Small news companies pin their hopes on new Google fund. But already there’s controversy

Small publishers have been thrown a lifeline by a new fund. Archive photo: Juliette Garms

• Small and independent publishers and broadcasters across the country are battling to survive.
• Google has given R114-million to a new fund intended to “help small, local and independent news publishers” over three years.
• The fund is being managed by Tshikululu Social Investments.
• But a local publisher has described the fees that Tshikululu will be getting — estimated at about R16-million over three years — as “obscene”.

Google has granted a R114-million lifeline over three years to help save small and independent publishers in South Africa. The Digital News Transformation Fund was initiated by the Association of Independent Publishers (AIP), in partnership with Google. The Fund will be administered by Tshikululu Social Investments.

But the high administration costs of the Fund have already generated controversy, with one publisher describing it as “obscene”.

There are about 120 small community news publishers – print and broadcast – across the country. They mostly aim to publish local news. Some do it in newspapers, others on the web, and some on the airwaves. Based on a survey of 40 of these publishers by Wits University researchers for the AIP two years ago, their average turnover is less than R250,000 per year. They generally have about five full-time staff and “pay is very low”. Most publish monthly or weekly. Only six of these publishers have turnover of over R1-million per year.

All this was as of 2023. It’s almost certainly worse now.

Decades ago, these kinds of news publishers had a clear business model. Adverts from local businesses occupying much of the paper easily paid for printing and staff.

But the rise of the internet, along with technologies like Google Ads and Facebook Marketplace, has changed the way advertising works as well as how people access their news. So these news publishers are seldom profitable, and they are disappearing, to the detriment of local news coverage.

Google’s grant is meant to help these publishers become profitable again. The Fund’s website says it will “help small, local and independent news publishers develop and strengthen their digital operations, improve their audience reach and engagement, and enhance the sustainability of their journalism”.

The Limpopo Mirror, published in Louis Trichardt, exemplifies the local newspaper tradition. It was founded in 1990. Anton van Zyl, the current publisher, took it over in 2000. The paper has won multiple prestigious awards. Van Zyl won the Nat Nakasa award for courageous journalism in the community media sector in 2023. He has been at the forefront of uncovering corruption in the Lottery and has co-published frequently with GroundUp.

But van Zyl is not pleased about the hefty percentage of the Fund that Tshikululu will be getting. He wrote an “open letter” to the AIP expressing his concerns.

Hefty admin fees

In a presentation to prospective grantees, it emerged that Tshikululu, which was established in 1998 to administer the Anglo American Chairman’s Fund, the De Beers Fund and the AngloGold Fund, will receive in the region of R16-million to administer the Fund.

Van Zyl wrote that there was no justification for Tshikululu “taking such a large portion of funding intended to make a meaningful impact in the small news media sector”. He said the amount going to Tshikululu was “obscene” and could support dozens of small publishers. He told GroundUp R16-million could cover all expenses for both the two weekly newspapers he publishes for three years without the need for any additional revenue such as advertising.

“We’re not talking about helping wealthy publishers who need a bit of surplus funding to remain in their comfort zones,” van Zyl wrote. “We’re talking about publishers whose passion to serve as watchdogs in their communities is on the verge of dying out. They are on the brink of giving up.”

Van Zyl referred to a presentation by Dr Francois Nel, one of the speakers at the African Media Perspective conference a few weeks ago, who “spoke at length about income inequality and how it erodes trust in news”.

Nel explained that the UK pay gap between the highest-paid executives in the media industry and lowest is 113 to 1. “I suspect the situation in South Africa may be even worse,” said van Zyl.

In a presentation, Tshikululu explained that there would be three tiers of funding. The first is up to R380,000 per project per year, the second is up to R950,000, and the third tier is up to R1.9-million per project per year.

In his letter, van Zyl also raised concerns that Tshikululu did not have an adequate understanding of “the sector or its dynamics”.

AIP responds

Kate Skinner, Executive Director at AIP, told GroundUp that after an “extensive search”, Tshikululu was the only organisation with the capacity and experience to manage this amount of money.

She said that Tshikululu had the required experience to deal with a large number of small grants, some of which would be going to publishers that have not received donor funding before, and would need an organisation that would support them with the application process.

Skinner acknowledged they were expensive. She said they would be renegotiating their fees for years two and three. “The first year is particularly difficult because you’re putting all the infrastructure together for the first time,” she said.

Fees are justified, says Tshikululu

In response to GroundUp, Tshikululu said that its responsibilities include “a comprehensive set of responsibilities that extend well beyond basic grant administration”.

“As with any fund management of this nature, comprehensive accountability mechanisms are in place to monitor performance and responsiveness to the needs of community publishers. Tshikululu’s goal is not only to manage the fund, but to work alongside the [Fund] to contribute to a stronger, more resilient ecosystem for small and medium-sized publishers in South Africa,” Tshikululu said.

Asked for details of the fees Tshikululu will receive, as well as executive salaries, the company responded that they are “committed to transparency and good governance in the administration of all funds under our management”.

“The administration and services fees for this Fund were calculated to cover the full scope of services required to ensure responsible stewardship. The fee was based on a cost-recovery model, which factors in the level of complexity, resource intensity, and risk associated with managing the Fund,” Tshikululu said.

According to a press release, Leanne Kunz will head the Fund and be responsible for day-to-day leadership. The Fund is chaired by Vincent Maher, the CEO of Broadband, and Anetta Mangxaba, the chair of the AIP and CEO of Dizindaba Media. A call for proposals will be made on 25 August, and applications will close on 21 September. Disbursements are expected by December.

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