Kagiso Media's diversification strategy into new media is starting to pay off, it says, as the company grew revenue by 4% in the six months to December.
The media group says it managed to produce stable results, despite a “very negative market backdrop” and its growth has been aided by a move into the digital landscape.
CEO Murphy Morobe says the company has demonstrated its “ability to withstand difficult market conditions, achieving a stable set of results for the six months to December 2009”.
Kagiso grew revenue 4%, to R458.8 million, during the half year, but operating profit was down 4%, to R109.7 million. However, net profit was 13% higher, at R132.5 million, after allowing for finance income and profits from associated companies.
Seeking to expand
The media company will continue to expand into more areas of new media, he says. “However, in line with the uncertain economic climate, we have adopted a more measured and conservative stance to the strategic roll-out of our acquisition plans.”
Some of the investments the media company has made over the last two years include Urban Brew Studios, Gloo Digital and Acceleration Media, all of which have delivered positive results, and are expected to continue doing so.
Gloo Digital's results significantly exceeded its revenue and operating profit targets, and it is proving to be a strategic addition to the business, says Kagiso.
The company bought 50.1% of Gloo, a digital design agency focused on new and multimedia, in January last year. It has performed ahead of expectations since the acquisition and, although small relative to the group, the deal is seen as strategic, because it will stimulate the growth of new media properties across Kagiso Media.
Strategic decision
Acceleration Media was added to the group in February 2008 and was the first step in Kagiso's venture into new media. Acceleration is a media strategy, planning and buying company that helps South African agencies and marketers make the best use of online media.
It also owns Mobil Alliance, which posted a 44% improvement in profit. Kagiso Exhibition and Events acquired a 50% stake in Mobil Alliance Media and Technology, in November 2007. The unit specialises in sport sponsorship and digital technology advertising.
Morobe says there are indications that the advertising market is improving, “off the back of an anticipated economic recovery, as well as the 2010 Fifa World Cup tournament, which is also expected to benefit radio and the Internet segments of the market”.
Kagiso's other assets include Radio Jacaranda, Urban Brew Studios and Exhibitions and Events.
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