Despite having sold their media businesses to local businessperson Mzwanele Manyi, the Gupta family will still be pumping in money to keep TV channel ANN7 and The New Age newspaper afloat.
Manyi, formerly head of the government’s communications arm, confirmed yesterday that the R450 million in the “vendor purchase” of the companies was inclusive of operational costs.
This meant not only was Manyi buying the media houses, but that the Guptas were lending him money to run them without the pressure of having to generate revenue.
Manyi signed the deal of a lifetime when the Guptas granted him a vendor loan to buy ANN7 and a stake at The New Age.
Since neither media entities had publicised its sales, save for admitting to only selling half of its printed copies of The New Age, critics had already predicted the purchase was highly ambitious.
Moneyweb’s Deon Gouws predicted Manyi could be facing monthly instalments of over R9 million to service a R450 million loan. But the new owner said he had plans to “radically transform” the revenue streams of the media houses and hoped to exceed profit expectations.
“These assessments fail to take into account the activities and ventures we plan, so they may tick all the boxes now but it’s not going to be business as usual. We are going to have exciting and innovative new revenue streams.”
Media analyst Anton Harber took to Twitter to voice his reservations about the deal. “Dear @MzwaneleManyi, this is a gift horse you should be looking in the mouth.”
He told The Citizen the deal appeared to be more of a gift than a business deal.
“The Guptas did not start The New Age and ANN7 to make money, but to win friends and allies in the state that would open doors for them to make much more in other ways. That seems to have run its course, and they are ‘gifting’ it to their ally and friend, Mzwanele Manyi. It may be a gift laced with poison. I suspect they are passing on a massive money loser to save themselves the embarrassment of having to close it down themselves.”
But Manyi argued his purchase had great potential for profitability, based on the anticipated support of government and business.