A new daily – do they really believe it can succeed?

ALEC HOGG: Joining us now is Essop Pahad, former minister in the Presidency. Well, Essop, interesting to see that you've moved into the media business with the launch of The New Age. A spectacular launch last night. Is this the start of big things for this company?

ESSOP PAHAD: I think that's what the founders and the publishers are hoping, but obviously they will have to see how the initial investment in The New Age works out

ALEC HOGG: There's a lot of scepticism because I suppose newspapers all over the world are being laid to waste by the internet, and the last newspaper that tried to go national and independent in South Africa lost R100m in a year, then closed down. What makes yourself and the people behind The New Age believe that this time it'll be different?

ESSOP PAHAD: The Gupta family that's going to fund the newspaper thing are themselves very shrewd businesspeople, unlike me, and they've done their own sums. They did commission a ... feasibility study, also from Grant Thornton, and on the basis of their own assessment of the needs of the market and the space for the kind of daily they are talking about, they are very convinced that it will be both viable as well as sustainable, and that they are not throwing their money down the drain.

ALEC HOGG: 170 000 circulation would take it well beyond the biggest daily newspaper of the moment. Is this a figure that's been thrown in the air or is it very firm?

ESSOP PAHAD: Well. At the moment what they are working on is a circulation figure to start with of about 170 000, which is a substantial number. So what they are doing at the moment is certainly discussing with the distributors and others in terms of how rapidly they can get it out and onto the streets, into homes, into offices. And obviously an important element would be to develop a relatively strong subscription base.

ALEC HOGG: So there is a distribution agreement in place?

ESSOP PAHAD: It is at the moment with Allied Distributors, who in any case are one of the two best distributors in South Africa.

ALEC HOGG: And the management of the company? Are you going to be involved at all?

ESSOP PAHAD: No, they've asked me to serve as a director, which I have agreed to do, and the other director will be Lazarus Zim at the moment. As I think they move forward they may well add other individuals to the directorate. So at the moment, in addition to the chair, who is Atul Gupta, who will be the executive chair. There are two directors, myself and Lazarus Zim.

ALEC HOGG: So Atul Gupta will be running the company. Has he got a media background?

ESSOP PAHAD: No, he's learning fast. His background is essentially very much in the IT business. But my own view is that many of his businesses in terms of investments and return on investments and ensuring that the product is the right type, ensuring that you have the right kind of people in your management structures, aren't necessarily all that different. Vuyo Mvoko, who is the editor, obviously has a great deal of experience in the media world. Lazarus Zim also has some experience, and I hope I learnt something over the last 50 years.

ALEC HOGG: And the sales side? Have you managed to secure some top sales people?

ESSOP PAHAD: They are at the moment trying to find the kind of people that they think they will require for that. And what they are also working on is to have a very specific event - I don't know what form it will take - with the people in the advertising agency. So there will be a pretty direct engagement with the advertising agency, wherein they would then be able to, if you like, push their product to the advertising agencies. They've already had a tremendous amount of discussion with a number of people in the advertising agencies, and as far as I am aware the response has been quite positive.

ALEC HOGG: Essop, who is the target market going to be for The New Age?

ESSOP PAHAD: I think initially they started at [LSM] 6-10,which is what the advertising agencies are also asking them to do. My own personal view is that - anyway, they know that I am not a great fan of LSMs. I think they don't give you any information. I think it's too ill-defined where there's such a great deal of flexibility in terms of people's own level of understanding.

ALEC HOGG: Perhaps I can put it differently.

ESSOP PAHAD: My own view is to say, look, what you have in South Africa - if you take Cosatu, for example, you have Cosatu shop stewards. This is probably the most important corps in the entire Cosatu decision-making process. I know in the end the CEC takes the decisions. But you have to target the Cosatu shop stewards. If you take some of the mid-level cadres, both of the ANC as well as the South African Communist Party, these are people who play a very important role in the decision-making process before the NEC or PECs come to a final decision. It is this group of people who are very important in the decision-making process. My own view is one must begin to target them, but target them in a way in which you respect their understanding of political developments, economic developments in this country.

ALEC HOGG: Just to close off with, is there an existing newspaper which will be directly competing with The New Age?

ESSOP PAHAD: I guess in one sense it would be some of the newspapers in the Independent stable, possibly Sowetan. As you know, with the Sowetan they've moved somewhat with their own target groups. Not the Business Day, because the Business Day has a very specific audience, and obviously not the Afrikaans-speaking press, which have their own very specific readership base.

ALEC HOGG: Well, lets hope they've got very deep pockets, Wayne McCurrie. Newspapers are a quick way to lose money, and to lose it fast. We've had a look at - there was another recent newspaper launch in South Africa called The Times, which is using the base of the Sunday Times, and it's struggling to break even. You need a lot of time.

WAYNE McCURRIE: Alec, it's an intensely competitive market, with very low margins and well, well-entrenched players in an overtraded market. I think they are going to have a very, very difficult time.

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