Chapter One – From strength to vulnerability

Chapter Seven: Natal Newspapers is formed

The announcement on October 4, 1985 of the merger, and the formation of Natal Newspapers, came as something of a surprise to the general public and even to staff members unconnected with the negotiations, though the deal had been worked on quietly by the top players for months.

It could be read as a sign of the times – on the one side, the tough economic conditions prevailing as the political situation worsened, which were driving companies to the wall; and on the other side, the need to preserve newspaper titles to perpetuate a culture of free speech, especially in an unfree society.
Besides the Mercury’s owners, Robinson and Company, getting a 30% shareholding in Natal Newspapers (Argus taking the rest), they also won 50% representation on the Natal Newspapers board (with Argus having the chairmanship and the chairman’s casting vote). The right to appoint an editor for the Mercury would rest with the Robinson board (not Argus or even Natal Newspapers) for the following five years, to reinforce the concept of editorial independence. Other editors in the Natal Newspapers stable would be appointed by Argus. Robinson and Company would continue with its own printing company, Robprint. It was planned to sell the Robinson and Company building in Devonshire Place.
The new company would be housed in the Daily News building in Field Street, central Durban, to be renamed Newspaper House, and would come into operation on November 1.
On November 19, Argus published an interim report giving further details. It stated that the effect of the rationalisation was that Argus acquired 70% of Robinson’s merged assets for R7,42-million and Robinson acquired 30% of the Argus Durban branch for R13,29-million, both figures subject to audit. It stated that, after the initial costs had been absorbed, profitability was expected to improve. “The merger will ensure the future viability of newspapers in Durban.” Though the Minister of Trade and Industry had instructed the Competition Board to examine the merger, the Argus Company did not anticipate it would alter its opinion.
While the company went through the formalities of public statements and awaited the outcome of the Competition Board’s fresh examination of the deal, it proceeded internally with the work of rationalising activities in the new company. There were about 1 430 people employed by the two companies, and a necessary first step after the merger would be for the new management to discuss retrenchment arrangements for some of the staff made redundant in the process.
Right from the first announcement, Mercury editor James McMillan made it clear that it was unlikely the Mercury’s editorial staff would be reduced. Mercury staff and printing equipment would move to Newspaper House over the following 18 months.
The Mercury ran a front page editorial to mark the impending end to its status as a family business, emphasising its strong ideals: “When George Robinson sat down to write the first Mercury editorial in the tiny wattle and daub house at the intersection of Aliwal and Smith Streets that first housed this newspaper in Durban almost 133 years ago, he said . . . ‘the safety of the people, the supreme law, will be its governing maxim in political discussions and a thorough and absolute independence will characterise it’.”
What was also part of the Mercury’s heartbeat was the Latin dictum audi alteram partem – hear the other side. It vowed to remain true to both in the new company. Each newspaper in the new group would remain editorially independent, but strengthened immeasurably by a programme of rationalisation, combined facilities and pooled expertise for a sound financial foundation, “without which any newspaper must fail”.
“And fail we will not – either in service to our readers or in the maintenance of a policy which commits us unequivocally to maintaining those same high standards of journalism – always incorruptible, always independent, always outspoken, always regardful of high purpose and tone: with truth, justice and freedom as prime elements of our journalistic life, as applied to this day.”
The Daily News ran an editorial saying: “The co-ordination of the business and printing operations of The Daily News and The Natal Mercury is not a threat to Press freedom. On the contrary, the purpose of this move is to protect two distinct editorial voices that have been part of the life of Natal for more than a century.” It added that, had the agreement not been reached, Natal might well have lost one of its daily papers, as had happened in Johannesburg and Bloemfontein.
On the more pragmatic business side, David Robinson expressed himself happy with the deal, saying the pattern of editorial independence within a joint operating arrangement was a common and successful one in the United States. It had been becoming increasingly difficult to find the resources to keep the newspaper viable. “The cost of capital equipment is becoming exorbitant and we are at a stage where we need to upgrade in several important areas, areas in which the Daily News has just spent millions of rand and has spare capacity.”
The announcement of the Robinson-Argus merger set off a string of other speculation relating to the press, and the managing director of Argus newspaper division, Peter McLean, stepped in quickly to scotch them. He said stories about a continuous daily newspaper in Natal were “pure speculation”. The same applied to rumours that Argus was thinking of acquiring the Cape Times in Cape Town and Business Day in Johannesburg. Assertions about a possible deal concerning the Sunday Star and the Sunday Times were equally unfounded. “the market is sick with rumours and the sooner they stop, the better,” he said. The only clue he gave to other negotiations was to reveal that discussions under way with Saan centred on possible joint printing arrangements in both Johannesburg and Cape Town.
For all the confidence of the Daily News in the arrangement, and the resolve from within the Mercury to retain its independence, there were prescient doubters. PFP spokesman on the media David Dalling said there was no doubt Argus muscle would soon dictate events on the Mercury. Though the saving of a morning newspaper was a positive step, the move would mean that diversity of presentation would diminish. Robin McGregor, author of Who Owns Whom, said the event was “the beginning of the end” and the newspaper industry was becoming a total monopoly.
The Minister of Trade and Industries, Dr Dawie de Villiers, ordered a full Competition Board investigation into the formation of Natal Newspapers, even though the Competition Board had already given its opinion that, subject to certain conditions, the merger was justified in the public interest and that the Mercury could not survive financially under prevailing conditions. Dr de Villiers said: “There is concern over the degree of concentration in the newspaper industry.”
David Robinson then spoke up, saying Robinson and Company was not entirely surprised the matter had been referred back to the Competition Board, because a merger was a highly sensitive issue and was bound to be looked at with suspicion in some quarters. It was for that very reason the Competition Board had been approached in the first place. “I believe their positive response was based on the clear understanding that if we did not merge with Argus in Durban, there was every likelihood of the Mercury closing down for financial reasons.”
While putting the convenient view thus, Robinson did admit privately later that his company had laid it on thick to the Competition Board about their financial difficulties and their failing viability. His private view was that the Mercury could have survived for some time, but with profits at unsatisfactory levels, the company would ultimately have been in danger. Therefore it had been better to negotiate a merger while the company was still strong, rather than negotiate later without any trump cards.
With the merger a fait accompli, the new company had several challenges to overcome, the first being the integration of the two staffs and the establishment of a new hierarchy of authority. Featherstone became managing director, with David Robinson his deputy, to the chagrin of other Argus contenders David Mead, Tony Hiles and Ed Booth. Argus staffers gained most of the middle-management “head of department” positions, which made Mercury staff despondent.
Andy Stanton, who had been deputy advertising manager at the Mercury, but lost rank in the merger, said: “It was actually catastrophic. Everybody from the Mercury came off second best. It was not a merger. It was a take-over. No Daily News people were retrenched, only Mercury people. The people were generally unhappy.”
Ed Booth, however, had a more positive view from the Argus side of the merger: “Once their key staff had been looked at, and after the rest had been looked after, we ended up with their normal staff coming up very well. Some of their production staff actually increased their pay. Some of them went from getting salary cuts to an increase in salary and a bonus they hadn’t had for a long time. So I believe the staff came out of it very well. Some of the staff came out of it very well indeed.”
The situation of unhappiness, however, was a fact, and even extended right up to David Robinson’s position as deputy managing director. He was in a unique position, being part proprietor and part-employee. His company’s 30% shareholding and 50% board representation gave him clout at board level, but in the everyday work situation he was the outsider placed in a foreign environment, resented by his Argus rivals, not as a person (because they liked him very much) but as a block to their promotion aspirations.
David Mead said: “David came in as deputy MD, but quite frankly it was a travesty, because I don’t believe he was ever given power. Tony and I were John’s men. So we dealt directly with John. We didn’t use David as an intermediary. I think he felt very out of it. David left the rather illustrious position of being a publisher and came into the ethos we had. He was never comfortable.”
Nevertheless one Argus source said that, though David Robinson’s arrival on the scene was not popular with his Argus rivals, “he was very well liked by advertising agencies and was very good in that area.” He also had portfolio responsibilities for production and circulation.
The man most put out by David Robinson’s appointment was Ed Booth. He said: “I had been Number Two to John and all of a sudden I found out I was not Number Two. I had to work under David. I really ran the place, as I had always done. He had a completely different management style from the Argus way of doing things.”
Booth said the merger worked out very favourably financially for Robinson, but David Robinson could see he was filling a position that was not vital. “He was there because of an agreement. He wasn’t there because of the specific skills for what was needed to be done.”
David Robinson’s role as deputy MD was not vital, and it was less than a year before he decided to abandon the position and look after his own interests.
He admitted that when he went into the position, he had not intended pulling out so soon. He had visualised the remainder of Robinson and Company developing into something bigger, that would make it worth his while to pull out of Natal Newspapers later. He had always thought his role at Natal Newspapers would be restricted, because of non-Argus background, and he did not see himself going beyond the Natal Newspapers situation at Argus.
Booth said that after the merger, the company was able to use Argus’s departments to do the job for both newspapers, only slightly beefed up with Mercury staff. It worked very well, but “the biggest problem was that many of the Mercury people took a long time to feel part of the new family. They didn’t feel accepted.” Booth even admitted that “editorially, Daily News staff probably worked very hard at making that so.”
Booth recalled an incident that happened five years later than the merger, when I first assumed the position of editor of the Mercury after McMillan: “Do you remember when you knocked on the door upstairs, because you were part of the same group, and the stir you caused because you walked across the Daily News floor? That was how strong it was. It was a kind of culture. I just feel the Daily News editorial staff tried very hard to ingrain that feeling of insecurity in Mercury staff.”
He was right. The courtesy call I paid on the editor of the Daily News caused something of a sensation among Daily News staff, who had maintained a deliberately hostile and competitive attitude towards the Mercury, as if the Mercury and its staff were not welcome in the company. That culture persisted for a long time, and broke down slowly only after some years. The Daily News editor, Michael Green, told me I was the first Mercury editor ever to cross the threshold of the Daily News editor’s office.
The carried-over rivalries were, sadly, not restricted to editorial staff alone, but were felt within other departments between individual members of staff, and also showed itself in continuing loyalties of these staffs either to the Mercury or to the Daily News. Advertising business, time on the presses, deadline-setting, even commitment to getting best possible circulation, were affected by these rivalries, so there was an undercurrent of dissatisfaction among staff that took a long time to die.
The element of estrangement was there from the start.
What made it even more difficult to gain integration and unity was the fact that, initially, Mercury staff continued to work in the old Mercury building, separate from the rest of the staff in Field Street.
The company initially made some effort to achieve team-building, by holding social functions where former rivals could meet and get to know each other as colleagues. This did help, especially for staff who were transferred to Field Street from Devonshire Place.
An editorial view from the Mercury side was given by Anne Stevens, later the features editor, who said contact was awkward. There was constant running between the two buildings. “We also used to have little meetings so we could integrate and get to know each other at lunch time. Everybody went along for a free drink.” But the editorial staffs remained distant rivals.
The way of doing business also changed with the merger of departments other than editorial. Andy Stanton remembers trying to merge the sales group. He felt an element of competition was removed when jointly canvassing for advertising, because previously “if you were trying to get advertising for the Daily News, you would try to get every penny, and if you were trying to get advertising for the Mercury, you would try to get every penny.” The merger changed that, but to keep some semblance of competition, advertising targets for each paper were set for the staff. On cost-cutting, Stanton felt a great deal was achieved through the merger.
Mercury editorial staff felt one difference under the new management almost immediately. They had come through Spartan times of salary cuts and applied austerity immediately previous to the merger. Greg Dardagan said the culture for claiming expenses at the Mercury had been completely different from that at the Daily News. “It was a sort of unwritten law that no matter what money you spent, whether it was on the job or partly on the job or whatever, whether you had dinner or drinks or used taxis, you just didn’t claim. Claims were frowned upon. You were seen as a mercenary if you claimed, because it was all for the good of the company. You were expected not to claim. It was the Gestapo. You didn’t upset the generals. You played their way or else you got fired.”
Dardagan said he was not joking altogether by saying that. “When they had a purge shortly before I joined, there was just a letter on the fired employees’ typewriters, even for very long-serving employees, when they arrived at work: ‘You’re out. Thanks very much. Twenty-four hours. Clear your desk please and collect your cheque.”
Apropos this sacking, Miles Mattson, deputy editor at the time recalls: “There was one dreadful ‘month of the long knives’ when they fired eight people in one go. The worst was Aubrey Smith. He got back from a holiday, and when he got off at the airport, somebody was there to tell him he didn’t have a job any more. When he came in to work, there was just some stuff on his desk. That was what made him so bitter.”
Mattson said McMillan had gone through a nightmarish time after receiving orders to “get rid of eight people”.
By contrast with this tight and uncomfortable situation for down-the-line employees at the Mercury, some of these employees remember with bitterness that Mercury executives had at that time gone out and bought flashy new company cars to drive.
The splurge on new cars did in fact take place, but was intended by management to demonstrate economising by executives. Instead of driving top-of-the range large executive cars, they moved down a notch to smaller executive cars, but this economising was not perceived as such by other members of staff. It was seen as gross, in-your-face arrogance. Of course, the executives cheated a little in downgrading to smaller cars. They saw to it that, under the bonnet, they had lost nothing in power and performance. They had more powerful than standard engines put in the cars, and top-range gadgetry fitted.
Editor James McMillan says he was told to take his car and change it for a three-series BMW. “It was a weakness in thinking in management, because it would have been even cheaper for us just to keep our Mercedes cars a bit longer.”
Nor was it only in the area of top executives’ cars that different standards were practised as between chiefs and Indians, for while employees were actively discouraged from claiming even the most legitimate expenses, Argus was aware that certain Mercury middle management executives, “the glamour boys”, were spending company money left, right and centre. Argus’s Tony Hiles says it was well known in the industry that Mercury advertising executives were given credit cards and were allowed to use them for their own entertainment. “They were given so much a month on the Barclaycard. They were given an annual clothing allowance, so a guy could buy himself two or three suits a year. They were free and easy with things like that . . . like free telephones, all that sort of thing.”
All these privileges and grievances had to change to the Argus culture from the time of the merger – a culture of tight budgeting, but where expenses claims extended from top to bottom. Though the test of expenses claims was the legitimacy of the expenditure, it was remembered by editorial employees that Daily News editor Michael Green, confronted once by staff about poor salaries, had argued that – while this was so – staff members were allowed to claim expenses, and the company was willing to be generous about them. Generosity with expenses, however, depended very much on the personal whims of the executives authorising them. Generally speaking, Argus paid legitimate expenses, but was not free and easy with expenses.