Caxton and CTP Publishers says the sale of Media24’s newspaper distributor to Novus in 2024 has already started to weigh on its operations with distribution costing it more after the transaction.
The JSE-listed printing and publishing group bemoaned the situation in its half-year earnings report to end-December, released on Tuesday. It is looking at ways to mitigate the impact.
“The group’s daily newspaper, The Citizen, delivered a much-improved performance where market growth in the legal advertisements and cost reductions were the main contributors,” the company said.
However, it said: “Circulations and national advertising revenues remain under pressure and with the acquisition of our distributor by Novus Holdings, we are faced with a large increase in distribution costs. We are in the process of looking at various alternatives to mitigate this increase.”
In October 2024, competition authorities approved Novus’ bid to acquire Media24’s media logistics and community newspaper portfolio, with conditions.
The deal was the result of a strategic shift that put 400 jobs at risk as Media24 announced earlier in the year that it was seeking to close the print editions of five newspapers, transitioning three of them into digital-only brands.
The Naspers-owned media group is selling its media logistics business, On the Dot, and its community newspaper portfolio to Novus Holdings, subject to regulatory approvals.
The On the Dot business, is a specialist logistics provider to SA’s print industry, including magazines, newspapers, leaflets and books.
Caxton had made a competing offer for the assets, but was rebuffed.
Ishmet Davidson, then CEO of Media24, said at the time: “Selling the community newspaper portfolio to Capital Newspapers/Caxton will give them (direct and indirect) ownership of 76% of the community newspaper market in SA.”
Caxton reported a fall in revenue, driven by losses from asset sales, reductions in publishing and a slowdown in its packaging operation.
Revenue fell by 1.6% to R3.631bn. Despite certain difficult trading conditions easing in the period, owing to a reduction in interest rates, no load-shedding and some reprieve on the fuel price, the group said “this has yet to manifest itself in any significant improvement in consumer spending”.
Revenue in the packaging division showed some growth, up 3.9%, but this was more than offset by a drop in advertising media and printing revenue, which was 8.1% lower.
Profit before tax was up 26.3% to R470.4m, compared with the prior year, helping to push up headline earnings per share to 95.5c in the previous comparable period, an increase of 12.3%.
Cash and cash equivalents ended at R2.356bn, compared with R1.81bn previously.
The situation at Media24 has also had the effect of reducing business for Caxton’s book and magazine printing unit. It hopes that “the department of basic education’s imminent curriculum rewrite should increase requirements from our facility and will go some way to mitigate the impact of the lost Media 24 magazine titles effective April 2025”.
Caxton’s share price ended Tuesday up 3.15% to R12.45.
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