“ESG” and business journalism

As a former financial journalist, editor of Finweek and MD of Moneyweb prior to its delisting from the JSE, I’ve long been intrigued by the relationship between “Public Relations” and “the media” – more specifically the associated business models. With the Chief Financial Officer (CFO) of the SABC recently indicating that the institution was on the verge of liquidation, it’s important that the challenges of media houses be given some airtime and we look at some innovative thinking around funding models.???

I cut my teeth as a financial journalist during the Global Financial Crisis (GFC) and still vividly remember riding up in a lift with an executive from Bidvest to their AGM. His words to me: “What a time to be alive as a financial journalist – this is going to be a huge boost to your industry – the clear communicators are going to be the ones who navigate this crisis.”

For a period of time he was right. Business journalism was the sector to be in as a journalist.??

But in the same way that listed corporates had to navigate global upheaval, it was one of the most disruptive periods for financial media in South Africa. Regulations around the advertising of financial results changed and sucked a key revenue stream from the ecosystem and we saw the rise of Facebook and Google further erode the income streams of traditional media.?

A third dynamic began to playout – traditional media advertisers or clients became competitors to the media houses themselves. Organisations were able to take their ability to create content including podcasts, video, written content, and social media and amplify it across their own channels.??

The has left the media sector sorely under-capacitated and apart from a handful of donor-funded investigative journalism teams, most media houses are dependent on the sales of advertising to fund their operations.?

Why should you care about media business models??

Global research shows that in developed markets, there are 6 PR professionals for every journalist, and I would be willing to bet that this ratio is closer to double figures in South Africa. On top of this, research suggests that between 40 – 75% of all media consumed is as a result of PR pitches.??

When you look at the media you’re consuming each day through this lens, it might change your perspective.?

Take it a step further and let’s look at the 2018 situation around Investec and Tongaat. For those who follow business media, there was a well-publicised case where Investec analyst Anthony Geard wrote a scathing report to clients where he highlighted issues at Tongaat and called on Tongaat CEO [at the time] Peter Staude to resign. Geard was rapped over the knuckles and told to apologise to Staude for any embarrassment he might have caused.??Fast-forward 4 years later and Staude and other executives are now in court for R3.5bn in fraud.?

This is Investec with a R30bn market capitalisation and multiple income streams able to attract clients because of its global levels of corporate governance.?

What hope would a media company have – you’re constantly walking on eggshells not looking to upset your advertisers???

Those who have the money dictate the narrative, which leads us to the opportunity in ESG.??

The “G” factor

“ESG” is without a doubt one of the most polarising 3-letter acronyms in the world today.?

We run an advisory business which includes an Impact Investment offering and a Communications business, and we get sight of a lot of the push-and-pull factors associated with ESG. On one hand it’s a creation of the financial services sector to charge more fees. On the other, it’s a framework to unlock key funding for sustainability and economic growth across Environmental, Social and Governance related issues.?

The “E” and “S” are relatively straight-forward to understand but the “G” element is often under-appreciated and one of the areas where South Africa needs significant investment to restore business confidence. In the current reporting frameworks, Governance focuses on things like board diversity, executive pay, business ethics, anti-competitive practices and corruption.?

These are all potentially areas which could be strengthened through a vibrant business media.????

The challenge is that many of the current reporting frameworks appear to focus on the company being self-policing rather than an investment in strengthening the broader ecosystem.

That begs the question: Would South African business actually want a more robust business media which is outside of its control??

Why business SA care about the state of media?

The common argument is “their business models are outdated – let them fail” and they must “change with the times” or “the SABC can be run down and make way for private players”.??

At a capitalist level … fair enough. At the same you can’t then argue that journalists need to step in and hold businesses or political parties or industry stakeholders accountable. They just don’t have the firepower.?

South Africa currently struggles with a trust and governance deficit, and this is holding back access to lower cost development financing which could be key in accelerating growth. At the same time, we are heading into arguably the most pivotal elections post 1994 and our national broadcaster is teetering on the brink of financial collapse.?

The reality is that most media platforms are not sustainable purely on an advertising basis and there may be merit in incorporating the support of journalism as part of the ESG frameworks – specifically around governance – in the years to come.?

Marc Ashton is a former financial journalist, editor and MD of a JSE-listed media company. He now runs advisory firm Decusatio which works with businesses in the fields of Impact Investing , Communications and Human Capital