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The Death of SAPA

Written by Mark van der Velden

Mark van der Velden former editor of Sapa tells the story of the country's longest news organisation's demise

The sad closure at the end of March 2015 of the South African Press Association (Sapa) wire service, the county's oldest news agency, was inevitable.
And there's little doubt it was written on Member-owners' boardroom walls long before it was spelled out at the wire service itself.
The decision to seal the pipe on millions of newswire stories over 76 years of SA's history was not due to a failure of effort by staffers, who in the last years added gritty new layers to the concept of editorial endurance.
Also technically, it was something of a miracle Sapa managed to keep going as long as it did. For years the headcount was trimmed as costs were cut, and ever deeper efficiencies were sweated out. All along the way, the quality of the news product was eroded.
With "End Day" still weeks away, the prevailing sound in our computer room was the ominous squealing of museum-ready hard drives struggling to hold it all together.
Staffers, as collectively resilient as they were, were also increasingly exhausted.
With hindsight, there actually never was any real relief in sight, in spite of all the talk of a revamped and recapitalized Sapa to come. It just could not happen. No knight in shining armour to the rescue.
This then starts pointing to the real reasons, within the bigger context of the coming bloody newspaper industry battle for survival, why Sapa was in the way and had to go.
To contextualise the hollow convenience of the phrase that "Sapa could no longer be financially sustained," some background on how and why, long ago, it was needed and enthusiastically funded is relevant.
In 1938, English and Afrikaans-language newspaper proprietors put aside differences and agreed to fund Sapa as a non-profit, non-government, news gathering, processing and redistribution cooperative. Each newspaper group became a Member of the Association. They had three objectives:
• Cost savings on getting a fast, reliable supply of neutral, routine domestic news, as gathered by newspaper members in their areas of the country and pooled through Sapa.
• Cost savings on international news agency content. Sapa fulfilled a bulk-buy function and then filtered a manageable flow of world news to members. Sapa's domestic news flow was then also sold into the global network.
• They wanted a domestic news agency without any government or state control, stipulating that it should always operate "in the public interest." This public interest tag proved vital over the decades in upholding Sapa's valued editorial independence.
Sapa was thus funded exclusively via annual assessments on each Member's newspaper title. Sapa's additional commercial clients came much later.
At first, Sapa generated little of its own, originally reported editorial content. It was mostly a news processing hub, serving all Members equally.
Sapa was meant to be only a wholesale provider of content to its members; strictly not retail. That would have made it a competitor to Members. Being paid for by the Members and not upsetting them was in Sapa's DNA.
Sapa went about its brief for many years as a valued service to its members, until two important events in the 70s:
The first was the Soweto uprising. Sapa could not wait for the "routine" news from members to be shared. Desk reporters were sent out into the townships to report directly. Besides local consumption, this reportage was picked up by global news agencies, which credited the "independent Sapa news agency" around the world. It set the precedent – and demand -- for more and more direct own news reporting by Sapa.
The second event was the establishment in 1978 of The Citizen newspaper, later exposed as the government's covert "Infogate" propaganda project.
Until then, the nature of the newspaper ownership network was such that no one member of Sapa was "scooped" with its own news appearing in a directly competing paper. There was also a "gentleman's agreement" that no Member would unfairly exploit the Sapa resource by, for example using the wires as a substitute for the newspaper's own editorial resources. Sapa was a supplement, sometimes a back-up, to a newspaper's own editorial production; but never a substitute.
When The Citizen applied to join Sapa, other Members were reputedly suspicious, but welcomed it because its money reduced their share of Sapa's costs.
But, with barely any editorial staff, The Citizen set about wholesale pasting of virtually the entire daily Sapa news file into its pages. There was no clear rule prohibiting this, but it upset other Members greatly. The Argus in Cape Town, for example, was sending its routine news into Sapa but then finding that its own sister paper in Johannesburg, The Star, was being "scooped" by The Citizen because of the abuse of loopholes in Sapa's cooperative system.
This was the beginning of the end of Sapa's news cooperative model. It became a punch bag for Members as they started holding back on pooling their news through Sapa. It was a slow process, but pooled content was history by the mid-90s.
Over the years, however, Sapa had also been stepping up its own content generation, especially during the violence of the 80s and early 90s. It did so very well, and it suited everyone to pretend Sapa remained a harmonious cooperative.
Running in parallel with this over the years from the late 70s, and probably indicative, too, of the bickering about abuse, it suited Sapa Members' own agendas to drive cost-cutting at the Association. From a head-count of about 125 into the 70s, this reduced to some 80 by 1992. Eventually, Sapa had 48 staffers, 35 of them journalists covering a 24-hour roster.
Sapa's next notable milestone was setting up a radio news wire service, Network Radio News, in the latter 90s, following deregulation of the broadcasting industry.
This was a natural extension of Sapa's role and a vital modernisation opportunity. At first, Members said no, because they were themselves exploring radio opportunity. When it became clear broadcast cross-ownership was going to be prohibited for newspaper groups, they relented and said OK. The business model was sound, with great revenue potential. But it was terribly mismanaged, crashing miserably in 1999. Sapa was crippled, with debt of well over R5 million in the form of emergency cash injections from Members.
Costs were further slashed from around the year 2000 onwards, and debts paid, but recovery came at a cost. Sapa reverted to producing only text content and some photographs. The Board was opposed to any further investment, and Sapa was returned to its slot as a rigidly controlled cost-centre for content. A good indication of this is that in the recovery decade from 2000, Sapa's annual budget was static, regardless of increasing costs, and a rapidly changing needs in the media industry.
Then, around 2010, on the back of finances that were at least stable again, and also with a modest pension fund surplus in the bank, Members admitted Sapa would die unless it was rejuvenated to be a multimedia content producer. It also needed a vibrant marketing and product sales arm to break the downward spiral of revenue, while costs rose.
But this was in tough economic times, and the investment and capacity was limited, certainly not at the scale required for a real turnaround. Sapa's decline continued.
At the beginning of 2013, the board did away with the structure of a general manager and an editor reporting equally into board meetings on their areas of responsibility. The GM departed and the editor was tasked with more responsibilities.
Then the dominos started to fall.
In June, the Times Media Group (TMG) resigned its membership, to take effect at the end of 2014. Its printed titles would no longer take Sapa, although it retained the service for its online platforms. For the sake of limiting the financial shortfall, Sapa was compelled to accept the farcical notion that TMG's print journalists were not "seeing" the wires.
The remaining Sapa member newspaper groups, Media 24, Independent and Caxton, took stock and agreed Sapa could not continue as it was. It needed recapitalisation and proper commercialisation – somehow by somebody -- if it was not to hit the wall. The days of the price setters also being the price takers were over.
The search for that somebody with a solution started. Members still saw value and cost-efficiencies in a continued Sapa, but would prefer to simply be arm's-length commercial customers, with no further responsibility for Sapa.
After some approaches to and from international news agencies such as the British Press Association and Agence France Presse (AFP) and subsequent due diligence examinations of Sapa's financial state and prospects, the search narrowed on the photo syndication company, Gallo Images.
Simultaneously, fearing liabilities down the line, Caxton gave notice of its resignation, to take effect mid-2014, and Independent Media followed, with its resignation set for end November 2014. So, as the end-game was heating up, this left only Media 24 still a full member, committed to funding Sapa all by itself if need be.
Gallo Images' offer, when it came in around August 2014, guaranteed editorial independence, had sound commercial legs and would have continued the Sapa brand with new investment in its core service of fast, neutral and accurate news to complement its photo service. But Gallo only wanted the best editorial staffers and the "good" brand assets of Sapa. It felt the Members should still pay to wind up the old Sapa with its staff retrenchments and other liabilities.
Independent and Caxton were unimpressed. A complication was also that Gallo was 50% owned by Media24; raising fears of a national news agency in effect in the pocket of one media house. So, from a wish to shed responsibility for Sapa, there was now fear of Media 24's possible news agency monopoly.
In a remarkable turnaround, Members agreed on an alternative direction for Sapa. They would all stay in the game, but this time around as purely commercially shareholders in a private company. Profits would be low but, as co-owning media houses, they would benefit from a continued cost-efficient flow of news – something they would have to source elsewhere at higher prices if Sapa disappeared. Simultaneously, invitations were sent to certain "interested parties" to come in as additional shareholders to widen the ownership pool in a new Sapa. Sapa had previously always been retained as a closed-shop for its newspaper Members, jealously to the exclusion of other non-print entities.
A separate body blow to Sapa came in the form of a decision by AFP to cut its foreign content news redistribution ties with Sapa. Now with knowledge of Sapa's finances, AFP believed it should extract much more local revenue by going direct.
As these developments and direction for Sapa took shape, Iqbal Surve's Sekunjalo Investment Holdings – somewhat controversial new owners of Independent Media, mostly because Surve himself was seen as closely connected to the ruling African National Congress – offered to "buy" Sapa and incorporate it into plans for a continental African News Agency. Surve said he was prepared to put a stunningly big $50 million into Sapa. That would have been enough to run Sapa at its current levels for another 18 years!
Another contender emerged in the form of KMM Review Publishers – led by journalist and businessman Moeletsi Mbeki. KMMR did not want to buy Sapa. Rather, it wanted to be a part of the new entity to grow it and keep it independent.
At the same time, Gallo's limited offer was reversing into wanting only an operational brief to run a newly commercialised and recapitalised news agency. It rejected outright any notion of a partnership with Sekunjalo or KMMR.
A target date end March 2015 – it being the end of Sapa's financial year – was set for the death of the old news agency in expectation of the birth in its place of a fresh new entity.
As all this unfolded, the legitimacy of the existing Member groups -- as founder shareholders in the new commercial entity – holding on to a "right" to decide who else could be admitted as fellow shareholders came under uncomfortable scrutiny. This ratcheted up as it became apparent that, after all, none of the existing Members actually still wanted to be co-owners of a new Sapa. They wanted out of any such responsibility, but still wanted to be commercial subscribers to a functional and effective news agency. Thus they were in effect holding on to the untenable notion they could select the new owners of a reborn Sapa.
Growing mutual distrust among Members led directors to decide in January that, really, their only task was to close Sapa at the end of March. Tacitly, they admitted their vision was clouded by the notion of shaping also the creation of a new Sapa the way they would want it. That, they conceded, had nothing to do with them. They had no authority or responsibility for it. Instead, they said, it was up to the market to decide what would replace Sapa.
Running deep underneath all this was the uncomfortable truth it was most unlikely Media24, Sekunjalo and Caxton could ever live happily together inside a new Sapa ....and that each of them had long been working on their own Plan B. So, Sapa staffers who believed all along they had a chance of jobs in a new Sapa from April 1 were told that, no, everything was to be shut down with total retrenchments and no guarantees of anything.

So, as Sapa set about complying with orders to die on exactly March 31, the Members began announcing their plans for life after Sapa.
Independent's Sekunjalo owners announced the creation of a continental African News Agency (ANA) to take over also the space Sapa left. Its core business model was still long-term subscription partnerships with other media houses, which, it believed, would buy into the positives of African media telling their own positive story of Africa, in contrast to the "negativity" of Western news agencies.
Then, very soon after this, Media24 announced it too was starting up a news agency, via its News24 digital platform. Its content would be "free" to all other online platforms -- clearly a move to torpedo ANA's subscription model before it was even floated. But, any non-digital media platform that wanted News24 news, would have to buy it.
Both ANA and News24 recruited key Sapa editorial staffers to help them build their operations.
And then TMG also announced the creation of a third news agency – Rand Daily Mail Newswire – to repurpose its own news content for internal and also external second-tier sale.
Fourthly, Caxton – with its single national title, The Citizen, but backed by scores of profitable local community newspapers, has invested in extra editorial capacity and making use of its Caxton News Service.
And then there are still the foreign news agencies' operating in SA – AFP, Associated Press, Reuters, Bloomberg, and the German dpa -- all slogging it out for a bigger slice of a shrinking market.
This news agency-type slugfest, among previously supposedly harmonious partners in Sapa, is yet another symptom of a deeper malaise in the newspaper print industry generally.
It's dying, slowly for the moment still, but the momentum will pick up. The market is too small for all its players and nobody yet has the digital business model worked out to start covering declines on old-fashioned print.
On the political and economic terrain, most are also at each other's throats, one way or the other.
Caxton takes every available opportunity to haul Media24 to the Competition Commission and Media24 fights back, hard. The CEOs of TMG and Sekunjalo would likely resort to fisticuffs if they met on the pavement. Other previously collegiate and representative bodies of the newspaper industry, such as the publisher's organisation, Print and Digital Media South Africa PDMSA, are fracturing due to pull-outs and funding ultimatums.
Arguably, even the future of the vitally important self-regulatory Press Council's complaints resolution mechanisms is at risk – which may open the way, again, for government's dreaded plans for a statutory media tribunal. So, in the midst of all this juggling and jostling for position ahead of a final survival show-down in the industry over the next few years, there was – finally – consensus the market no longer has space for a collective cooperative content supplier like Sapa.
In fact, if an institution like Sapa was to continue, its very presence as a neutral zone might make the ugly coming bigger battles even more complicated than things are already. Better to have it out of the way to clear the battlefield a bit more.
So, the inevitability of Sapa's closure, if it did not see re-investment, was already obvious long ago – just not really talked about. Sapa's story should be studied in further detail, but it is history. It cannot and will not be recreated.
And the wisdom, or not, of those who agreed to kill Sapa for the sake of more clear cut bigger battles to come, will be assessed in due course as our media industry history continues to unfold.
Mark Van der Velden joined Sapa as a reporter in 1983 and was appointed editor in March 1992, a position he held until the wire agency's last story was issued.

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