TON VOSLOO Chairman of Naspers

Q: To start off the interview, maybe you could tell us a little bit about the beginnings of Naspers. How did it all start and how did you get involved?
A: Well it started in 1915 after the Afrikaans element regrouped after the Boer War of 1899-1902. Because it was pre-radio, pre-TV, the only means of communication was the newspapers and they wanted a voice and so they represented the Afrikaans community and they got together and formed this company called Nasionale Pers or today, Naspers abbreviated, it means National Press. Their main aim was to form a newspaper versus the dominant English speaking communities so the home language of this paper Die Burger is Afrikaans. The press in this country was always divided between Afrikaans and English and then our group in the early 1960s started publishing in English because my forerunners realized that they could not confine themselves to one segment of the market and that evolved again in the 80s. I was an editor up until 1983 but from 1983 I became the Chief Executive. We then got involved in what one would call Black publishing. We bought the only real three Black titles in the country, it's a newspaper called City Press, which is a Sunday paper and it's doing very well. A magazine called True Love and Family which was the magazine of the year last year. And then we've got a magazine called DRUM, it's a weekly magazine and it's a very strong brand name.

In the 80s we were confined to newspapers, magazines, books and printing. We got television in 1976 and it was run by the South African Broadcasting Corporation and the government favoured them and said they can have advertising on TV. Now the moment you got advertising on TV it sucked a lot of advertising away from print media and it started hitting us very hard, especially the newspapers. It was also the advent in your country then of paid television through HB0. The present MD, the guy who succeeded me, Koos Bekker, and I formed a business called M-Net and we got the license to run a paid television service. That put us into another dimension, suddenly Naspers was in electronic publishing as well and since 1985 that has evolved. We formed various companies, the main sector is called Multi-Choice International Holdings, (MIH) and they run the systems for paid television based on satellite downloading and uploading to 44 countries in Africa, in Greece, Thailand and China. It has got very good systems of delivery and the encoding and decoding, the setup box is very advanced, probably one of the best in the world, and for instance Sky TV in Britain uses our technology based on that so we sell the technology, we don't sell programmes as such, the content is not our forte, we sell the platform. So like we went into Greece, we put up a business with local partners, the same in Thailand, and in China of course, it's a long process, individuals are not allowed to own dishes and boxes in China, only expats, people who live in international hotels, and what we call the sort of compounds where expats live because the Chinese are exchanging and of course they have signed a WTO agreement on communications so we expect liberalization but the Chinese are always saying you are in too much of a hurry. We've won a few fairly substantial contracts over the years, like for instance to put up 40 000 TV receiving points in the nine provinces of China. A lot of the TVs they have are in the public squares. But really the end game will be to have a platform that can sell boxes to the individuals and that will be the first prize, so what we need is an investment mode in China but whilst we are waiting as a spin-off from our television business we started cell phones in this country, and we formed the company MTN and then in the process six/seven years ago we sold our stake in MTN to people who were our partners, they gave us their stake in our business in television, we made a swap, so we are out of mobile phones but we have a lot of know-how and we have internet businesses, Mweb, wherever we go, like for instance in China, and Thailand, we put in an internet business as an adjunct to the TV business. The interesting point is in China they grow very fast, but their infrastructure in many areas, is under-developed. They don't have many fixed lines, communications is not as developed as we know it, so cell phones are a great help because of satellites, people don't need to have fixed lines, they can invest in cell phones. So we have a business there, an instant messaging business, called QQ (which means "the Penguins") which is tremendously popular and the Chinese do business on cell phones, they gamble, they take bets, they send love messages and on every message we've got the technology and the software, we skimmed a portion of the income into that business and it's growing tremendously fast. At last count it was something like 19 million calls a day.

So this Naspers that started out as an Afrikaner business with a single-minded vision, has become a broadly based South African business with very strong international connections. I say we cover from Bloemfontein to Beijing.

Q: How would you qualify the group's results for last year?
A: Naspers: We didn't do too well for a few years because we invested heavily in electronic media, especially on the internet, and our shares went through the roof and then the bubble burst. So we had a few tough years but also at that time we had just finished a big investment programme in printing facilities. We've got by far the best press plants now for newspaper production and magazine production. Now that programme cost us in the order of R300-million and it tapered off just when this investment phase started in the internet. And remember Naspers is a very strong and solid company with lots of assets and that made an impact on our cashflows and when the bubble burst then our share price collapsed like all the others. But we are basically controlled by Naspers, we don't have any outside shareholders.

Q: Are you looking for external partners?
A: In Mnet we have outside partners and so on and then every country we go into, like in Greece or in Thailand we have outside partners.

Q: Are they local partners?
A: Yes, and even in China as well. And for instance in Thailand we are the minority shareholder in the sense that we have 39% and the other people have more than 50 but we have the management contract, so then you can bring in the know-how and the systems. We will be making our results known on the 24 June and I'm not allowed to say too much at this stage but you can take it for granted we've had a very good year, and Naspers is coming out of the world wide slump in media stocks, etc. We were hit fairly hard by what happened in America on 911 but we are a bit removed from there but there was a worldwide slump and it affected us, but just by the nature of that sort of thing we sold more newspapers but advertising did go down, but South Africa I must say, what's been happening in our business mode now is a reflection on the new confidence in South Africa. It's coming up strongly and we are benefiting from that. The World Cricket Cup here was a benefit to our magazines and newspapers and books. And of course we look forward to a fantastic year from now on because 31 March is the end of our book year and the prognosis at this stage looks very good because I must give a great deal of credit to the way the South African economy is run and the finances are the best ever in my experience.

Q: We were talking before about Naspers being a broadly based South African company with a strong international activity and I was wondering, and here I am referring more to the African continent, how has Nepad influenced your activities?
A: Nepad is a wonderful concept and one must admire Mr Mbeki and his team for driving this home in the sense that they want to restructure Africa under the name of the Renaissance, and one can only wish them well in the sense that there are huge problems. Africa is a big continent and I don't think one must be over ambitious to think that you can drive all the economies from South to North, but you must get systems into place, systems are governance, and I think that's the important thing, for us as business people, Nepad and we were disappointed when Mr Wiseman Nkuhlu he said at some stage Nepad is not going to monitor the corporate governance and the politics in all these countries, and in a sense he is right, you can't do it but we have business people who would like to invest in stable countries so if Nepad can bring about systems, first class economic and financial systems as we know it, and some cohesion then it will be a fantastic thing and already Africa is opening up to South Africans, as business people as I said, we've got Multichoice, if you go to any African country, you can flick on and you see the program via satellite.

In Africa, Naspers is targeting Nigeria and Kenya. Nigeria is obviously the big one. Formerly we were involved as I said with cell phones, MTN went there and they are very successful so far, but before MTN, Multichoice was there and another country coming up now is Angola, the restructuring of Angola is providing very good opportunities for us so our main business, electronic communications, is into Africa, targeting mostly Nigeria, Kenya, Namibia, Malawi, and Angola is coming up very quickly. And following on that we are now tentatively moving into again Nigeria and Kenya but with print products like magazines. It's very difficult to publish newspapers unless you do it with local people but Nigeria hasn't got a paper mill, you have to import all the newsprint and you are really dependant on the government and the questions of tariffs and that sort of thing. I don't think it's feasible for us to go and put up a big printing plant in Nigeria at this point in time. So what we have been doing is we've been testing the water, we've been flying off issues of True Love, or Kickoff, the soccer magazine, launch it there and see what the reaction is and it's been very positive so I think it will increase, and we are indeed considering co-ventures with citizens of Nigeria, business people in Kenya and Nigeria, joint ventures and that sort of thing. You need to have local partners like we do all over, and especially people in the media and the communications business, they know the language, they know what we are about.

Q: Are they receptive to South Africans?
A: Yes very much. South Africans, wherever they go, whether it's Thailand or Africa they are known by the locals to be very hard working. Our people are well qualified, well equipped and they are mature and they can go in there and do business but also a great part of our strategy is wherever we go where we have partners from local people, we involve them in a process of not only re-educating but giving them business know-how by flying them to South Africa for courses, or setting up courses there. I mean we have constant traffic say between South Africa and Thailand, people coming here for courses in Randburg where our big head office is.

Q: On the subject of your international activities, I was wondering how important the US market is for you. Why are you listed on the NASDAQ? How important is the US for Naspers' activities?
A: We listed on NASDAQ because of the technology. We had something to offer and we had the TV business OpenTV, we had an application. If you want to really get somewhere you've got to sell your product like that in the States, I'm not talking about newspapers and magazines, I'm talking about where you are at the forefront of electronic technology and we were and we still are, and it's a developing process.

We folded MultiChoice into Naspers so the entity is now Naspers, that's the name on NASDAQ and it's not that we need capital at the moment but it gives us a presence and a face in the technology field, in communications technology of course, and if you look a decade from now or whatever, if things come right in China, and we are profitable in Thailand already, the fact is we could become a multinational. We are the biggest media business in Africa now if you add the TV, books. We are not into radio by choice, but books is important to us, both education and recreational books, and magazines. We are the biggest publisher of magazines in Africa. We've got about 40 titles or thereabouts.

Q: There is an issue which has been discussed in all our interviews : Black Economic Empowerment. Whilst doing some research on Naspers I noticed that not only you have Black Economic Empowerment programs but you also have something like Afrikaner empowerment. What is the idea behind this?
A: Well they split it in two and the ethos of the company is still in a sense, Afrikaans. Our biggest stakeholder in terms of where we sell, etc., when it comes to your newspapers, magazines and books, will probably be the Afrikaans speaking community so we support the Afrikaans community and their endeavors. For arguments sake when the Afrikaners gave away political power in 1994 I started - it was a suggestion from one of my colleagues, why don't we start festivals with an Afrikaans heart, a cultural affinity, because they said our people were down at the time and you need to give them some hope because South Africa is going to continue and it's not going to be as bad, they lost out, and they must play a constructive role in the community because they can, they are well educated, well qualified, so we said we are going to give you an injection of hope and we started these festivals.

They are a very strong people; in a sense we were isolated for 300 years and they became very independent and forthright and of course they were racist and we had endless debates, they should bring in Black people but on a qualified basis and we said let's give our people an injection of hope, let's start festivals, let's have fun.

I started a thing here called the Afrikaans Foundation, basically to empower in this area of the Western Cape where they have been neglected. So we want to empower them through Afrikaans. So we have the Foundation for Afrikaans, assisting these people with crash courses in adult education and so on, so that's one form of empowerment.

The other form of empowerment is structural in this company, we support all the programmes, it's an imperative. We have it from Board level right down to all our subsidiaries, we try to bring in Black people and we adhere to the concepts that the government is going to apply piece by piece to all business sectors. You will have it in the financial sector, the Mining Charter, we will no doubt have one in the publishing sector.

In our group we did two things that I think is worth mentioning. When we started Mnet and listed on the Johannesburg Stock Exchange, we said we are going to reserve a percentage of the shares for previously disadvantaged Black people. So we started a scheme called the Phutuma Scheme in which we sold shares to Black people on the basis that they don't put their money down but they subscribe to this, we provided the finance so that they can buy the shares but then they pay it back with the dividends they receive and hopefully the price will cover your outlay. Although with the slump we couldn't do it after five years, we said we would review it every five years but the last time round the share was under water, we just said okay we will just roll it over, and in that way we got 18 000 Black shareholders in Mnet, far more than White shareholders, and they don't sell their shares because at the moment it's not covered, but it's interesting, they keep at it and they get their dividends.

You can't run business in a colonial paternalistic way, if you want to spread the economy you must bring it down to grass level and let the people participate and know what capital formation is about, to teach them to save. So we did the same at Naspers when we listed, we forked out a scheme here called Welkom, meaning Welcome, where we got 21 000 shareholders of color, and that makes us one of the biggest empowerment companies in that sense and with the most shareholders. We want to share South Africa with its entire people. And that's an aside. We have as I said all the formal programs in place for Black Economic advancement, training programs, employment equity, gender equity, all that sort of thing, it's all here and it's part of management's philosophy, it's part of their bonuses, they have targets, they have to go for it, and we measure them every year. So Naspers is not owned by any particular concern or company, it is a community based business and the shares are held by broadly based investors, we have shareholders in the States now, your merchant banks and all sorts of people have stakes in us, but no one is dominating and also anyone who sits on the Board is there representing only himself, not any other group. The Directors who retire are asked if they are available for renomination and the shareholders have to approve it. So it's quite transparent. That's the way we run the business.

Q: And it's quite significant especially if one considers the way we could start it as the voice of the Afrikaners today on such a broad basis.
A: And our Black interest is now becoming very important because after the initial investments in the three publications I mentioned, we now start with newspapers aimed at the Black community, the one is the Sunday Sun and the other one is the Daily Sun and they are massively successful. We want to induce people to read. If you give them a too high-browed newspaper, they are not going to read it, so we broke it down into tabloid size, popular newspapers, in other words, the journalism is structured in such a way that it's easy to read, digestible paragraphs, short words, short stories at a very low price, and it's hugely successful. I think the Daily Sun is now the biggest daily paper in South Africa. It's already selling in excess of 200 000 copies a day after seven months and it has overtaken the Sowetan and it's overtaken The Star. The Sunday paper is also upwards between 160 000 and 170 000 so it's doing fairly well for us.

Q: As you look into the future, what is the biggest challenge that you identify ahead for Naspers? Do you see an integration of the print and digital medium?
A: To me I see it as a challenge and not a threat, I've always been saying when the internet came about, in my simplistic way I said I didn't understand how you can do business with it but I could see that digital technology as the key to everything. And I see Naspers as a developer of content and programs and platforms where you generate content or you acquire it, like in television, then you disseminate it worldwide or in your own community, it's like a huge pocket of information and the divisions or the publishing entities can siphon off what they need. We've got a newspaper on the internet called Media 24, it runs 24 hours a day, and it's constantly updated, so they draw on all the content generated in our business and they disseminate it and the same with all our magazines and books, they go on the internet, so what we see is a constant flow of information which we then utilize in markets, and we massage and we have the expertise. We invest a lot in the education of journalists and technology, and we do it because we believe it's not the good manager who is the most important person, it's the creative people who can write good stories and good books and good articles. At the end of the day everything flows from that so in this business we've put a very high premium on creative work by your journalists. Journalists are more important to us than anybody else. I'm an ex-journalist and they put me in the job because of the philosophy, the top guy has always been associated with journalism to understand the ethos.

Q: And there is this Sarie magazine.
A: Yes, Sarie is the name of a woman. She was a figure in the Boer War. This magazine started out as Sarie Marais and we cut off the surname and it's just "Sarie" so it's like Marie Claire, it's a name, it's got an affinity for women. It was elected the top magazine in the country and has a top editor - it sells about 160 000 every two weeks. Our top magazine called Huisgenoot, which means Home Companion sells about 360 000 a week, we used to sell 500 000. You is the top English magazine, it sells about 250 000 a week and part of our success is we print all of our magazines and we distribute all of them, so they all contribute to the cost structure.

Q: And you can control them.
A: You make your money in printing. The advertising is a bonus.