back on a growth track and specifically because the company’s strategic planning sessions had repeatedly identified the black English-reading public as a gap in the market that needed urgently to be addressed. It had seemed strange to me that, while taking such decisions at strategic planning sessions, no one seemed willing to take the risks that went with doing something about it. Seeing the Mercury was forced by the company to seek growth only in the fringe niche markets that did not interfere with the Daily News, I had been willing to tackle the project at the Mercury and give it our best shot.
He put to me various ideas he said he had heard raised in conversations with others in the company. Among these was the idea of publisher being appointed in charge of each branch, in control of both management and editorial. I said I opposed such an idea. The existing system was better, because it left editors in charge of policy and content, and managers in charge of business.
He asked me whether I thought the launch of new products would be good for the company, notably a national upmarket newspaper, a national tabloid, a national finance newspaper, a national Sunday magazine, a national newspaper for blacks, and a Fridays-and-Mondays sports newspaper.
I said I thought all of them could have potential, but the newspaper market was already crowded and there might be some difficulty in raising enough advertising for all these additional products unless some fell away.
He asked me to outline my strategies and policies for the Mercury, which I did briefly, stressing my liberal political stance and my belief that the Mercury belonged in the upmarket sphere for its main readership. I said compromises with this market position had had to be made to address niche readerships – for example, the country edition and the Metro edition.
Tippler and his assistant then retired to Australia to analyse all the information they had acquired on their visit, and to come back later with recommendations. He left the company rife with speculation. A phrase he often used, which was remembered with trepidation, was: “Pain is good.” Mostert van Schoor said he had mentioned to Tippler that he had found it strange that Tippler was able to speak about definite plans for the company when he was commissioned only as a consultant. Tippler had replied: “Because Tony O’Reilly accepts what I recommend.” So the company then knew that Tippler’s word was virtual law, and waited anxiously to find out what his word would be.
It was the last day of August 1994 that I got my first inkling of what was to come. I was called to Booth’s office to meet Featherstone. In Booth’s presence, Featherstone handed me a statement, which he said he was keen to release that day. Would I read it carefully and let him know what I thought.
This statement was the announcement of an hierarchical structure for Natal Newspapers, under which Mostert van Schoor became editor-in-chief, reporting to Ed Booth as managing director, and with all editors in the Natal Newspapers stable reporting to van Schoor.
We had had no advance briefing or discussion about the planned new structure, which presumably Tippler had recommended, and were virtually asked to agree to a fait accompli. Deliberately, there was no time given for consultation between colleagues. It was a style rather typical of Featherstone, but not one I thought wise. It was probably thought necessary to cut off any incipient organised resistance to the plan, brutal but effective, yet strangely lacking in respect for senior editorial executives. As the plan later showed itself in other parts of the company, it was evident that there was the same lack of respect for editorial executives.
When I got over my shock and astonishment, I indicated my unhappiness with the structure. I had been appointed in 1990 to a position answerable only to the chairman of Argus Newspapers. Now suddenly I was to operate under an editor-in-chief, who himself was answerable to the managing director of Natal Newspapers. Top editorial positions were now answerable to management, where they had previously been co-equal with management. There was a definite downgrading of status involved, and of editorial authority in general. Editors, however, were still to be appointed by the board, so could presumably not be fired by the managing director. They would also remain in sole control of the content of their newspapers.
I told Featherstone I regarded the structure as giving the impression that I was being demoted, and suggested that if the company wanted to go ahead with the structure anyway, that at least they should change van Schoor’s title to publisher, or perhaps Booth’s title to publisher with van Schoor as his deputy. This would look less like a demotion for me and other editors. I did not think I deserved to be demoted.
He rejected this, saying the statement was part of a larger structure for the whole company, so a change could not be made. My salary and privileges would remain unaffected by the change. His stance confirmed to me that I was being presented with a take-it-or-leave it statement. It was not subject to alteration.
Featherstone then wanted to know whether I accepted the changed structure as set out in the statement, again stressing he wanted to issue it that day. I told him I disagreed with it, but if that was what the company wanted to do, then I accepted it, because I was not yet ready to retire. I had respect for van Schoor as a person and as a journalist, so did not foresee any problem in working with him. Featherstone seemed relieved that I had avoided a situation where outright rejection of the company’s plan would have meant his having to force my resignation or remove me from my position as editor.
What happened to Natal Newspapers was part of an overall Tippler plan for the whole company, which began to emerge bit by bit as meetings – of the sort I had had with Featherstone – were completed and announcements made.
What Tippler had recommended was the regionalisation of the company into three cones of command – Johannesburg, Cape Town and Durban, and virtually demolishing head office as the centre of command.
After dealing with KwaZulu Natal, Featherstone and the Irish went on to establish a new structure for Cape Newspapers only slightly different from that decided for Durban. In Cape Town there would be no editor-in-chief. I heard that the editors of The Argus and the Cape Times had objected to reporting to Rory Wilson a managing director, but I never heard whether they were forced to do so.
The reason why an editor-in-chief had been appointed for Durban but not in Cape Town, I surmised (and I think correctly), was because Ed Booth was not a man who had any feeling for the professional concerns of journalists. He was an accountant and a manager, and was actually rather out of touch with news and uncomfortable with politics, the arts or other matters of major public debate. His interests were his work, investment strategies, his church, photography and scuba diving. Van Schoor, an experienced journalist and editor, was appointed to handle the journalist issues of Natal Newspapers and to give insight into public issues, to fill the gap in Booth’s array of talents. In Cape Town, Rory Wilson was an ex-journalist and a man of wide cultural interests and with a keen awareness of public issues.
The big explosion came a few months later when the company came to sort out the situation for Johannesburg, Pretoria and Kimberley. There, it dropped the bombshell of appointing Pretoria News editor Deon du Plessis as managing director of what became Gauteng Newspapers, over the heads of The Star’s general manager, Graeme King, and of The Star’s editor-in-chief, Richard Steyn. Du Plessis had been a junior editor in the company, in the sense that he was the last of the then editors appointed to his post, whereas Steyn – with 20 years experience as an editor - was the most senior editor in the company, heading the company’s flagship newspaper and headhunted for the position from outside the group five years before. Now he was being asked to report to du Plessis. He resigned, not citing his unwillingness to serve under Du Plessis, but his dissatisfaction with the way editorial independence had been damaged. The grounds of his resignation were valid, but it was generally felt in the company that he also could not stomach being put under du Plessis.
Du Plessis’s sudden promotion to a top managerial position was greeted with stunned amazement. Everyone knew him as a man of unbridled ambition, an exhibitionist and a man with an irrepressible, swashbuckling style about him. He was married to a very competent businesswoman, but his knowledge of money matters was seriously questioned. His colleagues used to joke that his wife trusted him so little with money that she ran the family budget and even du Plessis’s personal spending. He had no arithmetical or mathematical skills, but was bright and aggressive as an editor, fully bilingual in English and Afrikaans, and well connected through being the son of a former principal of Wits University. He had an impressive range of experience, having worked on The Star, for Argus Africa News Service during the Rhodesian bush war and the civil wars in Angola and Mozambique, for the Sunday Tribune as assistant editor (later deputy editor), for Pretoria News as assistant editor, for The Argus as its deputy-editor, and for Sowetan as managing editor before being appointed editor of the Pretoria News. He was an enterprising editor, and had handled the challenge of the Fourth Wave conversion experiment well. But did this make him a manager? Many thought not, and not too many years down the line, the owners also decided they had made a mistake.
When the company got over the shock, the grapevine explanation for the appointment was that du Plessis was the same larger-than-life sort of person that O’Reilly himself was, and that he was O’Reilly’s – not Featherstone’s – personal choice for the position.
Some said du Plessis had clinched the job when he and three other Argus editors were invited to O’Reilly’s Castle Martin in Ireland on a familiarisation tour. It was said du Plessis was the only one of the four editors who stayed the pace with O’Reilly till dawn. Whether these grapevine stories had any truth or not is not particularly relevant. They were believed and helped form a perception of who these new owners of the company were and what their style was. They were shaking the traditions of the company to the core.
The resignation of Steyn as editor of The Star resulted in the appointment of Peter Sullivan as his replacement, itself a controversial appointment, because Sullivan came straight out of management into the job, although he was really an editorial man who had only been seconded to management for three years.
A good mixer and a wonderful raconteur, Sullivan did not have a hands-on style, preferring to be out and about meeting people and seeing interesting places. He did, however, have important political credentials. After a difficult start, his editorship settled down well, but there was said to be continuous friction between him and du Plessis.
The effect of the Tippler restructuring had several effects. First, it raised the independence of each of the branches by giving them added authority to run their own affairs, but it also increased the tension felt because of the high profit demands the company made on them. Job security was shaken by what had happened to head office staff and particularly to editorial staff on The Star. The position of editors had suffered a grievous setback, and nothing since has led to their regaining their past status. Editors have been moved with disconcerting frequency, giving them no feeling of tenure or status in their communities.
Independent Newspapers in South Africa became a management-driven group in which profit considerations became considerably more important than news coverage and influence.
But Tippler’s shake-up generated a number of new opportunities as well, with national business coverage becoming a feature, personal finance information gaining a rapidly expanding readership, and a serious Sunday newspaper given a foothold. Talk of a national newspaper for blacks came to nought, and it was apparent that Tippler had seen little profit potential in this field. This led later to the company having to accommodate political transformation and affirmative action through its white-led newspapers, forcing blacks into top positions above more experienced colleagues and in the face market forces governing readership and the generation of advertising.