Johannesburg - Media group Johnnic Communications (Johncom) and radio station group African Media Entertainment (AME) have a lot in common beyond both being involved in the media business. They are both linked to Caxton.
Johncom owns an effective 36 percent stake in Caxton. The Moolman Coburn Partnership, which controls Caxton, is the single largest shareholder in AME, with a stake of more than 24 percent. Connie Molusi, who until recently was the chief executive of Johncom, is the chairman of AME.
But perhaps the most interesting and unusual thing about the two companies is that neither has a chief executive. Molusi was fired by the Johncom board last month. And the last chief operating officer that AME had was "terminated" in 2004.
At the AME annual general meeting (AGM) in May 2004 Stan Katz, who was the group's chief operating officer, was unceremoniously bumped off the AME board in a move that appeared to be orchestrated by Moolman Coburn. Katz's departure left the group without any executive directors.
Ironically, as AME chairman, one of Molusi's responsibilities is dealing with the ongoing dispute between AME and Katz over the terms of Katz's termination.
At the time of the AGM in May 2004, AME certainly appeared to be floundering. It had a market capitalisation of just R50 million, a substantial tax bill, crippling debt and an urgent need for a R20 million rights issue. Its debt and need for capital were the results of an earlier phase of ill-considered acquisitions. By financial 2004, AME's assets had been trimmed back to two profitable radio stations, OFM and Radio Algoa.
A year later, the group reported a 189 percent hike in headline earnings for the 12 months. And now, two years later, AME continues to go from strength to strength, without executive directors. That strong performance is reflected in the solid increase in the share price to a high of R19 earlier this year. At this level, it is on an undemanding price:earnings ratio of 10 times and is expected to move higher. Its market value has more than tripled since the 2004 AGM to R155.6 million.
So while the manner in which Molusi was fired from Johncom seems unsatisfactory from a shareholder perspective, particularly with regard to the lack of communication with investors, the absence of a chief executive may not necessarily have negative consequences for Johncom. Although, as has been noted in the case of AME, Caxton is believed to be providing many of the back office services needed by that company. And so it might just be that AME is being remotely controlled by Caxton.