That, and not the conduct of its competitors, contributed to its demise, advocate Schalk Burger argued for Media24 before the Competition Tribunal yesterday.
Burger was grilling Hans Steyl, former co-owner and manager of GNN whose complaint against Media24 instigated the hearing.
The Competition Commission investigated the complaint and is asking the tribunal to fine Media24 10% of its annual turnover on charges of abusing its dominant position in the community newspaper market in the Free State area of Goldfields, alternatively predatory pricing.
It alleges that Media24 cut the rates of its Forum newspaper to below cost to drive GNN out of the market and to protect its stronger paper in the same area, Vista.
Steyl first painted a picture of a thriving independent newspaper in the Welkom area. In 2003/4, he said Media24 cut its advertising rates. As a result, GNN not increase prices to cover rising printing costs and inflation, and declined until it had to close in 2009. He said Forum “played a big role in this game”.
If Forum, which had the lowest rates, had not been present, he estimated GNN would have picked up about 40% of its revenue. That could have made the difference between life and death for GNN, Steyl said. He denied that internal problems and the economic downturn lead to the closure of GNN.
Burger listed several factors Media24 would argue led to GNN’s closure, including an increase of R240 000 in directors’ fees and R70 000 in bad debts in the year profit declined by R292 000 to R57 000. Burger also said the erratic distribution of GNN was a “deathblow”, quoting from a letter Steyl wrote to the distributor. Steyl said had he exaggerated to justify ending that contract.
Other reasons Burger argued contributed to GNN’s fate were that the market was saturated by two established papers, economic conditions globally, in Goldfields and the industry, smaller footprint, high personnel costs and bad record-keeping.