Johannesburg - Kagiso Media has decided not to buy shares in billboard advertising company Clear Channel Independent (CCI), citing price and long payback periods.
Last year Kagiso Media teamed up with MSG Afrika to buy a 50.1 percent stake in CCI subsidiary Clear Channel Merafe for about R29 million.
Through new entity Kagiso Outdoor, the two were expected to be frontrunners for an empowerment stake in CCI.
Yesterday Murphy Morobe, Kagiso Media's chief executive, said the payback period was too long. He did not rule out an opportunity to buy into an outdoor advertising company in the future.
Kagiso Media's stake in Kagiso Outdoor contributed R44.2 million in revenue for the year to June.
The contribution to net profit was R2.2 million, compared with R433 000 a year earlier.
Kagiso Media has decided to sell its interest in Kagiso Outdoor to MSG at a price equivalent to that which Kagiso Media would receive if CCI exercised its call option.
Kagiso Media reported a 23 percent jump in headline earnings to R159.6 million.
Operating profit rose 13 percent to R267.6 million and revenue added 14 percent to R841.6 million.
Morobe attributed the "sterling results" to strong performances in the broadcasting and information services and solution divisions.
The broadcasting assets, which include Jacaranda 94.2 FM, East Coast Radio, Durban-based iGagasi and an indirect 25.1 percent economic interest in Gauteng-based KayaFM, lifted profit to R176.5 million from R152.6 million.
Kagiso Media announced three acquisitions during the year. Acceleration Media, an online media company, was jointly acquired with Lagardère Active Radio International.
Kagiso Exhibition and Events (KEE) bought a 50 percent interest in Mobil Alliance, which specialises in sport sponsorship and digital technology advertising.
KEE's loss widened to R11.8 million from R537 000. The general consumer slowdown contributed to the loss. In addition, the biennial Auto Africa show, which contributed R35.5 million last year, was not staged this year.
Kagiso also bought a controlling interest in Urban Brew, a television production firm.
Morobe said the acquisitions were part of Kagiso Media's strategy of introducing new revenue streams to help the company moderate the cyclical fluctuations associated with its traditional dependence on advertising. They extended the business model into "new media channels", including online and mobile.
Profit at information services and solutions business LexisNexis rose to R45 million from R36 million.
Kagiso Media established a presence in India through a joint venture, RadioMinds, with Primetime International, an Indian media group.
Kagiso Media shares gained 0.79 percent to R10.20 yesterday. The media sector rose 0.73 percent.