In addition, the acquisition is a milestone for the group which is focused on deepening its ability to deliver content. “Urban Brew Studios complements our existing portfolio of broadcast assets, the bulk of which are currently in radio, and enhances our capacity to extend our reach into visual media, including online, mobile and other platforms,” explains Murphy Morobe, CEO, Kagiso Media.
“We will leverage Urban Brew's skills and capabilities to cement Kagiso Media's positioning in the visual media space and to realise the linkages between broadcast and mobile content, which are being driven by technology.”
Established more than 20 years ago, Urban Brew Studios has developed a strong reputation for creating and distributing audio visual content on a range of broadcast platforms. It produces a number of popular television shows, including Three Talk With Noleen; YO TV and the Live Lotto Draw, and also manages the One Gospel Channel on the DStv bouquet and has a joint venture interest in Soweto TV.
As regards the long term revenue growth potential associated with Kagiso Media's enhanced ability to develop and disseminate content, Murphy adds that “this acquisition speaks to the group's strategic direction towards the diversification of our revenue streams as Urban Brew Studios is not directly dependent on advertising revenues, but rather income streams are based on its ability to deploy its intellectual capital. Our media assets have consistently delivered value since our listing in 1997. This acquisition will assist the group in maintaining its strong growth track record.”
Danie Ferreira, CEO and founder of Urban Brew Studios, says that “for the past two decades, Urban Brew Studios has been recognised for its capacity and willingness in developing innovative partnerships. Fundamental to the partnership with Kagiso Media Limited is a shared African premise and vision with significant synergies. With our recent successes on the continent, we look forward to Kagiso Media broadening our offering and helping to grow the market”.
The initial consideration of R75.1 million will be settled in cash. The impact of the acquisition for the six months ended 31 December 2007 would have been a 3.1% headline earnings enhancement from 66.1 cents to 68.1 cents if it had been in force for the period.
Completion of the acquisition is subject to conditions precedent, which include a due diligence on Urban Brew Studios and approval from the Competition Commission. The effective date of the acquisition will depend on the fulfilment of these conditions.
