As filed with the Securities and Exchange Commission on September 29, 2006.


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
 
FORM 20-F
 
(Mark one)
 o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
OR
 
 x  
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended: March 31, 2006
 
   
OR
 
 o  
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________ 
 
 
 
OR
 
 
 o
 
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT 0F 1934
Date of event requiring this shell company report __________
COMMISSION FILE NUMBER 1-14917
 
____________________
 
NASPERS LIMITED
(Exact name of Registrant as specified in its charter)
 
Republic of South Africa
(Jurisdiction of incorporation or organization)
 
40 Heerengracht
Cape Town, 8001
The Republic of South Africa
(Address of principal executive offices)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act.
 
N/A
(Title of Class)
N/A
(Name of each exchange on which registered)
   
Securities registered or to be registered pursuant to Section 12(g) of the Act.
 
Class N ordinary shares, nominal value Rand 0.02 per share*
American Depositary Shares, each representing one Class N ordinary share, nominal value Rand 0.02 per share
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
315,113,700
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes       X        No              
 

 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes       X        No              
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:
 
Large Accelerated filer x  Accelerated filer o  Non-Accelerated filer o
 
Indicate by check mark which financial statement item the Registrant has elected to follow.
Item 17               Item 18       X      

If this is an annual report, indicate by check mark if registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [  ] No [X]
 
*Not for trading, but only in connection with registration of American Depositary Shares.

 

 
 
TABLE OF CONTENTS
 
 
 
 
 Page No.
 
 
Our Use of Terms and Conventions in this Annual Report
1
   
Accounting Periods and Principles
1
   
Forward Looking Statements
1
   
PART I     
     
ITEM 1.
Identity of Directors, Senior Management and Advisers
ITEM 2.
Offer Statistics and Expected Timetable
ITEM 3.
Key Information
ITEM 4.
Information on the Company
17
ITEM 5.
Operating and Financial Review and Prospects
53 
ITEM 6.
Directors, Senior Management and Employees
82 
ITEM 7.
Major Shareholders and Related Party Transactions
94 
ITEM 8.
Financial Information
97 
ITEM 9.
The Offer and Listing
101 
ITEM 10.
Additional Information
102 
ITEM 11.
Quantitative and Qualitative Disclosures About Market Risk
114 
ITEM 12.
Description of Securities Other than Equity Securities
 115
     
PART II
   
     
ITEM 13.
Defaults, Dividend Arrearages and Delinquencies
116
ITEM 14.
Material Modification to the Rights of Security Holders and Use of Proceeds
116
ITEM 15.
Disclosure Controls and Procedures
116
ITEM 16A.
Audit Committee Financial Expert
116
ITEM 16B.
Code of Ethics
116
ITEM 16C.
Principal Accountant Fees and Services
117
ITEM 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
118
     
PART III
   
     
ITEM 17.
Financial Statements
118
ITEM 18.
Financial Statements
118
ITEM 19.
Exhibits
E-1
 
 
i




OUR USE OF TERMS AND CONVENTIONS IN THIS ANNUAL REPORT
 
Unless otherwise specified or the context requires otherwise in this annual report on Form 20-F:
 
 
·
references to “Naspers”, “Naspers group”, “group”, “we”, “us” and “our” are to Naspers Limited together with its subsidiaries, unless the context suggests otherwise;
     
 
·
references to “MIH Limited” are to MIH Limited together with its subsidiaries with respect to any period prior to December 20, 2002, and to MIH (BVI) Limited together with its subsidiaries thereafter;
     
 
·
references to “Rand” and “R” are to South African Rand, the currency of South Africa; 
     
 
·
references to “U.S. dollar(s)”, “dollar(s)”, “U.S. $” and “$” are to United States dollars and cents, the currency of the United States; 
     
 
·
references to “Euro” and “€” are to the currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the Treaty establishing the European Economic Community, as amended by the Treaty on the European Union; 
     
 
·
references to “Pound sterling” are to United Kingdom pounds sterling, the currency of the United Kingdom; 
     
 
·
references to “Renminbi” are to Chinese Renminbi, the currency of the People’s Republic of China; 
     
 
·
references to “Naira” are to Nigerian Naira, the currency of Nigeria; and 
     
 
·
references to “Brazilian Real” and “Real” are to Brazilian Real, the currency of Brazil.
 
 
 ACCOUNTING PERIODS AND PRINCIPLES
 
Unless otherwise specified, all references in this annual report to a “fiscal year” and “year ended” of Naspers refer to a twelve-month financial period. All references in this annual report to fiscal 2006, fiscal 2005, fiscal 2004, fiscal 2003 or fiscal 2002 refer to Naspers’ twelve-month financial periods ended on March 31, 2006, March 31, 2005, March 31, 2004, March 31, 2003 or March 31, 2002, respectively. References in this annual report to fiscal 2006 refer to the period beginning April 1, 2005 and ending March 31, 2006. Our group consolidated financial statements included elsewhere in this annual report have been prepared in conformity with International Financial Reporting Standards (“IFRS”), which differ in certain respects from accounting principles generally accepted in the United States (“U.S. GAAP”). See note 39 to Naspers’ audited consolidated financial statements included elsewhere in this annual report.
 
During the year ended March 31, 2006, the group adopted IFRS for the first time in accordance with the JSE Limited (formerly the JSE Securities Exchange South Africa) (“JSE”) Listing Requirements. Financial information provided in this annual report and in our audited consolidated financial statements included elsewhere in this annual report have been presented in accordance with IFRS as required in terms of the requirements of the JSE and the Securities and Exchange Commission in the United States of America (“SEC”). Previously the group prepared its financial statements under South African Statements of Generally Accepted Accounting Practice (“SA GAAP”) as effective at that time. For a description of the impact of the first time adoption of IFRS on the Group’s reported results of operations and financial position, see note 2 to our annual financial statements. Additionally, the US GAAP reconciliation as of and for fiscal year ended March 31, 2005 has also been adjusted to reflect the adjustments between IFRS and the previously reported SA GAAP information.
 
FORWARD LOOKING STATEMENTS
 
The SEC encourages companies to disclose forward looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This annual report contains historical and forward looking statements concerning the financial condition, results of operations and business of Naspers. All statements other than statements of historical fact are, or may be deemed to be, forward looking statements.
 
 
1


 
Forward looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward looking statements include, among other things, statements concerning the potential exposure of Naspers to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions.
 
These forward looking statements are identified by their use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “objectives”, “outlook”, “probably”, “project”, “will”, “seek”, “target” and similar terms and phrases. These statements are contained in the sections entitled “Key Information”, “Risk Factors”, “Information on the Company”, and “Operating and Financial Review and Prospects”, and in other sections of this annual report. The following factors, among others, could affect the future operations of Naspers and could cause those results to differ materially from those expressed in the forward looking statements included in this annual report:
 
 
·
economic, political and social risks which exist in all countries in which Naspers, its associated companies and joint ventures operate;
     
 
·
adverse regulatory developments;
     
 
·
market risks related to fluctuations in the exchange rates and interest rates in all countries in which Naspers, its associated companies and joint ventures operate;
     
 
·
the level of Naspers’ debt (including finance leases) and funding difficulties Naspers may face;
     
 
·
restrictions imposed by exchange control regulations and the possibility that Naspers may not be able to access cash flows from its subsidiaries, associated companies and joint ventures;
     
 
·
difficulties associated with successfully completing acquisitions and integrating acquired companies;
     
 
·
the lack of control we have over companies we make minority investments in and other risks associated with such investments; 
     
 
·
dependence on suppliers and partners for the provision of services and expertise and on local governments;
     
 
· 
the possibility that satellites used by Naspers, or its printing equipment or facilities, may fail to perform or may be damaged; 
     
  · 
competitive pressures which may result in declining subscriber and circulation levels; 
     
  · 
unauthorized access to Naspers’ programming signals; 
     
 
 
·
trade union activity and labour instability;
     
 
·
the ability to enforce foreign judgments against Naspers and its directors and officers;
     
 
·
cyclical fluctuations in the demand for advertising;
     
 
·
the rapid pace of technological change;
     
 
·
reliance on software and hardware systems, which are susceptible to failure;
     
 
·
reliance on content developed by third parties and susceptibility to claims made in connection with such content;
     
 
·
the degree to which our intellectual property rights are protected; and 
     
 
· 
changes in accounting standards.
 
All subsequent forward looking statements are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. You should not place undue reliance on forward looking statements. Each forward looking statement speaks only as of the date of the particular statement. Naspers undertakes no obligation to publicly update or revise any forward looking statement as a result of new information, future events or other information. In light of these risks, Naspers’ results could differ materially from the forward looking statements contained in this annual report.
 
 
2



 
PART I
 
ITEM 1.      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 
Not applicable.
 
ITEM 2.         OFFER STATISTICS AND EXPECTED TIMETABLE
 
Not applicable.
 
ITEM 3.         KEY INFORMATION
 
3.A.                 Selected Financial Data
 
The following tables show selected consolidated financial data for Naspers as of and for the fiscal years ended March 31, 2005 and 2006 under IFRS and as of and for the fiscal years ended March 31, 2002 through 2006 under U.S. GAAP. We derived the selected consolidated financial data from our audited consolidated financial statements. You should read this selected consolidated financial data together with “Operating and Financial Review and Prospects” and Naspers’ audited consolidated financial statements and the notes thereto appearing elsewhere in this annual report.
 
In accordance with the JSE Listing Requirements, Naspers was required to prepare its first annual consolidated financial statements in accordance with IFRS for the year ended March 31, 2006. As Naspers publishes comparative information in its financial statements, the date for transition to IFRS is April 1, 2004, which represents the beginning of the earliest period of comparative information to be presented pursuant to the requirements of the JSE and the SEC.
 
Naspers’ audited consolidated financial statements have been prepared in Rand. Amounts shown in U.S. dollars have been translated for convenience from Rand amounts to U.S. dollars at the noon buying rate on September 15, 2006 of Rand 7.38 per U.S. $1.00. You should not view such translations as a representation that such Rand amounts actually represent such U.S. dollar amounts, or could be or could have been converted into or at any other rate.

   
Year ended March 31
         
   
2002 
 
2003
 
2004 
 
2005 
 
2006 
 
2006 
 
   
     Rand in millions, except per share data
U.S. $ in millions,
except per share data 
 
                           
Consolidated Income Statement Data:
                         
IFRS:
                         
Revenue, net 
                     
13,517.9
   
15,706.4
   
2,128.2
 
Operating expenses: 
                                     
Cost of providing services and sale of goods 
                     
(7,725.8
)
 
(8,753.7
)
 
(1,186.1
)
Selling, general and administration 
                     
(3,311.5
)
 
(3,948.7
)
 
(535.1
)
Other losses, net 
                     
(11.7
)
 
   
 
Operating profit
                     
2,468.9
   
3,004.0
   
407.0
 
Financial costs, net(1) 
                     
(217.0
)
 
(11.4
)
 
(1.5
)
Share of equity accounted results 
                     
88.6
   
151.3
   
20.5
 
Profit/(loss) on sale of investments 
                     
(0.3
)
 
74.4
   
10.1
 
Dilution profits 
                     
368.0
   
   
 
Profit before tax and minorities 
                     
2,708.2
   
3,218.3
   
436.1
 
Profit from continuing operations 
                     
2,334.8
   
2,126.3
   
288.1
 
Profit from discontinuing operations 
                     
50.0
   
31.8
   
4.3
 
Profit arising on discontinuance of operations 
                     
   
1,032.1
   
139.9
 
Net profit attributable to equity holders of the group  
                     
2,384.8
   
3,190.2
   
432.3
 
 
 
3

 
                                       
Per share amounts
                                     
Basic
                                     
Profit from continuing operations 
                     
8.42
   
7.49
   
1.01
 
Profit from discontinuing operations 
                     
0.18
   
0.11
   
0.01
 
Profit arising on discontinuance of operations 
                     
   
3.64
   
0.49
 
Net profit attributable to equity holders of the group 
                     
8.60
   
11.24
   
1.52
 
                                       
Diluted
                                     
Profit from continuing operations 
                     
7.97
   
7.08
   
0.96
 
Profit from discontinuing operations 
                     
0.17
   
0.11
   
0.01
 
Profit arising on discontinuance of operations 
                     
   
3.44
   
0.47
 
Net profit attributable to equity holders of the group 
                     
8.14
   
10.63
   
1.44
 
                                       
Weighted average shares outstanding
                                     
Basic 
                     
277,293,544
   
283,718,859
   
283,718,859
 
Diluted 
                     
293,126,268
   
300,242,781
   
300,242,781
 
                                       
Dividend per A ordinary share (cents)(2)
                     
7.0
   
14.0
   
1.9
 
Dividend per N ordinary share (cents)(2)
                     
38.0
   
70.0
   
9.5
 
                                       
Consolidated Income Statement Data:
                                     
U.S. GAAP:
                                     
Revenue, net 
   
9,861.4
   
11,208.6
   
11,526.1
   
13,189.4
   
15,751.3
   
2,134.3
 
Operating profit / (loss) 
   
(2,355.8
)
 
(63.0
)
 
1,042.6
   
2,463.7
   
3,076.7
   
416.9
 
Profit / (loss) from continuing operations 
   
(2,582.0
)
 
(889.6
)
 
495.3
   
2,243.9
   
1,801.0
   
244.0
 
Profit / (loss) from discontinued operations 
   
(2,665.0
)
 
528.0
   
   
42.0
   
715.8
   
97.0
 
Cumulative effect of change in accounting principle 
   
18.4
   
(531.5
)
 
   
   
   
 
Net profit / (loss)(3) 
   
(5,228.5
)
 
(893.1
)
 
495.3
   
2,285.9
   
2,516.8
   
341.0
 
                                       
Per share amounts
                                     
Basic
                                     
Profit / (loss) from continuing operations 
   
(17.73
)
 
(5.04
)
 
1.92
   
8.10
   
6.36
   
0.86
 
Discontinued operations 
   
(18.29
)
 
2.99
   
   
0.15
   
2.53
   
0.34
 
Cumulative effect of change in accounting principle(4) 
   
0.13
   
(3.01
)
 
   
   
   
 
Net profit / (loss) 
   
(35.89
)
 
(5.06
)
 
1.92
   
8.25
   
8.89
   
1.20
 
                                       
Per share amounts
                                     
Diluted
                                     
Profit / (loss) from continuing operations 
   
(17.73
)
 
(5.04
)
 
1.87
   
7.63
   
5.98
   
0.81
 
Profit / (loss) from discontinued operations 
   
(18.29
)
 
2.99
   
   
0.14
   
2.38
   
0.32
 
Cumulative effect of change in accounting principle(4) 
   
0.13
   
(3.01
)
 
   
   
   
 
Net profit / (loss)  
   
(35.89
)
 
(5.06
)
 
1.87
   
7.77
   
8.36
   
1.13
 
                                       
Consolidated Balance Sheet Data (at period end):
                                     
IFRS:
                                     
Total assets 
                     
14,042.6
   
17,339.4
   
2,349.5
 
Net assets 
                     
5,093.3
   
7,290.0
   
987.8
 
Share capital(5)  
                     
5,391.2
   
5,561.3
   
753.6
 
Total long-term debt(6) 
                     
2,275.6
   
2,355.6
   
319.2
 
Minority interests 
                     
227.3
   
171.5
   
23.2
 
Capital and reserves attributable to the company’s equity holders 
                     
4,866.0
   
7,118.4
   
964.6
 
U.S. GAAP:
                                     
Total assets 
   
23,750.5
   
12,896.2
   
11,318.1
   
16,190.1
   
19,707.4
   
2,670.4
 
Net assets 
   
11,116.8
   
3,306.5
   
3,376.1
   
6,570.4
   
8,989.5
   
1,218.1
 
Total long-term debt(6) 
   
5,742.6
   
3,843.9
   
2,815.6
   
2,675.9
   
2,590.0
   
350.9
 
Minority interests 
   
7,967.6
   
257.4
   
187.3
   
295.9
   
281.0
   
38.1
 
Total shareholders’ equity 
   
3,149.2
   
2,779.1
   
3,188.9
   
6,274.5
   
8,708.5
   
1,180.0
 
 
4

 
 
                                       
Other Data:
                                     
                                       
IFRS:
                                     
Cash flow from operating activities 
                     
2,367.9
   
3,166.4
   
429.1
 
Cash utilized in investing activities 
                     
(877.1
)
 
(335.4
)
 
(45.4
)
Cash (utilized in)/from financing activities 
                     
(513.7
)
 
24.5
   
3.3
 
U.S. GAAP:
                                     
Cash (utilized in)/from operating activities 
   
(346.1
)
 
1,128.9
   
1,692.3
   
2,347.0
   
3,393.0
   
459.8
 
Cash (utilized in)/from investing activities 
   
(1,088.0
)
 
42.5
   
(534.1
)
 
(683.6
)
 
(133.6
)
 
(18.1
)
Cash from/(utilized in) financing activities 
   
768.0
   
(942.6
)
 
(1,332.6
)
 
(364.3
)
 
(420.4
)
 
(57.0
)
______________
 
(1)
Includes interest expense, interest income, preference dividend income, foreign exchange gains and losses and fair value adjustments on derivative instruments.
 
(2)
Based on the U.S. dollar exchange rate at the respective payment dates of the 2006, 2005, 2004, 2003 and 2002 dividends, the U.S. dollar equivalent of the dividend per Class N ordinary share was U.S $0.09, U.S. $0.06, U.S. $0.04, U.S. $0.03 and U.S. $0.02, respectively. The dividend per Class A ordinary share amounted to U.S. $0.03 or less at these respective dates.
 
(3)
For U.S. GAAP reporting purposes, effective April 1, 2002, Naspers adopted Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). Under SFAS No. 142, goodwill and intangible assets with indefinite useful lives are not amortized but rather are tested at least annually for impairment. If this standard would have been adopted for fiscal year 2002 the adjusted net loss would have been Rand 3,842,228 and basic and diluted earnings per share for fiscal 2002 would have been Rand 26.37 and Rand 26.37, respectively.
 
(4)
The cumulative effect of change in accounting principle for fiscal 2003 relates to the adoption of SFAS 142. Upon completion of the transitional test, Naspers recorded an initial goodwill impairment of Rand 531.5 million. The cumulative effect of change in accounting principle for fiscal 2002 of Rand 18.4 million relates to the fair value of fair value hedges recorded on adoption of SFAS 133 “Accounting for Derivative Instruments and Hedging Activities”.
 
(5)
Excludes treasury shares and redeemable preferred stock.
 
(6)
Includes long-term liabilities in respect of capitalized finance leases, concession liabilities, interest-bearing loans, program and film rights liabilities and non-interest bearing loans.
 
 
Exchange Rate Information
 
The following tables show, for the periods and dates indicated, certain information regarding the U.S. dollar/Rand exchange rate. The information is based on the noon buying rate in the City of New York for cable transfers in Rand as certified for United States customs purposes by the Federal Reserve Bank of New York. On September 15, 2006, the rate was Rand 7.383 per U.S. $1.00.
 
Year ended March 31,
Average Rate(1)
(Rand per U.S. $1.00)
   
2002
9.643
2003
9.572
2004
7.161
2005
6.253
2006
6.398
________________
 
(1)
The average rate is calculated as the average of the noon buying rate on the last day of each month during the period.
 
5



 
High
Low
 
(Rand per U.S. $1.00)
March 2006
6.335
6.136
April 2006
6.166
5.985
May 2006
6.706
5.999
June 2006
7.430
6.634
July 2006
7.230
6.830
August 2006
7.198
6.723
September 2006 (until September 15, 2006)
7.433
7.163

For other important information, you should read the discussion of South African exchange controls in Item 10 of this annual report under the heading “Exchange Controls”.
 
3.D.                 Risk Factors
 
Risks relating to countries in which Naspers and its joint ventures operate
 
Naspers’ multinational operations expose it to a variety of economic, social and political risks
 
There is an element of risk in all countries in which Naspers operates. Naspers may be affected by political, social and economic changes in countries where the group has operations. The incidence of HIV/AIDS infection in a number of markets in which Naspers operates is high and may increase. Those at risk may include both Naspers’ employees, giving rise to increased sickness and disability costs, and its customers, resulting in a reduction in sales and an inability to grow Naspers’ revenue base.
 
A majority of Naspers’ revenue comes from its operations in South Africa. There has been a period of significant change in South Africa since the democratic government came to power in 1994. The Government continues to introduce policies designed to alleviate or redress inequalities suffered by the majority of citizens under the previous government. It is not possible to predict to what extent the government will continue introducing legislation or other measures designed to empower previously disadvantaged groups nor can it assess the potential impact of these reforms. MultiChoice South Africa and Media24 are preparing for broad-based Black Economic Empowerment (BEE) share schemes, aligned to the BEE legislation and the draft codes of good practice applicable to South Africa. These codes are not final yet and, although work has started in the South African companies of the Naspers Group to ensure compliance with these draft codes, Naspers can only assess its compliance once the codes are final.
 
Many emerging market countries have experienced high levels of unemployment and crime in recent years. These problems have impeded inward investment into these countries and have prompted some emigration of skilled workers. As a result, attracting and retaining suitably qualified employees in these countries may be difficult. Against the background of political tensions and the current transition to stable democratic governments, it is not possible to predict the future economic or political direction of these countries. Matters that may affect emerging market countries’ future economic and political direction include whether their governments can address the various political, social and economic challenges and the effect of the continuing integration of these economies both regionally and with the economies of the rest of the world.
 
Naspers operates in emerging economies, including many African countries, China, Brazil and more recently India and Russia. Naspers’ operations in these markets may involve economic and operating risks. Many countries in emerging markets have in the past experienced difficulties resulting from currency fluctuations, high interest rates, increases in corporate bankruptcies, stock market declines, terrorist attacks, threats and ransom, epidemics and other factors that may materially and adversely affect Naspers’ business. Although governments in many of these countries have taken steps toward addressing these problems, it is not possible to predict whether or to what extent these steps will succeed in achieving their objectives.
 
South Africa’s economy has recently experienced periods of moderate growth and inflation and high unemployment but growth could slow and inflation could increase
 
The South African economy has recently been growing at a moderate rate, and inflation has been relatively low. The growth in South Africa’s GDP was 2.8% for 2003, 3.7% for 2004 and 4.9% for 2005. South Africa’s unemployment rate was 26.7% in September 2005. The depreciation in value of the Rand against the U.S. dollar during the latter part of 2001 put upward pressure on South Africa’s inflation rate (CPIX) during the 2002 calendar year, peaking at 11.3%. Since 2003, the inflation rate
 
 
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decreased as the Rand appreciated in value against the U.S. dollar. The South African Reserve Bank has stated that it targets South Africa’s inflation rate at between 3% and 6% per year. Despite such intentions, there can be no assurance that these inflation targets will be met. A future increase in inflation would increase financing and other costs in a manner that could adversely affect Naspers’ profitability.
 
South African exchange control restrictions could hinder Naspers’ normal corporate functioning
 
South Africa’s exchange control regulations provide for a common monetary area consisting of South Africa, the Kingdom of Lesotho, the Kingdom of Swaziland and the Republic of Namibia. Exchange controls may continue to operate in South Africa for the foreseeable future. As a consequence of these exchange controls, an acquisition of shares or assets of a South African company by a non-resident purchaser will require exchange control approval if the payment for the acquisition is in the form of shares of a non-resident company or if the acquisition is financed by a loan from a South African resident. Denial of any required regulatory approval may result in the acquisition not occurring.
 
South Africa’s interest rates may increase Naspers’ borrowing costs
 
The volatility of the Rand in the past has impacted the inflation rate in South Africa, causing the South African Reserve Bank to respond by using interest rates to manage inflation. The depreciation of the Rand has therefore resulted in interest rates being higher in South Africa than in most developed countries. The prime lending rate (the benchmark rate used by South African banks to determine lending rates for their customers) reached a high of 25.5% in 1998. The prime lending rate of 10.5% on September 15, 2005 was at its lowest level over the past 20 years, mainly due to the strengthening of the Rand against most major currencies over the past three years. The prime lending rate as at September 15, 2006 was 11.5%. An increase in interest rates in South Africa would increase Naspers’ cost of borrowings and hence the cost of capital.
 
Naspers could suffer losses as a result of fluctuations in foreign currency exchange rates
 
Naspers’ reporting currency is the Rand. Naspers will continue to conduct business transactions in currencies other than its reporting currency. Approximately 23.6% of Naspers’ revenue was generated outside South Africa during fiscal 2006. Naspers is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the U.S. dollar, the Naira, the Renminbi, the Euro and the Brazilian Real against the Rand, which have in the past affected and could in the future affect Naspers’ revenues, financing costs and general business and financial condition. In addition, fluctuations in the exchange rate of these currencies could affect the comparability of Naspers’ performance between financial periods, since a portion of Naspers’ sales are in currencies other than Rand while Naspers’ financial statements are stated in Rand.
 
A significant portion of Naspers’ cash obligations, including payment obligations under satellite transponder leases and contracts for pay-television programming and channels, are denominated in the currencies of countries in which Naspers has limited operations, such as U.S. dollars. Where Naspers’ revenue is denominated in local currency, a depreciation of the local currency against the U.S. dollar adversely affects Naspers’ earnings and Naspers’ ability to meet its cash obligations. Many of Naspers’ operations are in countries or regions where there has been depreciation of the local currency against the U.S. dollar in recent years. Naspers cannot provide assurances that the hedge transactions that Naspers enters into to mitigate currency risk will fully protect it against currency fluctuations or that Naspers will be able to hedge effectively against these risks in the future. Naspers can in most instances only hedge its foreign currency exposures for a limited period, therefore Naspers can not hedge 100% of its exposure.
 
The Rand, the Renminbi, the Naira and the Brazilian Real have at times in the past depreciated against the currencies of their major trading partners by more than the inflation rate differential between South Africa, China, Nigeria and Brazil and their major trading partners. Historically, the performance of the Rand against other currencies has been characterized by periods of rapid depreciation followed by periods of stability. In particular, the Rand rapidly depreciated against the U.S. dollar and other major currencies during the latter part of 2001. The value of the Rand against the U.S. dollar remains difficult to predict and vulnerable to depreciation. Since December 2001, the Rand has appreciated against the U.S. dollar, ending fiscal 2006 at Rand 6.15. The Rand depreciated after March 31, 2006 to Rand 7.38 on September 15, 2006. Any strengthening of the Rand will have a negative impact on the U.S. dollar based earnings of the group, but a positive impact on its dollar based expenses. Collectively, a strengthening of the Rand against the U.S. dollar has a positive net profit impact on Naspers. Naspers cannot predict the future relative strength of the Rand, Renminbi, Naira or Brazilian Real against the U.S. dollar and expects that these currencies will remain volatile against major currencies like the U.S. dollar and the Euro.
 
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In addition, fluctuations in the exchange rate between the Rand and the U.S. dollar could adversely affect the market value of Naspers American Depositary Shares (“ADSs”) in the United States and the real value of dividends paid on Naspers’ ADSs.
 
The activity of trade unions could adversely affect Naspers’ business
 
As of March 31, 2006, trade unions represented some of Naspers’ employees. In the past, trade unions have had influence as vehicles for social, economic and political reform and in the collective bargaining process. The cost of complying with labor laws may adversely affect Naspers’ operations. The risks and associated costs with labor strikes are difficult to manage and predict.
 
Because Naspers is a South African company, you may not be able to enforce judgments against Naspers and its directors and officers that are obtained in U.S. courts
 
Naspers is incorporated in South Africa. Most of Naspers’ directors and executive officers reside outside the United States. Substantially all the assets of Naspers, its directors and executive officers are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon Naspers or its directors or executive officers, or to enforce against such persons judgments of the United States courts based upon the civil liability provisions of the Federal securities laws or other laws of the United States or any of its states. Although foreign judgments are recognized by South African courts, they are generally not directly enforceable in South Africa and can only be enforced by way of execution of an order to that effect made by a competent South African court, the latter court basing its order upon the judgment of the foreign court.
 
The policy of South African courts is to award compensation only for loss or damage actually sustained by the person claiming the compensation. The award of punitive damages is generally not recognized by the South African legal system, on the grounds that such awards are contrary to public policy. Whether a judgment is contrary to public policy depends on the facts of each case. Exorbitant, unconscionable or excessive awards will generally be contrary to South African public policy. South African courts cannot consider the merits of a foreign judgment and cannot act as a court of appeal or review over the foreign court. South African courts will usually observe their own procedural laws and, where an action based on a contract governed by a foreign law is brought before a South African court, the capacity of the parties to contract may under certain circumstances be determined in accordance with South African law. A plaintiff who is not resident in South Africa may be required to provide security for costs where proceedings are initiated in South Africa. In addition, the Rules of the High Court of South Africa require that documents executed outside South Africa must be authenticated by way of the apostille procedure in terms of the Hague Convention 1961 before they are used in South Africa. Also, foreign judgments concerning the ownership, use or sale of any matter or material connected with South African commerce (such as production, import and export) require consent from the South African Minister of Trade and Industry to be enforced in accordance with the South African Protection of Business Act, 1978. Naspers has been advised by Webber Wentzel Bowens, its South African counsel, that there is doubt as to the enforceability against Naspers and its directors and officers in South Africa of liabilities predicated solely upon the Federal securities laws of the United States.
 
Risks relating to Naspers’ business
 
Naspers’ level of debt could adversely affect its business and competitive position
 
Naspers has an amount of debt that may adversely affect its business in numerous ways. As of March 31, 2006, Naspers had total debt (including finance leases and debt in respect of program and film broadcasting rights) of approximately Rand 4.42 billion, or U.S. $598.9 million. On the same basis, Naspers’ ratio of total debt to equity would have equaled 0.61. Naspers’ debt could, among other things:
 
 
·
increase its vulnerability to adverse economic conditions or increases in prevailing interest rates, particularly where borrowings are or will be made at variable interest rates;
     
 
· 
limit its ability to obtain additional financing that may be necessary to operate, develop or expand its business; 
     
  ·  require Naspers to dedicate a portion of its cash flow from operations to service its debt, which in turn reduces the funds available for operations, future business opportunities and dividends; and 
     
 
 
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  ·  potentially place Naspers at a competitive disadvantage relative to competitors with less debt. 
 
Naspers’ ability to make payments on its debt will depend upon its future operating performance, which is subject to general economic and competitive conditions, many of which are outside Naspers’ control. If the cash flow from Naspers’ business and its operating subsidiaries is insufficient to make payments on its debt or is otherwise unavailable, Naspers may have to delay or reduce capital expenditures, attempt to restructure or refinance its debt, sell assets or raise additional equity capital. Naspers may not be able to take these actions on satisfactory terms, in a timely manner or at all. The sale of additional shares, or the possibility of such a sale, may adversely affect the price of our outstanding shares, including the Class N Shares.
 
Naspers depends on access to cash flows from its subsidiaries, associated companies and joint ventures, and limitations on accessing the cash flow may adversely affect Naspers’ business operations and financial condition
 
Naspers Limited has no significant business operations or assets other than its interests in its subsidiaries, associated companies, joint ventures and other investments. Accordingly, Naspers relies upon distributions from its subsidiaries, associated companies, joint ventures and other investments to generate the funds necessary to meet the obligations and other cash flow requirements of the combined group. Naspers’ subsidiaries, associated companies, and joint ventures are separate and distinct legal entities that have no obligation to make any funds available to Naspers, whether by intercompany loans or by the payment of dividends. The ability of Naspers to utilize the cash flows from some of its subsidiaries, associated companies and joint ventures is subject, in South Africa, China, Brazil and other countries, to foreign investment and exchange control laws and also to the availability of a sufficient quantity of foreign exchange. In particular, substantially all the cash flow generated by Naspers’ South African businesses cannot be currently utilized outside South Africa without exchange control approval. Naspers’ non-South African subsidiaries may be subject to similar restrictions imposed by their respective home countries. In addition, because the consent of some of Naspers’ joint venture partners is required for distributions from Naspers’ joint ventures, Naspers’ ability to receive distributions from the joint ventures is dependent on the co-operation of its joint venture partners. The interests of the minority shareholders of some of Naspers’ subsidiaries and associates must be considered when those subsidiaries and associates make distributions. Accordingly, Naspers may not be able to obtain cash from its subsidiaries, associated companies, joint ventures and other investments at the times and in the amounts required by Naspers. Any failure by Naspers to receive distributions from its businesses could restrict Naspers’ ability to provide adequate funding to the combined group and otherwise meet its obligations. Naspers’ business units may face funding and liquidity difficulties under the terms of the financing arrangements upon which they depend. Each Naspers business relies on its own separate credit facility and financing, to the extent necessary. Naspers has not to date provided any parent company guarantees in respect of bank borrowings. Several of the credit facilities and other financing arrangements contain financial covenants and other similar undertakings and requirements. If these covenants, undertakings or requirements are violated, the financing may not be available and the relevant business unit could face liquidity difficulties. In addition, many of the different group credit facilities must be renewed annually by the relevant lenders.
 
Naspers has only limited influence over its minority investments and the value of Naspers stake in such investments could decrease
 
Naspers holds minority stakes in a number of companies, including a 36.1% interest in Tencent Holdings Limited (“Tencent”) and a 30% interest in Abril S.A. Although Naspers exercises influence with respect to certain of the affairs of these and other companies in which it holds a minority stake, Naspers minority voting position has and may continue to have several important consequences for Naspers, including precluding us from controlling the businesses, limiting our ability to implement strategies we favor and allowing the business to adopt strategies and take actions which may in some cases be contrary to our preferred strategies and actions. As with many minority investments, differences in views among the principal shareholders may result in delayed decisions or in failures to agree on major matters, potentially adversely affecting the business and operations of the joint venture and in turn Naspers business and operations.
 
The acquisitions and investments that Naspers has made and may make in the future may not be successful and may create unanticipated problems
 
Naspers has experienced growth and development through successful acquisitions and investments in the past and intends to continue to pursue acquisitions in order to meet its strategic objectives. Integrating the operations and personnel of acquired businesses is a complex process. Naspers may not be able to integrate the operations of its acquired businesses with its operations rapidly or without encountering difficulties. The diversion of the attention of management to the integration effort and any difficulties encountered in combining operations could adversely affect Naspers’ business and operations. In addition, although Naspers has grown through successful acquisitions in the past, no assurance can be given that it will be able to identify, acquire and
 
 
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successfully integrate additional companies in the future. Future acquisitions Naspers does undertake could result in potentially dilutive issuances of additional equity and the incurrence of debt and contingent liabilities.
 
Naspers’ businesses operate in highly competitive and rapidly changing industries and increased competition could adversely affect Naspers’ results of operations and financial condition
 
Pay-television. Although Naspers is currently the leading provider of pay-television services in most of its markets, Naspers competes directly with both state owned and private national free-to-air broadcast networks and regional and local broadcast stations for audience share, programming and advertising revenue and indirectly with motion picture theatres, video rental stores, mobile telephones, lotteries, gaming and other entertainment and leisure activities for general leisure spending. Naspers cannot determine the nature or extent of future competition it may face in the pay-television market. In South Africa licenses will be granted in the future to other operators. In Sub-Saharan Africa and Cyprus various competitors have entered the pay-television market. The entry of additional competitors into any of the pay-television markets where Naspers operates remains a continuous possibility. In addition, the sale of DVDs, ADSL broadband, mobile and wireless technologies providing digital pay-television content may erode Naspers’ pay-television subscriber base.
 
Internet. The market for internet access, communication, portal and related services is highly competitive. Naspers anticipates that competition will continue to intensify as the use of the internet grows. The African and Asian internet markets are characterized by an increasing number of entrants. Naspers’ competitors will compete in these markets. Many of these competitors have longer operating histories and substantially greater financial, technical, marketing and personnel resources and better recognized brand names than Naspers. Some of Naspers’ internet businesses may therefore never reach profitability.
 
Newspapers, Magazines and Printing. Revenues in the print media industry are dependent primarily upon paid circulation, advertising and printing revenues. Competition for circulation and advertising revenue comes from local, regional and national newspapers, magazines, radio, television, direct mail and other communications and advertising media that operate in the same markets. In addition, the rapid development of online internet advertising could have a negative impact on print media advertising. The extent and nature of such competition is, in large part, determined by the location and demographics of the markets and the number of media alternatives available in these markets. Naspers may face increased competition as both local and international publishers introduce new niche titles. Internationally recognized titles also continue to be introduced in South Africa. Many of the print media markets are overpopulated, with too many titles relative to the size of the readership base. Competitors that are active in the same markets as Naspers attempt to increase their market share, circulation and advertising revenues by changing the style and layout of their publications to win new customers at the expense of Naspers’ magazines and newspapers and by launching new titles. In addition, Naspers’ competitors may reduce the cover prices of their publications to increase their circulation. Naspers may be forced to decrease the prices it charges for magazines and newspapers in response or make other changes in the way it operates. Naspers’ business and results of operations may be harmed as a result.
 
Other businesses. The markets for the products and services currently offered by Irdeto, Naspers’ conditional access technology business, Entriq, Mediazone and Naspers’ book publishing and education businesses are highly competitive. All these businesses operate in fragmented markets and some compete with large international players. Irdeto competes with numerous entities, including subsidiaries of other pay-television providers, many of which have greater financial resources than Naspers. Entriq and Mediazone compete with a variety of players. Via Afrika Limited (Via Afrika), the book publishing subsidiary of Media24 Limited (“Media24”), faces competition from several South African publishers as well as large international publishing houses, which have substantially greater resources and strong brand names. Educor Holdings Limited (Educor), the private education subsidiary of Media24, faces competition from many different South African public universities and private educators, as well as from international educators, many of whom have substantially greater resources and better recognized brand names than Educor.
 
MultiChoice South Africa has applied for a broadcast license and the level of competition emanating from the license application process has increased

The Independent Communications Authority of South Africa (ICASA) issued its invitation to apply for satellite and cable licenses on January 31, 2006 and indicated that it expected to license new operators by mid 2007. The closing date for applications was July 31, 2006 which date was later extended to August 31, 2006. MultiChoice Africa (Proprietary) Limited (“MultiChoice”) submitted its application for a subscription broadcasting license on 31 August 2006.  ICASA has received a number of applications including applications from traditional telecommunications operators and existing broadcasters, as well as potential new entrants.
 
 
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Steady or declining subscriber levels may prevent further growth of some of or all of Naspers’ businesses
 
Naspers’ largest businesses are generally in mature markets and may face difficulties in maintaining or growing the number of subscribers. Naspers’ pay-television business in Greece has in the past experienced high levels of annual subscriber churn. High levels of churn and decreasing or flat subscriber numbers may be caused by competition from new entrants to the pay-television market and from other sources competing for discretionary income, economic and other local difficulties, the loss of popular sports and movie programming content and seasonality associated with the markets in which Naspers operates. Increases in prices can also lead to churn and subscriber terminations. Declining subscriber levels also adversely affect Irdeto, because Naspers’ pay-television operators constitute some of Irdeto’s primary customers. Naspers’ print media business has experienced declining circulation of some of its more established publications due to the maturity of some of its magazine titles and newspapers in South Africa and the introduction into the market of a large number of competing magazines and newspapers. Steady or declining subscriber levels make it difficult for Naspers to grow its businesses.
 
A reduction in demand for advertising may adversely affect Naspers’ businesses and revenues
 
A large portion of Naspers’ revenue is generated by advertising revenues. Advertising revenues are cyclical and are dependent upon general economic conditions. Traditionally, spending by companies on advertising and other marketing activities, and hence Naspers’ advertising and commercial printing revenue, decreases significantly in times of economic slowdown or recession. In particular, Naspers’ advertising revenues are subject to risks arising from adverse changes in domestic and global economic conditions and fluctuations in consumer confidence and spending. Consumer confidence and spending may decline as a result of numerous factors outside of Naspers’ control, such as terrorist attacks or acts of war. Global economic downturns and declining levels of business activity of Naspers’ advertisers have in the past and could in the future adversely affect Naspers’ results of operations. Newspaper and magazine advertising may decline relative to television, radio and outdoor advertising. Such trends would adversely affect Naspers’ results and financial condition.
 
Increases in newsprint and magazine paper costs could adversely affect Naspers’ results
 
Newsprint and magazine paper costs represent the single largest raw material expense for Naspers’ print media businesses and are among Naspers’ most significant operating costs. Newsprint and magazine paper costs fluctuate from time to time due to numerous factors beyond Naspers’ control, especially due to demand and supply forces, and exchange rate fluctuations between the Rand and other currencies such as the U.S. dollar and the Euro. An increase in newsprint and magazine paper costs will adversely affect Naspers’ earnings and cash flow.
 
Naspers’ business environment is subject to rapid technological change which could render Naspers’ products and services obsolete
 
Naspers operates pay-television and technology businesses through its holding in MIH Holdings Limited (“MIH Holdings”) and internet businesses through Media24 and its holding in MIH Holdings. The rate of technological change currently affecting the pay-television and internet industries is rapid compared to other industries. Trends, such as the migration of television from analog to digital transmission and the convergence of television, the internet, mobile telephones and other media, are creating an unpredictable environment. New technologies or industry standards have the potential to replace or provide lower-cost alternatives to products and services sold by Naspers. Naspers’ print media, publishing and education businesses also operate in markets that continue to change in response to technological innovations and other factors. In particular, the means of delivering Naspers’ products, and the products themselves, may be subject to rapid technological change.
 
Naspers cannot predict whether technological innovations will, in the future, make some of its products and services wholly or partially obsolete or adversely affect the competitiveness of its businesses. Naspers may be required to continue to invest significant resources to further adapt to changing technologies, markets and competitive environments.
 
Naspers’ substantial investment in internet related business may not produce positive returns
 
A part of Naspers’ strategy is to further develop its internet businesses. Naspers has invested, and will continue to invest, significant amounts to develop and promote its internet initiatives and electronic platforms. Naspers has made these investments through Media24 and through its shareholding in MIH Holdings. The provision of products and services over the internet and otherwise in electronic form is highly competitive and is in relatively early stages of development.
 
 
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Naspers may experience difficulties developing this aspect of its business due to a variety of factors, many of which are beyond Naspers’ control. These factors may include:
 
 
  ·  the extent of acceptance of Naspers’ internet initiatives and related electronic platforms by customers; 
     
  ·  competition from comparable and new technologies; 
     
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government regulation and control of the content and medium; 
     
  ·  customers not accepting or not continuing to use the internet and electronic media; and 
     
  ·  failures or difficulties with the data networks and infrastructures upon which Naspers depends. 
 
Moreover, Naspers relies on third parties for the provision of local and international bandwidth.
 
Naspers’ long-term success depends on the continued development of the internet as a commercial medium. As a result of rapidly changing technology, developing industry standards and frequent new product and service introductions, demand and market acceptance for recently introduced products and services on the internet are subject to uncertainty. Critical issues concerning the commercial use of the internet, including the perceived lack of security of commercial data, such as credit card numbers, and capacity constraints resulting in delays, transmission errors and other difficulties may impact the growth of internet use. These and other issues affecting the internet industry may be aggravated in countries with less developed internet cultures and infrastructures in which Naspers currently conducts or may in the future conduct its internet business, including South Africa, Thailand, China and Brazil. If the market for internet access services develops more slowly than expected or becomes saturated with competitors, or if the internet access and services offered by Naspers are not broadly accepted, Naspers’ growth strategy could be adversely affected.
 
Naspers’ business interests in China are dependent upon indirect relationships with third parties and mobile operators which are subject to various operational and competitive risks
 
Companies in which MIH Holdings has invested, including Tencent, provide internet, mobile and telecommunications value-added services to subscribers in China through a series of contracts with companies, which are licensed to operate these services.  MIH Holdings, however, does not hold any direct or indirect equity interests in the licensed operating companies and instead relies on a series of contracts in order to recognize and receive the economic benefit of the business and operations of these companies. As a result, MIH Holdings may not be able to fully recognize and receive the economic benefits of the China business and operations and may not be able to effectively control the China operations.
 
The revenue generated by services provided over mobile telephone networks or fixed line networks are principally recognized and received under contracts with Chinese mobile telephony and network operators. If these operators commit errors in recording revenue or fail to pay fees due to service providers, or if existing contracts are not renewed or less favorable terms are imposed, the financial condition, results of operations and profitability of the companies in which MIH Holdings has invested would be adversely affected. Also, if the business conditions of the mobile telephony operators deteriorate or if these mobile operators impose penalties or restraints on service providers, the business operations and financial condition of the companies in which MIH Holdings has invested may be materially and adversely affected.
 
The Chinese mobile telecommunications markets are highly competitive, rapidly developing and subject to economic, regulatory and other uncertainties. The size of the future customer base and user activity will be affected by a number of factors, many of which are outside of Naspers’ control, such as the regulatory regime governing the provision of telecommunication services in China and the general economic conditions in the region.
 
Naspers’ businesses rely on software and hardware systems that are susceptible to failure
 
Interruptions to the availability of Naspers’ internet services or increases in the response times of Naspers’ services caused by the failure of Naspers’ software or hardware systems could reduce user satisfaction, the amount of internet traffic and Naspers’ attractiveness to advertisers and consumers. Naspers’ publishing business also depends upon the timely functioning of software and hardware used to print newspapers and magazines and to publish books. Naspers is also dependent upon web browsers, telecommunication systems and other aspects of the internet infrastructure that have experienced system failures and electrical outages in the past. Naspers’ operations are susceptible to outages due to fire, floods, power loss,
 
 
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telecommunications failures, break-ins, industrial actions and similar events. Despite Naspers implementing network security measures, Naspers’ servers are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with its computer systems.
 
Naspers’ business may suffer if it cannot obtain attractive programming or if the cost of television receivers increases
 
The continued success of Naspers’ pay-television business depends upon its ability to continue to obtain attractive film, sports and other programming on commercially reasonable terms. For most of the programming, Naspers contracts with suppliers who in turn purchase programming from content providers. Much of Naspers’ premium programming is sourced through Electronic Media Network Limited (“M-Net”) and SuperSport International Holdings Limited (“SuperSport”). Naspers’ film studio and sport programming contracts are up for renewal from time to time. In the event the supply contracts or underlying programming arrangements are not renewed or are cancelled, Naspers will be required to seek alternative programming from other sources. Naspers cannot be sure whether alternative programming would be available on commercially reasonable terms or whether the alternative programming would appeal to Naspers’ subscribers. Naspers’ business strategy also depends on its ability to offer attractive programming on an exclusive basis. Political, regulatory and competitive pressures may make it more difficult to maintain exclusive rights to programming.
 
Naspers’ growth depends in part upon its ability to attract new pay-television customers. Many new customers are required to purchase the equipment necessary to receive Naspers’ broadcasts. The cost of this equipment may discourage potential subscribers, and Naspers’ market penetration and growth may be impeded if the cost of this equipment increases.
 
Satellite failures could adversely affect Naspers’ business and ability to grow
 
Naspers’ digital programming is transmitted to its customers through different satellites around the world, and in some regions Naspers’ terrestrial analog signal is also transmitted to regional broadcast points through satellites. In addition, Naspers receives a significant amount of its programming through satellites. Satellites are subject to significant risks such as defects, launch failure, incorrect orbital placement and destruction and damage that may prevent or impair proper commercial operations. All satellites have limited useful lives, which vary as a result of their construction, the durability of their components, the capability of their solar arrays and batteries, the amount of fuel remaining once in orbit, the launch vehicle used and the accuracy of the launch. The operation of satellites is beyond Naspers’ control. Future launch failures or disruption of the transmissions of satellites that are already operational could adversely affect Naspers’ operations. Some satellites used by Naspers’ pay-television operations have experienced technical failures in the past. In addition, Naspers’ ability to transmit its programming following the end of the expected useful lives of the satellites Naspers currently uses and to broadcast additional channels in the future will depend upon Naspers’ ability to obtain rights to utilize transponders on other satellites. In the event of a satellite failure, Naspers would need to make alternative arrangements for transponder capacity. Naspers may not be able to obtain alternative capacity rights on commercially reasonable terms or at all. In the event that Naspers has to obtain alternative transponder capacity, it may need customers to realign their satellite dishes to receive the broadcasting signals, which could prove impractical and very expensive to implement.
 
Naspers’ business may suffer if its printing equipment or facilities are damaged or fail to perform
 
Some of Naspers’ newspapers, magazines and educational textbooks, and a number of third party publications, are printed on printing equipment and facilities owned by the group. If printing facilities were damaged or if operations were interrupted due to a natural disaster or otherwise, the publication of some titles or textbooks could be interrupted and Naspers’ operating results could be adversely affected. In the event of such damage or destruction, Naspers would need to make alternative arrangements for printing to be outsourced. Naspers may not be able to obtain alternative printing services on commercially reasonable terms or at all.
 
Unauthorized access to Naspers’ programming signals may adversely affect Naspers’ revenues and programming arrangements
 
Naspers faces the risk that its programming signals will be accessed by unauthorized users. The delivery of subscription programming requires the use of encryption technology to prevent unauthorized access to programming, or “piracy”. Naspers currently utilizes encryption technology supplied by Irdeto. This encryption technology, to remain effective in preventing unauthorized access, needs to continually be updated or replaced with newer technology. Naspers will continue to incur substantial expenditures to replace or upgrade its encryption technology in the future. Encryption technology cannot completely prevent all piracy, and virtually all pay-television markets are characterized by varying degrees of piracy that manifest themselves in different
 
 
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ways. In addition, encryption technology cannot completely prevent the illegal retransmission or sharing of a television signal once it has been decrypted. If Naspers fails to adequately prevent unauthorized access to its transmissions, its ability to contract for programming services could be adversely affected and in any event it will lose subscribers who can then receive pirated signals.
 
Government regulations may adversely affect Naspers’ ability to conduct its businesses and generate operating profits
 
All media operations are subject to governmental regulation in the countries in which Naspers operates. Governmental regulation can take the form of price controls, service requirements, programming content restrictions, ownership restrictions, licensing requirements and restrictions on the amount of fees paid for advertising. Failure or delays in obtaining or renewing any necessary regulatory approvals could adversely affect Naspers’ ability to offer some of or all its services. In most of the countries in which Naspers conducts its pay-television businesses, it operates under licenses obtained from governmental or quasi governmental agencies. These licenses are subject to periodic renewal, and Naspers may not be able to renew the licenses on terms as favorable as the existing licenses or at all. Adverse changes in the regulatory framework of any country in which Naspers operates may occur in the short or long term. The media and competition regulatory frameworks everywhere are subject to change, and the relevant regulatory authorities may increase their regulation of Naspers’ businesses in these countries. Naspers cannot predict the likely impact that any such action by applicable competition and regulatory authorities could have on the operation of its businesses. In addition, there are several legislative proposals and other initiatives underway in some markets that could materially impact how Naspers conducts its business.
 
Failure to maintain Naspers’ relationships with its partners, suppliers and local governments could disrupt Naspers’ businesses
 
Many of Naspers’ operations have been developed in cooperation or partnership with key parties. With regard to these operations, Naspers is dependent on its partners to provide knowledge of local market conditions and to facilitate the acquisition of any necessary licenses and permits. Any failure by Naspers to form alliances with such partners, or the disruption of existing alliances, could adversely affect Naspers’ ability to penetrate and compete successfully in many important markets. Naspers’ businesses are dependent on their relationships with international suppliers, including major film studios and book publishers.
 
Some of Naspers’ businesses may also be vulnerable to local governmental or quasi governmental entities or other third parties who wish to renegotiate the terms and conditions of their agreements or other understandings with Naspers or who wish to terminate these agreements or understandings. Adverse developments with respect to Naspers’ relationships with its partners or with local governmental or quasi governmental entities could adversely affect Naspers’ business strategy and results of operations in important markets. Such developments could also lead to the introduction of additional taxes.
 
Consolidation in the markets in which Naspers operates could place it at a competitive disadvantage
 
Some of the markets in which Naspers operates have experienced consolidation. In particular, the combinations of traditional media content companies and new media distribution companies have resulted in new valuation methods, business models and strategies. Naspers cannot predict the extent to which these types of business combinations may continue to occur in the future or the success that these combined businesses may achieve. The on-going consolidation could potentially place Naspers at a competitive disadvantage with respect to scale, resources and its ability to develop and exploit new media technologies.
 
Naspers’ intellectual property rights may not be adequately protected under current laws in some jurisdictions, which may adversely affect its results and ability to grow
 
Naspers’ products are largely comprised of intellectual property content that is delivered through a variety of media, including magazines, newspapers, books, television and the internet. Naspers relies on trademark, copyright, trade secret and other intellectual property laws and employee and third party non-disclosure agreements to establish and protect its proprietary rights in these products. Naspers conducts business in some countries where the extent of the legal protection for its intellectual property rights is not well-established or is uncertain.
 
Even where the legal protection for Naspers’ intellectual property rights is well-established, Naspers intellectual property rights may be challenged, limited, invalidated or circumvented. Despite patent, trademark and copyright protection, third parties may be able to copy, infringe or otherwise profit from Naspers’ intellectual property rights without its authorization. The lack of internet specific legislation relating to trademark and copyright protection creates a further challenge for Naspers to protect content delivered through the internet and electronic platforms. If unauthorized copying or misuse of Naspers’ products were to
 
 
14

 
occur to any substantial degree, Naspers’ business and results of operations could be adversely affected. Litigation may be necessary to protect Naspers’ intellectual property rights, which could result in substantial costs and the diversion of Naspers’ efforts away from operating its business.
 
Legal claims in connection with content that Naspers distributes may require Naspers to incur significant costs or to enter into royalty or licensing agreements, which could adversely affect Naspers’ competitive position
 
The content Naspers makes available to customers through its publishing, pay-television and internet businesses could result in claims against it based on a variety of grounds, including defamation, negligence, copyright or trademark infringement, obscenity or facilitating illegal activities. In particular, Naspers expects that software developers will increasingly be subject to claims asserting the infringement of other parties’ proprietary rights as the number of products and competitors providing software and services increases.
 
Any such claim, with or without merit, could result in costly litigation or might require Naspers to enter into royalty or licensing agreements. These royalty or licensing agreements, if required, may not be available on terms acceptable to Naspers or at all. As a result of infringement claims, a court could also issue an injunction preventing the distribution of certain products. Naspers may incur significant costs defending these claims.
 
Naspers may need to improve its internal controls over financial reporting and Naspers’ independent auditors may not be able to attest to their effectiveness, which could adversely affect Naspers’ business operations, reputation and profitability
 
Section 404 of the Sarbanes-Oxley Act of 2002 requires that Naspers document its internal control systems and processes over financial reporting, evaluate the adequacy of the design of these respective controls and test that these controls are operating effectively. Naspers is currently evaluating its internal controls over financial reporting in order to allow management to report on, and its independent auditors to attest to, the effectiveness of internal control over financial reporting, as required by Section 404. Naspers is still in the process of evaluating the adequacy of design and testing the effectiveness of these various internal control activities over financial reporting. Certain potential significant deficiencies and material weaknesses have been identified to date which, if not remedied, could adversely impact our reporting obligations under Section 404.
 
If Naspers is not able to implement the requirements of Section 404 by March 31, 2007, its independent auditors may not be able to attest to the adequacy and effectiveness of the internal controls over its financial reporting. In such an instance, Naspers may be subject to sanction or investigation by regulatory authorities, such as the SEC. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of Naspers’ financial statements. In addition, Naspers may be required to incur costs in improving its internal control systems. Any such action could negatively affect Naspers’ results and have an adverse effect on its business operations, reputation and profitability.
 
Changes in accounting standards or interpretations issued by standard-setting bodies for IFRS and U.S. GAAP may adversely affect Naspers’ reported revenues, profitability and financial results

Our financial statements are subject to the application of IFRS and U.S. GAAP, which are periodically revised. The application of accounting principles is also subject to varying interpretations over time. In particular, IFRS, as a relatively new set of accounting principles, is subject to further change. Accordingly, Naspers is required to adopt new or revised accounting standards or comply with revised interpretations that are issued from time to time by the relevant authoritative bodies. Those changes could adversely affect Naspers’ reported revenues, profitability and financial results. For example, with the increased focus on fair value accounting, changes in the market valuation of certain financial instruments will be reflected in the reported results before those gains or losses are actually realized and this could have a significant impact on the income statement. IFRS standards now also require certain items that previously had no income statement impact to be expensed through the income statement . This can in some instances cause the reported financial results to not reflect what Naspers’ believes is the economic reality of its business.
 
Naspers believes that it complies with the appropriate regulatory requirements concerning its financial statements and disclosures. However, other companies have experienced investigations into potential non-compliance with accounting and disclosure requirements that have resulted in significant penalties.
 
 
15

 
 
Risks relating to the Class N ordinary shares and Naspers ADSs
 
Existing Class A ordinary shares of Naspers have more voting rights than, and a liquidation preference over, the Class N ordinary shares and ADSs of Naspers
 
Naspers’ issued capital at March 31, 2006 consists of 712,131 Class A ordinary shares and 315,113,700 Class N ordinary shares. The Class N ordinary shares are listed on the JSE and on a poll carry one vote per share. The Class A ordinary shares are not listed on a stock exchange and on a poll carry 1,000 votes per share. Naspers, through Heemstede Beleggings (Proprietary) Limited, a wholly owned subsidiary of Naspers, holds 49% of Naspers Beleggings Limited which, in turn, holds 49.15% of the Class A ordinary shares, which carry approximately 34.09% of the total voting rights in respect of Naspers’ ordinary shares. Keeromstraat 30 Beleggings Limited holds 30.80% of the Class A ordinary shares, which represents 21.36% of the total voting rights in respect of Naspers’ ordinary shares. Some members of the board of directors of Keeromstraat 30 Beleggings Limited, Naspers Beleggings Limited and Heemstede Beleggings (Proprietary) Limited are also members of the board of directors of Naspers Limited. As a result, the controlling shareholders and these directors significantly influence the outcome of any action requiring approval of shareholders, including amendments to Naspers’ memorandum and articles of association for any purpose, the issuance of additional Class A or Class N ordinary shares, and mergers and other business combinations. If the interests of Naspers’ controlling shareholders and directors diverge from the interests of other shareholders, they may be in a position to cause or require Naspers to act in a way that is inconsistent with the general interests of holders of Class N ordinary shares and ADSs.
 
If Naspers is liquidated, holders of Class A ordinary shares will be paid the nominal value of such shares before any payment is made to holders of Class N ordinary shares or ADSs. Based on the outstanding Class A ordinary shares, this amounted to approximately Rand 14.2 million as of March 31, 2006.
 
In terms of South African company law, resolutions passed by Naspers’ shareholders and the lower voting rights of the Class N ordinary shares relative to Class A ordinary shares could deter a change in control and may adversely affect Naspers’ share price
 
Some of the provisions of the South African Companies Act, 1973 (the Companies Act) and some of the resolutions passed annually by Naspers’ shareholders in general meeting may discourage attempts by other companies to acquire or merge with Naspers, which could reduce the market value of Class N ordinary shares and ADSs. The Companies Act requires that 75% of the total votes exercisable by all shareholders at a meeting (subject to a quorum of shareholders holding at least 25% of the total number of votes present, in person or by proxy, at the meeting) approve changes to certain provisions of Naspers’ memorandum and articles of association. In addition, Naspers’ shareholders in general meeting may annually pass resolutions that authorize Naspers’ board of directors to issue certain Class N ordinary shares and certain Class A ordinary shares without the specific approval of the holders of Class N ordinary shares.
 
The lower voting rights of the Class N ordinary shares relative to Class A ordinary shares could prevent or hinder a merger, takeover or other business combination involving Naspers or discourage a potential acquirer from otherwise attempting to obtain control of Naspers.
 
Your ability to sell a substantial number of ADSs may be restricted by the liquidity of shares traded on the Nasdaq
 
The only trading market for Class N ordinary shares is the JSE. The only trading market for Naspers ADSs is the Nasdaq Stock Market (“Nasdaq”). Trading volumes of Naspers ADSs on Nasdaq have been low. As a result, the ability of a holder to sell a substantial number of ADSs on Nasdaq in a timely manner may be restricted. From July 1, 2005 through June 30, 2006, 220.1 million Class N ordinary shares (70% of the total issued) were traded on the JSE and 3.7 million ADSs were traded on Nasdaq.
 
 
16

 
 
ITEM 4.          INFORMATION ON THE COMPANY
 
4.A.                  History and Development
 
Naspers was incorporated in Cape Town on May 12, 1915 under the laws of the then Union of South Africa as a public limited liability company. Naspers conducts its operations primarily through its subsidiaries and other affiliates. Its principal executive offices are located at 40 Heerengracht, Cape Town, 8001, South Africa (telephone: +27 21 406 2121).
 
Naspers started as a printer and publisher of newspapers and magazines in 1915. Later, book publishing operations were founded. Naspers’ print media operations developed of such an extent over the years that Naspers is now one of the leading media groups in Africa.
 
With the advent of electronic media, Naspers expanded its activities in the 1980s to incorporate pay-television and later internet platforms. In 1985, Naspers and several other South African media companies formed an electronic pay-media business, M-Net. M-Net was listed on the JSE in 1990. In October 1993, M-Net was divided into two companies. The subscriber management, signal distribution and cellular telephone businesses, together with a holding in FilmNet (a pay-television operator in Europe) were placed into a new company called MultiChoice Limited (later named MIH Holdings Limited).
 
In December 2002, Naspers conducted a reorganization pursuant to which the minority interests in MIH Holdings and MIH Limited were swapped for shares in Naspers itself. Holders of MIH Limited shares, resident in any country other than South Africa, received their interest in Naspers shares in the form of Naspers ADSs. MIH Holdings shares were delisted from the JSE and MIH Limited’s shares were delisted from Nasdaq. At the same time, Naspers’ ADSs were listed on Nasdaq.
 
In May 2001, the group acquired a 46.5% interest in Tencent, the operator of an instant messaging platform in China called QQ. The business developed into the leading instant messaging business in China. Tencent listed on the Hong Kong Stock Exchange in June 2004, whereafter Naspers’ interest decreased to 36.1%.
 
Naspers acquired an additional interest in M-Net and SuperSport and subsequently they were both delisted from the JSE and Nigerian Stock Exchange with effect from April 15, 2004.
 
In December 2004, Naspers acquired a 9.9% interest in the Beijing Media Corporation (“BMC”) for a cash consideration of Rand 273.2 million. BMC is a media company principally engaged in the sale of advertising space for the Beijing Youth Daily, production of newspapers and trading of print-related materials. On December 22, 2004 BMC listed its shares on the Hong Kong Stock Exchange.
 
On March 31, 2005, Naspers consolidated all its print media, book publishing (Via Afrika) and private education (Educor) assets under the Media24 umbrella in order to simplify the group structure.
 
In January 2006, Naspers sold its entire interest in United Broadcasting Corporation plc (“UBC”), Thailand’s leading pay-television operator, and MKSC World Dot Com Co.(“MKSC”), a leading Thai ISP, and recognized a profit on discontinuance of operations of Rand 1,032.2 million on the transaction. Details relating to this transaction are highlighted in note 28 to Naspers’ audited consolidated financial statements.
 
In April 2006, Naspers acquired, through Irdeto, the CryptoTec Conditional Access business from Koninklijke Philips Electronics NV for a cash consideration of Rand 230.7 million. The business is involved in the development and selling of content security systems.
 
In May 2006, Naspers acquired a 30% interest in Abril S.A. (“Abril”) for a cash consideration of Rand 2,557.3 million. Abril is the largest magazine publisher in Brazil and one of the largest media companies in Latin America. In addition, Abril owns the country’s leading educational book publisher and a pay-television network.
 
In August 2006, MIH Print Media Holdings Limited (“MIH Print Media”) acquired a 20.2% interest in Titan, a leading company in the field of Chinese sports publishing, for a cash consideration of approximately Rand 114.5 million. It is anticipated that through a further acquisition MIH Print Media’s shareholding will increase to 37%.
 
 
17

 

 
In September 2006, Naspers announced that, in furtherance of its empowerment objectives, the group intends to implement a Broad-Based Black Economic Empowerment ownership initiative in relation to Media24 Limited (“Media24”) and MultiChoice South Africa (“MCSA”).
 
The BEE transactions are expected to result in the acquisition by qualifying Black Persons and Black Groups of ordinary shares in the issued share capital of Welkom Yizani Investments Limited (“Welkom Yizani”), which will hold ordinary shares in the issued share capital of Media24 Holdings (Proprietary) Limited (“Media24 Holdings”), the holding company of Media24 as well as Phuthuma Nathi Investments Limited (“Phuthuma Nathi”), which will hold ordinary shares in the issued share capital of MultiChoice South Africa Holdings (Proprietary) Limited (“MCSA Holdings”), the holding company of MCSA.
 
Naspers will sell up to 14.6 million shares in Media24 Holdings to Welkom Yizani for a consideration of approximately Rand 730 million. Welkom Yizani will fund the acquisition through cash and the issuance of preference shares to Naspers. MIHH will sell up to 45 million shares in MCSA Holdings to Phuthuma Nathi, for a consideration of approximately Rand 2,250 million. Phuthuma Nathi will fund the acquisition through cash and the issuance of preference shares to MIHH.
 
The empowerment transactions are subject to Welkom Yizani and Phuthuma Nathi undertaking the public offers to the General Black Public to subscribe for ordinary shares in Welkom Yizani and Phuthuma Nathi. The number of Media24 Holdings and MCSA Holdings ordinary shares to be acquired by Welkom Yizani and Phuthuma Nathi will depend on the amount raised by Welkom Yizani and Phuthuma Nathi in terms of the public offers. The closing date for the public offers is expected to be at the end of October 2006. The public offers may not ultimately be undertaken and the final terms of the empowerment transactions are subject to change.
 
For information on Naspers’ principal investments and capital expenditures and divestitures, see the description of Naspers’ business in “Item 4.B. Business Overview” and “Item 5. Operating and Financial Review and Prospects”.
 
4.B.                 Business Overview
 
Overview
 
Naspers is a multinational media company with principal operations in electronic media (including pay-television, internet and instant-messaging subscriber platforms and the provision of related technologies) and print media (including the publishing, distribution and printing of magazines, newspapers and books, and the provision of private education services). Naspers’ most significant operations are located in South Africa, where it generates approximately 76.4% of its revenues, with other operations located elsewhere in Sub-Saharan Africa, Greece, Cyprus, the Netherlands, the United States, Thailand and China. Naspers creates media content, builds brand names around it, and manages the platforms distributing the content. Naspers delivers its content in a variety of forms and through a variety of channels, including television platforms, internet services, newspapers, magazines and books. Many of Naspers’ businesses hold leading market positions, and Naspers capitalizes on these strong positions when expanding into new markets.
 
Naspers’ business comprises two core segments:
 
Electronic Media
 
The electronic media segment comprises pay-television, internet and related technology activities and is operated principally through MIH Holdings. MIH Holdings owns or operates pay-television and internet subscriber platforms in Africa, Greece, Cyprus, Thailand and China. This segment contributed approximately 65.1% (2005: 64.6%) to Naspers’ total revenue and 82.1% (2005: 77.6%) of operating profit in fiscal 2006 before the elimination of inter-company transactions.
 
Print Media
 
Media24 encompasses the newspaper and magazine publishing and printing interests of Naspers. It also includes the internet activities of Media24 Digital. Media24 is a large publisher of magazines and newspapers as well as one of the largest printers and distributors of magazines and related products in Africa.
 
Via Afrika is a leading African book publisher, seller and distributor of innovative and quality reading, learning, listening, and viewing products in various formats. Educor is a leading provider of private education in South Africa. It offers face-to-face full-time, part-time and block release programs, as well as distance learning education and training programs. The print
 
18



media segment contributed approximately 35.0% (2005: 35.4%) to Naspers’ total revenue and 19.8% (2005: 24.5%) to operating profit in fiscal 2006 before the elimination of inter-company transactions.
 
Strategy
 
Naspers focuses on media businesses in growing markets in which it has attained or hopes to attain sustainable market positions. Geographically the group is focused on the BRICSA countries (Brazil, Russia, India, China, South and sub-Saharan Africa), which we believe present above-average growth opportunities. During the current fiscal year, Naspers acquired a 30% equity stake in a leading Brazilian media company, Abril, and also established development offices in Russia and India. Naspers uses content, brands and distribution channels from existing businesses to grow in other markets and to develop new businesses. Naspers has integrated the internet into each of its businesses to better reach customers and increase the value of its content. Naspers’ key objectives are as follows:
 
·      
Focus on Investments and Technology. Naspers has made substantial investments in recent years to upgrade and enhance its subscriber platforms. Naspers intends to consolidate the leading positions it holds in many markets and to expand into new ones. Most of Naspers’ pay-television platforms offer digital subscriptions and feature interactive or enhanced services. Naspers is presently researching the opportunity of broadcasting television channels to mobile devices. Naspers has expanded its printing facilities by investing in advanced printing and related facilities. Additional newspaper and magazine titles have been launched when market opportunities present themselves. Naspers has further launched several internet related businesses.
 
·      
Build Digital Subscriber Base. Naspers seeks to continue to expand MIH Holdings’ digital pay-television subscriber base, both by converting its current analog customers to the digital service and by gaining new digital customers. MIH Holdings offers subscribers movie and sports programming, and is adding interactive services to its bouquets (the term used to describe the channels offered by a pay-television provider on a given platform).
 
·      
Grow Internet Businesses. Naspers intends, by offering content and superior service, to grow M-Web Holdings as an internet service provider and content portal in Africa. Naspers is also focused on e-commerce opportunities and on internet service provider (ISP) operations. Naspers has an interest in the operations of China’s leading instant messaging platform, Tencent. It will continue to develop such interests in China and elsewhere. Naspers’ print media and book publishing businesses are using their core competencies to create new business opportunities over the internet.
 
·      
Maintain Local Approach. Naspers has a track record of establishing or acquiring businesses in developing markets such as Africa, the Mediterranean, Asia and, more recently, Brazil. Naspers believes that a component of its success in these markets is its emphasis on taking a local approach. This may involve local partners and management teams and incorporating linguistically and culturally tailored local content in its service offerings. Naspers’ strategy is to continue to take a local approach to content as it expands its pay-television and internet businesses.
 
·      
Provide Quality Service. Naspers views its subscriber platform business primarily as a service business and, accordingly, places emphasis on providing customer service. Naspers believes that this helps build customer loyalty and reduce “churn” (a term used to describe subscriber loss). Naspers seeks to achieve quality customer service by operating service centers and utilizing advanced computer systems, which allow customer service representatives to address customer concerns more quickly.
 
 
19

 
Segments
 
Naspers’ business is comprised of two core segments - Electronic Media and Print Media. The following table shows revenues, revenues expressed as a percentage of total revenues and the percentage change in revenues from the prior period for Naspers’ core business segments for the last two fiscal years:
 
           
 Revenue (Rand millions except percentages)
 
   
R
Millions
 
2006
% of
revenues
 
% change
from 2005
 
2005
R
millions
 
% of revenues
 
                       
Electronic Media
                     
    — Pay-television
 
8,903
 
56.7
 
14.9
 
7,747
 
57.3
 
    — Internet
 
898
 
5.7
 
29.0
 
696
 
5.1
 
    — Conditional access
   
352
   
2.2
   
38.0
   
255
   
1.9
 
    — Entriq
   
66
   
0.4
   
94.1
   
34
   
0.3
 
Print Media
                               
    — Newspapers, magazines and printing
   
3,983
   
25.4
   
18.0
   
3,374
   
25.0
 
    — Books
   
981
   
6.2
   
13.9
   
861
   
6.4
 
    — Education 
   
536
   
3.4
   
(2.0
)
 
547
   
4.0
 
Corporate services
   
(13
)
 
   
   
4
   
 

The following table shows operating profit/(loss) and the percentage change in operating profit/(loss) from the prior period for Naspers’ business segments for the last two fiscal years:
 
   Operating profit/(loss) (Rand millions except percentages)
   
2006
R millions
 
% change from
2005
 
2005
R millions
 
Electronic Media
             
    —Pay-television 
 
2,785
 
31.4
 
2,120
 
    —Internet 
 
(153)
 
125.0
 
(68)
 
    —Conditional access 
 
 
 
(47)
 
    —Entriq 
 
(165)
 
85.4
 
(89)
 
Print Media
             
    —Newspapers, magazines and printing 
 
612
 
15.9
 
528
 
    —Books  
   
67
   
26.4
   
53
 
    —Education 
   
(84
)
 
   
23
 
Corporate services 
   
(58
)
 
13.7
   
(51
)


The following table shows revenues, revenues expressed as a percentage of total revenues and the percentage change in revenues from the prior period by geographic market for the last two fiscal years: 
 
           
     
Revenue (Rand millions except percentages)
 
   
2006
 
2005
 
   
R
Millions
 
% of revenues
 
% change
from 2005
 
R
millions
 
% of
revenues
 
                       
South Africa 
 
11,994
 
76.4
 
18.3
 
10,140
 
75.0
 
Rest of Sub-Saharan Africa
 
1,838
 
11.7
 
19.0
 
1,545
 
11.4
 
Greece and Cyprus 
   
1,469
   
9.4
   
2.5
   
1,433
   
10.6
 
Asia 
   
78
   
0.5
   
(66.1
)
 
230
   
1.7
 
United States 
   
49
   
0.3
   
4.3
   
47
   
0.3
 
Other
   
278
   
1.8
   
126.0
   
123
   
0.9
 
 
 
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Electronic Media
 
Overview
 
The electronic media segment comprises pay-television platforms, internet operations and instant messaging services and related technologies, and is principally operated through MIH Holdings. These businesses do not all develop at the same rate and are at varying stages of growth. The internet is already providing much of the content and services that are available through interactive enabled television sets and mobile devices and will effectively become a backbone to the delivery of these services. The electronic media activities are conducted through various subsidiaries, joint ventures and associated companies primarily in Africa, Greece, Cyprus, the United States and China.
 
Pay-television
 
The following table sets out the services offered and subscriber numbers for the group’s pay-television subsidiaries and joint ventures by region and service as at the end of fiscal 2006:
 
 
LAUNCH
DATE
SERVICE
SUBSCRIBERS AS   
AT MARCH 31, 2006
AFRICA
       
South Africa 
1986
M-Net (analog)
217,440
 
 
1995
DStv (digital)
1,033,093
 
Rest of Sub-Saharan Africa
1991
M-Net (analog)
819
 
 
1996
DStv (digital)
384,216
 
MEDITERRANEAN
       
Greece
1994
FilmNet/SuperSport (analog)
71,994
 
 
1999
NOVA (digital)
239,536
 
Cyprus
1993
Ltv & Alpha (analog)
42,552
 
 
2004
NOVA Cyprus (digital)
20,369
 

 
From fiscal 2002 to fiscal 2006, on a comparable basis, the group increased the total number of subscribers under management from 1,598,563 to 2,010,019, or 25.7%. Over the same period, the group’s digital subscribers as a percentage of its total subscribers increased from 56% to 83%. During fiscal 2006, the digital subscriber base increased by 229,956 to 1,677,214 subscribers, representing 16% growth. The group continues to migrate subscribers from the analog service to the higher revenue and higher margin digital service. The South African pay-television market is relatively mature, and the group does not expect the total number of subscribers in that market to increase substantially.
 
The following table shows the growth of subscribers in each of the group’s markets:
 
   
March 31,
 
   
2006
 
2005
 
2004
 
2003
 
2002
 
CAGR(1)
SUBSCRIBERS (THOUSANDS)
                         
AFRICA
                         
South Africa 
 
1,251
 
1,148
 
1,076
 
1,045
 
1,057
 
4.30
%
Rest of Sub-Saharan Africa 
 
385
 
336
 
292
 
260
 
224
 
14.50
%
Total Africa 
   
1,636
   
1,484
   
1,368
   
1,305
   
1,281
   
6.31
%
MEDITERRANEAN
                                     
Greece 
   
311
   
304
   
291
   
256
   
265
   
4.08
%
Cyprus 
   
63
   
60
   
60
   
54
   
53
   
4.42
%
Total Mediterranean 
   
374
   
364
   
351
   
310
   
318
   
4.14
%
Total Subscribers 
   
2,010
   
1,848
   
1,719
   
1,615
   
1,599
   
5.89
%
___________
 
(1)
Compounded annual growth rate calculated from March 31, 2002 until March 31, 2006.
 

21


Africa
 
The African business is operated through MultiChoice and MultiChoice Subscriber Management Service (Proprietary) Limited (“MSMS”) (collectively “MultiChoice South Africa”), and MultiChoice Africa Limited (“MultiChoice Africa”), each an indirect wholly owned subsidiary of Naspers Limited. The African business provides pay-television and subscriber management services in 48 countries throughout Africa and the adjacent Indian Ocean islands. The group has ownership interests through MultiChoice South Africa and MultiChoice Africa in subsidiaries and joint ventures operating in Kenya, Ghana, Uganda, Nigeria, Tanzania, Zambia, Namibia and Botswana. In many other Sub-Saharan African nations, MultiChoice Africa operates through agents or franchisees. The agents and franchisees conduct marketing and advertising activities to build MultiChoice Africa’s subscriber base and collect subscription revenues on behalf of MultiChoice Africa. They retain a portion of the subscription revenues they collect as compensation for their services and remit the balance to MultiChoice Africa.
 
The pay-television service consists of terrestrial analog networks as well as direct-to-home digital satellite television (DStv) bouquets on four separate satellites: Eutelsat W4 KU-band, Eutelsat SESAT Ku-Band, PAS 10 C-band and PAS 7 KU-band. In Namibia, the terrestrial analog network was replaced with a Digital Terrestrial Transmission (“DTT”) network.
 
South Africa 
 
MultiChoice South Africa offers customized M-Net premium analog terrestrial services consisting of sport and movies, as well as the premium DStv digital bouquet consisting of 74 video channels (including 6 Indian and 3 Portuguese), 8 data channels, 40 audio music channels and 25 radio channels. Viewer favorites are M-Net (Africa’s premier pay-television channel), the SuperSport channels, M-Net Movies 1  & 2, M-Net Series, Discovery Channel, National Geographic Channel and Animal Planet. During fiscal 2006, enhancements to the DStv bouquet in South Africa included the addition of 5 video channels to the DStv digital bouquet - MK 89 (Afrikaans Youth Music Channel), Boomerang (Kids animation channel), The Home Channel (Lifestyle Channel broadcasting on weekends only), CCTV 9 (English-language 24-hour news channel with a Chinese perspective) and SuperSport 8 (Portuguese Soccer Channel). In addition to 5 permanent video channels, DStv also broadcasted Events Channels (M-Net Holiday Channel, CNN/ MultiChoice Africa Journalist of the Year and Idols) and made enhancements to the Travel Channel, M-Net’s Academy Awards Broadcasts, Temptation and Carte Blanche as well as M-Net Series, BBC Food and Mindset Learn.
 
MultiChoice South Africa’s aggregate subscriber base in South Africa as of March 31, 2006 was 1,250,533 subscribers, an increase of 102,662 or 8.9% from 1,147,871 subscribers at March 31, 2005. The digital subscriber base in South Africa grew by 137,747 subscribers during fiscal 2006 (from 895,346 to 1,033,093 subscribers) and as of March 31, 2006 accounted for 83% of the total number of pay-television subscribers in South Africa. The lower priced bouquet aimed at the emerging market (“DStv Compact”) grew to 42,000 subscribers. MultiChoice launched a personal video recorder (“PVR”) in October 2005 and sold 27,500 units during fiscal 2006 which contributed to the growth in the digital subscriber base. The analog subscriber base declined to 217,440 subscribers during the same period, primarily due to subscribers upgrading from the analog to the digital platform. As of March 31, 2006, MultiChoice South Africa’s subscriber base represented approximately 17% of South Africa’s television households.
 
South Africa is Africa’s largest economy, with a population of approximately 44 million people, and is Africa’s third largest television market, with approximately 7.5 million television households. The South African market is relatively mature. The joint venture companies M-Net and SuperSport continue to play a role in growing the subscriber base through the delivery of premium thematic channels and exclusive content. M-Net provides premium entertainment channels and SuperSport provides sports channels carried by MultiChoice South Africa and MultiChoice Africa on their pay-television platforms in Africa. Naspers owns directly or indirectly 60.1% of each of M-Net and SuperSport.
 
M-Net has output deals with all the major film and television studios, enabling it to screen quality movies, series and miniseries. M-Net compiles 15 entertainment channels for broadcast across the African continent. These channels are carried on various satellite platforms all of which are operated by MultiChoice Africa under the DStv brand.
 
SuperSport produces nine sports channels for distribution across Sub-Saharan Africa. These comprise three primarily live 24-hour channels, including a dedicated pan-African football channel (football is also known as soccer), a sports update channel, a 24-hour highlights channel, a dedicated interactive sports channel and three ad hoc sports channels, covering more than 100 different genres of sport. The football channel screens South African Premier Football League and various Confederation of African Football games, extensive live English Premier League games, Italian Serie A and Bundesliga football. Extensive coverage of South African and international cricket, rugby, golf and tennis are also offered on other SuperSport
 
22

 

 
channels. The SuperSport Zone channel provides information, live scores and statistics on specific sporting events. SuperSport has recently launched a 3G mobile service to South African mobile service providers.
 
MultiChoice South Africa services its South African subscriber base through its customer care and billing center in Johannesburg and branches in Durban and Cape Town. The center in Johannesburg provides customers with walk-in and phone-in service, while the branches provide customers with a walk-in service.
 
The analog service is sent to transmission towers either terrestrially over fiber optic cables or microwave links, or via satellite. The towers transmit the signal to MultiChoice South Africa’s customers’ homes, where it is received by an antenna and decrypted by a set-top box. A satellite transmits the digital satellite signal. MultiChoice South Africa leases 9 KU-band (KU-band refers to a frequency range used for satellite downlink transmissions that falls within the 12 to 14 GHz range of the electromagnetic spectrum) transponders on this satellite, and its uplink facilities are provided by Orbicom (Proprietary) Limited and British Telecom. Digital customers receive the signal from this satellite using a 90 cm satellite dish located on or near their homes. The signal is then descrambled and decompressed for viewing using a conditional access system, set-top box and smart card. MultiChoice Africa and MultiChoice South Africa utilize the Irdeto conditional access system and third party set-top box technology that incorporates Irdeto’s software for their analog and digital platforms. Smart cards are credit card-sized devices that have embedded processors that provide entitlement functions and store decryption keys and digital signatures. MultiChoice Africa and MultiChoice South Africa utilize the Irdeto encryption and set-top box technology for their analog and digital platforms.
 
During the year ended March 31, 2006, MultiChoice South Africa experienced an average monthly net churn (net churn is the percentage of customers who terminate their subscription in a given period minus the number of former customers who reconnect in that period) of approximately 1.92% on its analog subscriber base and 1.2% on its digital subscriber base. This compares to an average monthly net churn of approximately 2.02% on its analog subscriber base and 0.96% on its digital subscriber base during fiscal 2005. The net churn for the analog subscriber base excludes customers who upgraded to the digital service.
 
MultiChoice South Africa bills its subscribers monthly, in advance, in Rand. The following table sets forth certain pricing information for the South African businesses:
 
 
Subscribers
Monthly
Subscription Price
Equipment Price(1) (4)
Purchase
 
March 31,
 
2006
2005
2004
Rand
U.S. $(3)
Rand
U.S. $(3)
 
(thousands)
       
               
Analog 
217
253
301
229.00(2)
31.03
550
74.53
Digital 
1,033
895
775
419.00(2)
56.78
650
88.08
___________
 
(1)
Excludes price of satellite receiver in the case of digital service.
 
(2)
Includes price increase that occurred in April 2006.
 
(3)
Converted at the noon buying rate at September 15, 2006. (U.S. $1 = Rand 7.38)
 
(4)
In October 2005, MultiChoice launched a dual-view personal video recorder which retails at Rand 2,999.00. (U.S. Dollar 406.37)
 
 
 
Rest of Sub-Saharan Africa
 
The group offers terrestrial analog, digital terrestrial and digital satellite pay-television services to Sub-Saharan Africa through MultiChoice Africa and various subsidiaries, joint ventures, agents and franchises. MultiChoice Africa offers many of the same premium channels in Sub-Saharan Africa as MultiChoice South Africa offers in South Africa, including those broadcasting exclusive premium films and popular sports. MultiChoice Africa’s digital service features various bouquets with some 75 video channels (including the customized M-Net channel and many major international network channels), 8 data channels and up to 65 audio channels, which are transmitted to 48 countries in Sub-Saharan Africa, and adjacent islands. As of March 31, 2006, MultiChoice Africa and its subsidiaries and joint ventures had 384,216 Sub-Saharan African subscribers to its DStv digital satellite and terrestrial services and 819 Sub-Saharan African subscribers to its terrestrial analog service, compared to 333,781 digital and 2,373 analog subscribers as of March 31, 2005. This represents an increase of 14.5% from fiscal March 2005 to March 2006.
 
 
23

 
 
The marketing efforts of MultiChoice Africa’s Sub-Saharan pay-television business are focused on the major cities in each of the countries served on the basis that households in these major metropolitan areas are more likely to be able to afford its services than rural households. In line with the focus on serving niche markets, a new satellite, SESAT, was introduced during fiscal 2005 to accommodate the expansion of the digital subscriber base for the French and Portuguese bouquets. A dedicated sports channel for the Portuguese bouquet was introduced during the year to further cater for the Portuguese market. The addition of a number of new English language channels has allowed the premium DStv bouquet to maintain its position as the leading offering in the market. The company has intensified its focus on providing localized programming to subscribers especially in Africa - this includes the enhancement of the Africa Magic channel and the addition of free-to-air channels in Zambia, Zimbabwe, Mozambique, Uganda and Botswana.
 
During fiscal 2006, its Sub-Saharan African operations experienced an average monthly net churn of approximately 1.46% on the digital subscriber base, as compared to average monthly net churn of approximately 1.65% on the digital subscriber base for fiscal 2005.
 
The following table sets out certain pricing information for MultiChoice Africa’s Sub-Saharan African businesses: 
 
 
Subscribers
Monthly    
Subscription Price(1)    
Equipment Price(2)  
 
March 31,
 
2006
2005
2004
 
(thousands)
   
           
Analog 
1
2
9
U.S.$ 35.00
N/A
Digital 
384
334
283
U.S.$ 58.00
U.S. $ 200
___________
 
(1)
Represents the average price across all of MultiChoice Africa’s Sub-Saharan African businesses.
 
(2)
Includes the price of the satellite receiver.
 
MultiChoice Africa’s digital service is transmitted direct-to-home, on PAS10 C-band satellite transponders (C-band refers to the frequency range of the electromagnetic spectrum used for satellite transmission, having an uplink frequency at 6 GHz and a downlink frequency at 4 GHz), the Eutelsat W4 KU-band, Eutelsat SESAT KU-band and PAS7 KU-band transponders. Customers receive these signals on a satellite dish mounted on or near their homes. The signal is then descrambled and decompressed for viewing using a conditional access system, set-top box and smart card. MultiChoice Africa utilizes the Irdeto conditional access system and third party set-top box technology that incorporates Irdeto’ software for both its analog and digital platforms. Smart cards are credit card-sized devices that have embedded processors that provide entitlement functions and store decryption keys and digital signatures. The smart cards are inserted in a set-top box to gain access to encrypted digital programming.
 
MultiChoice Africa delivers analog services terrestrially to Sub-Saharan Africa by transmitting its programming signal by satellite to local receiving stations in two countries. These stations relay the signal to a broadcast tower that transmits it as a standard encrypted scrambled television signal. When received by a customer, a decoder in a set-top box descrambles the signal and provides it to the customer’s television receiver. MultiChoice Africa is systematically shutting down its analog terrestrial networks on a country by country basis as more and more analog subscribers migrate to digital, making the terrestrial analog networks uneconomical on a selective basis. The analog transmission network will be closed down completely during the 2006 calendar year. In Namibia, the analog service was replaced with an innovative new Digital Terrestrial Transmission (“DTT”) service. Subscribers are now able to receive multiple channels in digital quality.
 
Mediterranean 
 
Naspers offers terrestrial analog and digital pay-television services in Greece and digital satellite pay-television in Cyprus through its subsidiary NetMed NV (“NetMed”). At March 31, 2006 Naspers owned 74.9% of NetMed. Global Capital Investors II LP (“Global”), an investment fund managed by Global Finance SA, owned 8.5% of NetMed, Antenna Pay-TV Limited (“Antenna”), a subsidiary of Antenna SA, owned 4.1% of NetMed, and Teletypos owned 12.5% of NetMed. In terms of Agreements with Global and Antenna, Global and Antenna exercised their right to put their shares to MIH BV. After an extended valuation and negotiation process, MIH acquired from Global and Antenna their shares in NetMed for the sum of Euro 67.3 million on July 19, 2006. Naspers now owns 87.5% of NetMed with the remaining 12.5% owned by Teletypos.
 
 
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NetMed manages its Mediterranean pay-television business through the following operating subsidiaries:
 
·      
MultiChoice Hellas and MultiChoice Cyprus Limited manage the subscriber base and market and sell pay-television services in Greece and Cyprus, respectively. NetMed, through Myriad Development B.V., controls 96.4% of MultiChoice Hellas. The remaining shares of MultiChoice Hellas are held by Lumiere Television Limited (“LTV”).
 
·      
NetMed owns 69.04% of MultiChoice Cyprus Holdings Limited and the remaining 30.96% is held by LTV. MultiChoice Cyprus Holdings owns 50.9% of MultiChoice (Cyprus) Public Company Limited (“MCC”), a company listed on the Cypriot Stock Exchange. Following a public offer in February 2006, LTV holds a further 32% direct stake in MCC. The remaining shares are publicly held.
 
·      
NetMed, directly and indirectly through its subsidiary, Myriad Development BV, owns 100% of NetMed Hellas SA (NetMed Hellas). NetMed Hellas operates the FilmNet and SuperSport premium pay-television channels in Greece.
 
·      
Synergistic Network Development S.A. is 100% owned by NetMed and is responsible for signal transmission and distribution.
 
NetMed’s Nova bouquet includes 50 channels, of which 44 are Greek channels or foreign channels dubbed or sub-titled in Greek. Subscribers also get access to more than 250 other European channels which are available on the same satellite as the Nova bouquet. The Greek language channels that are included in the Nova service (such as FilmNet, SuperSport and those of the Greek commercial and state broadcasters) are either produced in Greece or are foreign thematic channels customized for this market. These include Discovery, MGM, TCM, National Geographic, Animal Planet, Jetix Kids and E! entertainment. SuperSport features exclusive sporting events for the Greek and Cypriot markets.
 
FilmNet provides a combination of exclusive, first run movies, along with some original and imported series. NetMed’s analog service consists of three channels; FilmNet, SuperSport and Jetix Kids transmitted on two analog frequencies.
 
Greece has a population of approximately 10.9 million people and approximately 3.5 million television households, giving NetMed’s pay-television services a market penetration of approximately 9% of television households.
 
The total number of the group’s pay-television subscribers for the Mediterranean region was 374,451 households at the end of fiscal 2006, up from 363,739 at the end of fiscal 2005, an increase of 2.9%. During fiscal 2006, the analog subscriber base in Greece declined by 22,732 to 71,994 households, while Nova (the digital satellite television service) maintained its leading position in the region by adding 30,224 digital subscribers to end the fiscal year with 239,536 subscribers. As of March 31, 2006, NetMed had 62,921 subscribers in Cyprus. During fiscal 2006, NetMed experienced an average monthly net churn of approximately 1.4% (2005: 1.1%) on its total subscriber base in Greece.
 
NetMed experienced a decline in subscribers from 2001 to 2003 due to market confusion as a result of the launch and subsequent liquidation of a competing pay-television service in Greece, Alpha Digital Synthesis S.A. (“Alpha Digital”). In September 2002, Alpha Digital entered into liquidation. Recent events have also seen the emergence of a new administration for the A Division of Greek football league, which has been renamed the SuperLeague. Despite the new administration, further turmoil is expected in future seasons.
 
NetMed has secured the rights to a significant volume of games (112 of a total of 125 games per season) of Europe’s premier football club competition, The Champions League, for the next three seasons commencing, 2006/07. The remaining thirteen games (per season) will be broadcast by the Greek state broadcaster. The acquisition of The Champions League programming rights should help reduce NetMed’s dependence on Greek football although complete success will be dependent on the participation of Greek teams, whose performance tends to be erratic. NetMed secured the television rights to 13 of the 16 Greek football teams for the 2006/07 season. The Greek state broadcaster has entered the market and secured the rights to 3 teams, including the rights to the top team in Greece, for the next three seasons. The status of football in Greece, however, remains uncertain, with several clubs, including one of the four most popular, facing financial difficulties. Despite these difficulties, clubs have received no tax relief from the Greek government and are unlikely to do so in the near future. NetMed has withdrawn from all court cases pertaining to the broadcasting rights of football teams, but continues to pursue teams for damages where they have breached their broadcasting agreements, although there is no certainty as to the outcome and the legal process is proving to be extremely lengthy.
 
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NetMed markets its Nova digital service as an upscale alternative to the premium analog package. It expects the majority of the growth in its digital platform to come from new subscribers supported by the acquisition of the critical mass of the SuperLeague and Champions League. Previously digital growth has come largely from subscribers that upgrade from the analog service. Through March 31, 2006, approximately 20% of the growth in NetMed’s Greek digital subscriber base comprised analog subscribers who converted to the digital service. Overall, 32% of the total current Greek digital subscriber base was analog subscribers in the past.
 
In February 2006, the attention of NetMed was drawn to press reports in Cyprus of negotiations between LTV and the large Cyprus telecommunications provider (“CYTA”) for the supply of channels by LTV to CYTA for distribution on its broadband network. At the time, LTV was a 30.96% shareholder in MultiChoice Cyprus Holdings and 10.98% shareholder in MCC. NetMed was of the view that the proposed arrangements with CYTA would be in breach of a number of agreements between LTV and NetMed and/or its affiliates, including MCC. Various legal proceedings, including arbitration proceedings under the London Court of International Arbitration (“LCIA”), injunction proceedings in the Cyprus courts and complaints to the Cyprus Commission for the Protection of Competition (“CPC”), have been initiated in order to protect the interests of MCC and its affiliates, and some of these proceedings are continuing. On February 28, 2006, LTV made a public offer for the shares in MCC which it did not already own.
 
On June 1, 2006, LTV announced that this Offer had been accepted by 27% of the shareholders of MCC, resulting in LTV becoming the direct owner of 32% of the shares of MCC.
 
On July 7, 2006, LTV withdrew the carriage of its channel on the Nova Cyprus platform thus depriving Nova Cyprus of one of its premium channels. Nova Cyprus in turn has added elements of the premium Nova Greece channels (FilmNet and SuperSport) to its platform. However without the main driver of Cyprus football and other European football championships on the platform, churn is expected on the Nova Cyprus platform at the commencement of the various football championships during August 2006. As at August 31, 2006 Nova Cyprus had 20,947 subscribers.
 
On July 19, 2006, MCC began to experience difficulty in administering its analog subscriber base. MCC subsequently discovered that communications links between MCC and its subscribers had been severed by LTV. Attempts by MCC to gain access to its equipment located on LTV’s premises were refused and MCC was notified by LTV that it had terminated its analog channel carriage arrangement with MCC. MCC does, therefore, not provide analog service anymore.
 
MultiChoice Hellas has entered into a three year Agreement with Sigma in Cyprus for the carriage of Sigma Sports 1 & 2 channels, specializing in the broadcast of The Champions League.
 
Thailand
 
MIH disposed of its shares in UBC and MKSC for a total cash consideration of Rand 999.3 million, effective January 6, 2006. MIH’s sale of its shareholding in UBC to True Corp., which was already UBC’s largest shareholder, is in line with Naspers’ strategy to focus on its core competencies and allowed True Corp. to fully integrate UBC into its existing business.
 
Competitors and Competitive Position
 
MultiChoice South Africa’s digital and analog platforms in South Africa compete directly with the four free-to-air television channels in South Africa (which are also carried on MultiChoice South Africa’s digital bouquet) and indirectly with the internet, all live sporting events, motion picture theatres, video rental stores, mobile telephones, lotteries, gaming and other forms of entertainment.
 
MultiChoice Africa is the leading provider of pay-television services in Sub-Saharan Africa. In the countries in which MultiChoice Africa broadcasts, however, there are numerous public and private free-to-air television stations, as well as, localized pay-television operations (both licensed and unlicensed). Digital direct-to-home (“DTH”), Cable, Digital Terrestrial (“DTT”) and Internet Protocol Television (“IPTV”) competitors have launched or are expected to launch pay-television operations across Sub-Saharan Africa. During the course of fiscal 2005, three DTH competitors launched their services in Nigeria. A new continental operator, MyTV, has launched a DTH service in Sub-Sahara Africa. We also saw the launch of some country specific cable and DTT pay-television operations. MultiChoice Africa believes that its wide selection of programming, distributed both terrestrially and on DStv, appeals to the broader African market.
 
 
26

 
 
MultiChoice South Africa recently lodged its application for a broadcasting license. The regulations applicable to this license have been finalized and the due date for all license applicants was August 31, 2006. The process of evaluating and granting of the license may take some time to conclude. At the conclusion of this process additional conditions may be imposed. The impact of these conditions will only be known at the time of granting of the license. Several other organizations will also be applying for a license. The number of broadcasting competitors will only be known at the conclusion of the licensing process. 
 
In Greece and Cyprus, NetMed competes directly with free-to-air broadcast channels, including national Greek networks (such as ERT, Mega, Antenna, Alpha and Star) and four national Cypriot networks (Cyprus Broadcasting Corp., Sigma, Mega and Antenna).
 
Greek media law allows multiple licenses to be granted for satellite pay-television platforms, and two other entities, Intersat SA and Alpha Digital, had been granted licenses. Both had their licenses revoked, as Intersat failed to launch a digital television platform and Alpha Digital entered into liquidation. The Greek Post, Telecommunication & Telegraph (PTT) company, OTE launched a national satellite called HellasSat, serving Greece, the Balkans and greater Europe. The Greek regulatory process for issuing terrestrial licenses has been frozen for more than five years, a fact that may continue to retard the development of commercial opportunities for NetMed. ERT has launched DTT including a free-to-air movie channel and sports channel. This could dampen demand for pay-television movie and sports channels offered by NetMed if ERT deploys its channels commercially and further create pressure on rights acquisitions as ERT seeks content for these channels. Delays in acquiring DTT frequencies for pay television could also prevent NetMed from developing other TV distribution platforms which would form a natural extension.
 
New technologies have been adopted in Cyprus where a broadband network has been laid down by CYTA. A further independent broadband platform, Primetel, has also launched a package consisting of basic and premium pay-television channels as well as high speed internet and bundled telephony services. A rival digital satellite pay-television operation on HellasSat, named AthinaSat, launched in May 2005, with a basic and premium package of 12 channels. In addition, over the last few months LTV has begun offering its premium channel (including exclusive Cypriot football) to CYTA and PrimeTel, a DSL operator, and deals with other satellite and cable operators are pending. Since the carriage of LTV’s premium channel on MCC’s bouquets was terminated in June 2006 (digital) and July 2006 (analog), discussions have taken place about the renewed carriage of such channel by MCC, but no agreement has been reached.
 
Seasonality
 
The group’s pay-television business experiences an increase in the level of subscriber churn during the respective summer holiday seasons, particularly in Greece and Cyprus where the conclusion of the football and basketball seasons coincide with summer, when many subscribers travel away from their primary residence and engage in other forms of leisure. In Africa, the start of the European Football season is normally characterized by subscriber growth.
 
Technology
 
Irdeto

The group’s subsidiary, Irdeto, provides content protection solutions to subscriber platform operators and other providers of valuable digital content. Irdeto products enable pay-media operators and corporate users to encrypt and decrypt their broadcast or multicast signals. The products control subscriber access to content, services and events across all media platforms, including digital television, internet protocol (IP) streaming media and delivery of video services on mobile platforms. Irdeto offers customers over 40 years of experience in the pay-media industry and a range of skilled resources and properties.
 
As at March 31, 2006, Irdeto had 194 customers (including the affiliated companies MultiChoice South Africa, MultiChoice Africa and NetMed) in more than 40 countries. During the year ended March 31, 2006, Irdeto sold approximately 5.8 million personalized digital smart cards and other devices with a total of approximately 21 million shipped to date since 1995 when digital smart cards were first launched. Smart cards are credit card-size devices with embedded processors that provide entitlement functions and store decryption keys and digital signatures that are inserted in set-top boxes for access to subscription television services. During the year, Irdeto acquired 50 new customers in all regions of the world.
 
Irdeto continues to innovate and improve the security-related aspects of its products. On-going action against pirate networks continued to deter pirates from attempting to compromise Irdeto technology.
 
 
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In April 2006, Irdeto acquired a competitor, Philips CryptoTec, which was the conditional access business of Philips, based in Eindhoven, The Netherlands. The acquisition brought expert staff and market share, increasing Irdeto’s customers to 300 in 60 countries.

Entriq
 
Entriq is investing in content protection and subscriber management services for new broadband markets. Consumption of broadband media on the internet continues to grow and in some markets like Korea and China, is now the dominant form of internet usage. During the last year, Entriq continued to invest in content protection, subscriber management technologies and ASP services for broadband markets including a turnkey digital store solution.

Entriq made further progress on the development of its global network for media authorization. This is a secure, reliable service for distribution and selling media online and across platforms including PC, mobile telephones and extending into IPTV.

Entriq’s clients are in three major market sectors: sports, music and entertainment. Some of Entriq’s clients include: The Winter Olympics by nbcolympics.com and Intel ViiV platform, Viacom for Comedy Central, Channel 4 for Big Brother in the UK, Pro Sieben for distribution of content in Germany, UEFA for European Champions League, MTV US (radio channels on Sprint) and MTV UK integrating with major UK carriers.

MediaZone

Broadband presents an opportunity to reach small audiences not otherwise serviced through traditional distribution channels. Mediazone has invested in building web portals where niche content is aggregated and offered via subscription packages. These channel categories include sports (e.g. rugby), international (e.g. ChinaPortal and KuduClub) and lifestyle. Current events covered include Wimbledon, Fiba Basketball Championship and Super 14 Rugby.

Competitors and Competitive Position
 
The extent and nature of competition among smart card manufacturers is in large part determined by the ability to provide secure products that effectively combat piracy at competitive prices, the ability to offer superior customer service and the ability to acquire new clients, as the cost of switching for existing customers can be high. Irdeto’s main competitors are NDS Group plc and Nagravision S.A., which provide conditional access systems to operators utilizing a range of platforms.
 
Competition for Entriq’s products and services are determined by the ability to provide content protection and subscriber management services to enable customers to sell pay media online and to mobile devices. Entriq faces competition in all the individual elements of its overall service offering such as DRM, billing and subscriber management, mobile content management and rendering. Entriq’s competitors include companies like The Platform, Extend Media and Brightcove. It is expected that new competition could enter the market as forecasts continue to grow, especially for delivery of pay media over broadband and media rich content to mobile devices. Entriq’s license billing and subscriber software competes with products from companies such as CSG Systems.
 
MediaZone competitors for consumer-facing aggregated paid video service include JumpTV, Setanta, RooTV, TotalVid, PlanetVu.  On a more generalized “video content aggregation & delivery to consumers” level, competition would include traditional cable and satellite providers such as Comcast and Dish, especially those offering a Video on Demand model.
 
Internet
 
Naspers’ approach to the internet is to draw on its existing strengths and areas of expertise. Naspers continues to regard internet technology as important. It has impacted traditional ways of doing business, including the relationship between clients and suppliers, and has transformed the competitive landscape in many industries. Naspers believes in an “anytime, anywhere” philosophy, which enables its subscribers to access its content platforms via television, internet and wireless technologies. In the future, the group expects to deploy its expertise in order to manage interactive services.
 
 
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South Africa
 
Naspers conducts most of its internet business in South Africa through its indirect wholly owned subsidiary, M-Web Holdings. M-Web Holdings provides the infrastructure for MultiChoice South Africa’s interactive platform.

The South African internet market currently has approximately 3.6 million internet users and between 800,000 and 1 million dial-up subscriber homes. Growth in the dial-up internet market has slowed dramatically. Broadband access has shown some growth in recent years and there are currently about 175,000 broadband users in South Africa but the number of users lags comparable economies.
 
M-Web Holdings had approximately 300,000 dial-up subscribers and 44,000 broadband ADSL subscribers at March 31, 2006, which translates to an approximate 37% market share of the internet subscription market in South Africa.
 
The following table summarizes subscriber numbers and subscription fees for M-Web Holdings’ dial-up, ADSL broadband and web hosting services.
 
   
Subscribers
 
Monthly
Subscription Price
 
   
March 31,
 
     
2006
 
 
2005
 
 
2004
   
Rand
   
U.S. $(1)
 
 
 
(thousands)
           
                                 
Dial-up 
   
299.6
   
324.0
   
242.0
   
145
   
20
 
ADSL Broadband
   
44.4
   
19.4
   
4.6
   
258
   
35
 
Web and server hosting 
   
7.5
   
7.5
   
2.1
   
316
   
43
 
___________
 
(1)
Converted at the noon buying rate at September 15, 2006. (U.S. $1=Rand 7.38)
 
M-Web Holdings is also active in the business-to-business (B2B) and business-to-consumer (B2C) e-commerce markets. The business division of M-Web Holdings offers integrated commerce solutions to retailers and is a leader in the B2C e-commerce market. It offers various on-line services to large corporations and to the small and medium enterprise (SME) and small-office-home-office (Soho) markets. These services include web and server hosting, business mail solutions, domain name registrations, leased line access, application service provision, web development and e-commerce solution development.
 
Commercezone, a division of M-Web Holdings, is active in the B2B e-commerce market with products ranging from strategic sourcing to e-procurement platforms for the group and external customers. The on-line advertising and e-commerce markets are at an early stage of development in South Africa. M-Web Holdings estimates that neither is likely to start emerging as a significant generator of revenue in the near future. On-line consumer retail and true retail e-commerce will only develop once the necessary financial infrastructure and consumer markets mature. The business division of M-Web Holdings offers support to the increasing number of e-commerce web sites by making its portal and its dial-up subscriber base available to corporate customers.
 
Thailand
 
During the year ending March 31, 2006, the group disposed of its ISP assets, comprising 62.5% interest in Internet Knowledge Service Center Company, an entity that holds a majority stake in KSC Commercial Internet Company. The group’s internet investments in Thailand now comprise M-Web (Thailand) Limited (“M-Web (Thailand)”). As of March 31, 2006, the group held an effective economic interest of 100% in M-Web (Thailand).
 
The group believes that there are approximately seven million consumer internet users in Thailand and that advertising and on-line consumer retail e-commerce will only develop once the necessary financial infrastructure and consumer markets mature. Revenue from these sources in Thailand will not be significant for some years.
 
M-Web (Thailand) provides a comprehensive internet experience in the Thai language, which is tailored to the Thai culture via the portal Sanook! (www.sanook.com). M-Web (Thailand) extended its operations during the year ended March 31, 2006 through the introduction of broadband streaming services offering both audio and video content. The business also
 
 
29

 
extended its search capabilities via a commercial arrangement with Google. Significant revenues from these sources are not expected in the medium term.
 
China
 
Tencent


As at March 31, 2006, Naspers had a 36.1% interest in Tencent. Tencent is a provider of services based on the “QQ” instant messaging platform to Tencent Computer and Shiji Kaixuan, the licensed instant messaging operator in China. Tencent’s core market is mainland China, with QQ services also deployed in Taiwan, Japan, Thailand and South Africa.

Tencent is a leading provider of internet services and mobile value-added services in China, with the largest instant messaging (“IM”) community in China, according to iResearch. Tencent’s IM platform, branded QQ, allows users to communicate in real-time across the internet as well as mobile and fixed line telecommunications networks using various terminal devices. Tencent has attracted internet and mobile users to pay for its consumer-oriented internet and mobile value-added services and products, including the download of avatars (images representing a user’s virtual identity) and the participation in online casual games. As of March 31, 2006, Tencent had 220.5 million active user accounts. In addition, Tencent has been able to leverage the traffic in its online community to market online advertising services to its corporate clients.
 
Tencent provides services and products which have evolved into a variety of value-added services for IM users, including various fee-based IM service packages, entertainment and information content services, e-mail, chat rooms, dating services, casual games, massive multiple-player online games and user home pages. Tencent’s QQ Game Portal has become the leading casual game portal in China. Tencent’s mobile and telecommunications value-added services include mobile chat, Interactive Voice Response services, ringback tones, mobile music and pictures, mobile news and information content services, mobile games and other telecommunications value-added services.
 
In early 2005, revenues from Tencent’s IM services were negatively affected by the deactivation and related fee reversal of inactive customer accounts undertaken by Chinese mobile operators. In addition, revenues from mobile chat services declined as a result of the termination of the fee sharing arrangement with China Mobile for Tencent’s 161 Mobile Chat service, which was finalized in the quarter ended June 30, 2005.
 
The operation of telecommunications businesses in China, including Tencent’s internet related IM, internet content provision, online entertainment, online advertising businesses and other telecommunications value-added services, is subject to extensive regulation by the Chinese government. Due to such regulation, the internet services and mobile and telecommunications value-added services are provided by Tencent’s wholly-owned subsidiaries in China, pursuant to contractual arrangements with Tencent and two domestic Chinese companies wholly-owned by Tencent’s founding shareholders. In compliance with both IFRS and U.S. GAAP, Tencent consolidates the financial statements of these two domestic companies because, in substance, the contractual arrangements give Tencent control over the voting rights of these domestic companies.
 
Tencent currently has three principal lines of business: Internet value-added services, mobile and telecommunications value-added services and online advertising.
 
Internet value-added services provide the main platform on which Tencent’s user community is built. IM is at the core of Tencent’s internet value-added service platform. QQ is a comprehensive service platform that utilizes IM and other value-added services to create an online community. Internet value-added services also include community services such as the QQ.com portal and entertainment services such as casual games, avatars, massive multiple-player online games, electronic pets and user home pages that include blogs and photo albums. For the quarter ended March 31, 2006, the peak number of simultaneous online user accounts was 19.6 million, and during the 16-day period ended March 31, 2006, the average number of daily user hours was 272.2 million and the average number of messages sent daily was 2,883.8 million.
 
Mobile and telecommunications value-added services are also an important segment of Tencent’s business. Mobile QQ is a mobile based extension of Tencent’s QQ service, which allows its users to access the QQ network via their mobile phones and communicate in real-time with other QQ users. Value-added services include Mobile chat, ringback tones, mobile music, image and picture download services, mobile news and mobile games. As of March 31, 2006, there were approximately 9.5 million registered subscriptions for fee-based mobile and telecommunication value-added services provided directly by Tencent or through mobile operators.
 
 
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On July 6, 2006 China Mobile, one of China’s largest mobile operators, announced new regulations regarding the provision of Mobile value added services (“MVAS”) to its users. These new regulations require MVAS providers to give new subscribers one month’s free trial of their services and obtain double confirmation of new subscriptions. They also require fixed fee subscriptions in place of pay per message billings for existing subscribers and MVAS providers to send monthly reminders to existing subscribers that the service is still active, giving them the opportunity to cancel. These regulations may impact Tencent’s MVAS revenues going forward.
 
Online advertising has been growing as well. Tencent sells advertising space on its QQ software client and websites that generate significant impressions daily. The QQ software client enables targeted advertisements such as “log-in flashes” and “system messages” to deliver high resolution images to the end user’s PC screen. Tencent began generating advertising revenues relating to Internet searching functions in recent periods.
 
Competitors and Competitive Position
 
In South Africa, M-Web Holdings’ main competitors in the internet access business are Telkom SA, ABSA and various other ISPs that operate in this market. The country’s main mobile operators, Vodacom and MTN, have also begun to offer internet access subscription services through their 3G networks. Telkom SA is pursuing customers before a second network operator becomes operational. Once operational, the second network operator may enter the residential and corporate access internet market with competitive pricing. A number of companies offer e-commerce solutions to retailers. In the hosting and web development market, the competition is strong with some well-known companies, including UUNet and Internet Solutions, a subsidiary of Dimension Data.
 
Regulatory developments, including the granting of licenses to new operators, may affect the competitive position of Naspers’ internet operators and must be taken into consideration when evaluating competitive positions. You should read “—Regulation” for more information about the regulatory environment in Naspers’ key markets.  
 
The market for internet and telecommunications value-added services in China is highly competitive and competition is expected to increase continuously. As the industry is relatively new and is rapidly evolving, the basis of competition is expected to shift frequently, offering opportunities for new competitors to enter our markets. In addition, as China continues to open its telecommunications value-added services market to foreign investors, Tencent may face increased competition from international competitors that may establish joint venture companies with local companies to provide services based on the foreign investors’ technology and experience developed in overseas markets. Several of Tencent’s existing competitors, as well as a number of new potential competitors, may have significantly greater financial, technical and marketing resources than Tencent.
 
Tencent’s main competitors in the overall internet and telecommunications value-added services market in China are local internet portals. Tencent competes directly with these portals to provide comprehensive Internet and mobile and telecommunications value-added services to Chinese consumers. In addition to these horizontal portals, other foreign competitors such as MSN, Yahoo and AOL, which have substantial brand recognition and large user bases outside China, may leverage such strengths to increase their market position in the China Instant Messaging (IM) market. Some of China’s domestic telecommunications operators may have plans to launch their own branded mobile chat or IM services with the telecommunications services they are currently offering, further increasing the level of competition in this sphere. In the area of mobile and telecommunications value-added services, Tencent also faces competition from a large number of competitors that provide an expanding range of product offering.  Tencent believes the visibility for this highly competitive sector is still low due to the recent policy changes introduced by the mobile operators, and local players may market their services more aggressively to increase their market share thereafter. In the online entertainment market, Tencent also faced competition from a number of local game developers and operators in the mini casual games, advanced casual games and massive multiplayer online game (“MMOG”) market.
 
The enterprise IM market in China is in an early stage of development. MSN, AOL and Yahoo may have plans to enter the enterprise market upon interoperability. Enterprise software companies in China may also provide IM functionality in their products in the future.
 
 
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Print Media 
 
Overview 
 
Media24 is a leading print media concern in Africa, with its main operations in South Africa. The Media24 group is a large publisher of magazines and newspapers and a printer and distributor of magazines, newspapers and related products in Africa. In addition, Media24 is establishing internet businesses that compliment and draw from existing strengths and areas of expertise and are rapidly evolving as leaders in their specific segments. Media24 is also the holding company for Via Afrika, the book publishing and distribution business, and the group’s private education business, Educor. The print media segment consists of three sub-segments, namely Newspapers, Magazines and Printing, Books and Education.
 
Newspapers, Magazines and Printing
 
Media24’s current newspaper portfolio consists of more than 50 titles and the magazine publishing division publishes approximately 57 titles. At March 31, 2006 Naspers owned a 92.1% interest in the Paarl Media group, which is engaged in providing a printing service to both our own magazines as well as third party magazine publishers. NND24 does most of the distribution of the magazines for the group, as well as for external customers. Approximately 17% of total newspaper circulation revenue and 6% of total magazine circulation is generated from subscribers; the balance is achieved via delivery to a wide network of retail and smaller merchandisers.
 
Media24 acquired an additional interest of 7.5% in Paarl Media Holdings (Proprietary) Limited (“Paarl Media Holdings”) for a cash consideration of Rand 180.0 million during April 2005. Media24 now has an interest of 92.1% in Paarl Media Holdings.
 
The print media industry in South Africa is fairly mature. Media24 has expanded its business over the past few years by adding a series of new titles to its stable and through a series of small acquisitions.
 
Media24 streamlined its printing operations in 2000 by merging with the Paarl Post Web group to establish Paarl Media Holdings. Media24 has established new infrastructure and production resources and buildings as part of a comprehensive replacement and refurbishment program. A new litho web printing plant costing approximately Rand 175 million was commissioned in September 2005 in Gauteng. This plant will concentrate on commercial printing and some magazine printing.
 
Further capital investments of approximately Rand 120 million and Rand 40 million will be incurred over the next eighteen months at the newspaper printing presses in Johannesburg and Cape Town, respectively, to provide additional capacity for the circulation of the recently launched tabloids, Daily Sun and Son.
 
Newspapers
 
Media24 conducts its newspaper publishing and printing business through its newspaper division. The current newspaper portfolio consists of more than 50 titles. A number of new titles were added to the portfolio in recent years.
 
The five Media24 daily newspapers, Die Burger, Beeld, Volksblad, The Natal Witness (50% shareholding) and the Daily Sun, provide regional news coverage. The Daily Sun, based in Gauteng and now the largest selling daily in South Africa, was rolled out into the Free State, KwaZulu Natal and the Eastern Cape in the latter half of 2003. The Afrikaans tabloid Son is now published every weekday in the Western Cape. The Sunday papers, Rapport, City Press and Sunday Sun, are printed in three cities and distributed nationally. Media24 also has a strong group of regional and community newspapers.
 
The significant newspaper titles and related information published by Media24 are summarized below:
 
Newspaper
Circulation(1)
Year Established
Region
Language
         
Dailies
       
Daily Sun
463,691
2002
Gauteng
Eastern Cape
KwaZulu Natal
Free State
English
Beeld 
105,114
1974
Gauteng
 
Afrikaans
 
 
 
 
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Mpumalanga
Limpopo 
 
Die Burger 
99,288
1915
Eastern Cape
Western Cape
Afrikaans
Volksblad 
27,669
1904
Free State
North West
Afrikaans
Natal Witness 
23,603
1846
KwaZulu Natal
English
         
         
Weeklies
       
Soccer Laduuma 
295,833
1997
National
English
Son
184,179
2003
Eastern Cape
Gauteng
Afrikaans
Sunday
       
Rapport 
313,528
1970
National
Afrikaans
Sunday Sun 
195,850
2001
National
English
City Press 
187,741
1982
National
English
Community Newspapers
       
Paarl Post 
17,006
1905
Paarl
Afr/Eng
District Mail 
13,855
1926
Somerset West
Afr/Eng
Worcester Standard
10,338
1880
Worcester
Afr/Eng
Weslander 
10,175
1972
Vredenburg
Afr/Eng
Vaalweekblad 
10,100
1964
Vanderbijlpark
Afrikaans
Vaal Weekly 
9,981
1998
Vanderbijlpark
English
Eikestadnuus  
8,266
1950
Stellenbosch
Afr/Eng
Hermanus Times 
7,319
1949
Hermanus
Afr/Eng
Potchefstroom Herald
7,209
1908
Potchefstroom
Afr/Eng
Carltonville Herald 
5,480
1966
Carltonville
Afr/Eng
Vrystaat 
4,423
1975
Bethlehem
Afr/Eng
Freesheets
       
City Vision (Johannesburg) 
272,617
1992
Johannesburg
English
TygerBurger 
268,122
1972
Cape Town
Afr/Eng
PE Express 
89,798
1983
Port Elizabeth
Afr/Eng
MetroBurger 
83,340
1980
Cape Town
Afr/Eng
City Vision (Cape Town) 
70,000
1992
Khayalitsha
English
Vaal Vision 
64,850
1989
Vanderbijlpark
Afr/Eng
Express 
50,210
1991
Bloemfontein
English
Bloemnuus 
42,342
1982
Bloemfontein
Afr/Eng
Vista 
37,601
1971
Welkom
Afr/Eng
Ons Stad 
37,196
1983
Bloemfontein
Afr/Eng
Noordwes Gazette 
30,000
1997
Potchefstroom
Afr/Eng
UD Nuus 
29,911
1971
Uitenhage
Afr/Eng
Vanderbijl Ster
24,544
1980
Vanderbijlpark
Afr/Eng
Goudveld Forum 
23,178
1983
Welkom
Afr/Eng
Vereeniging Ster
22,306
1980
Vereeniging
Afr/Eng
Noordkaap 
22,079
1982
Kimberley
Afr/Eng
Sasolburg Ster
11,601
1996
Sasolburg
Afr/Eng
Kroonnuus 
8,462
1986
Kroonstad
Afr/Eng
Maluti 
7,939
1991
Bethlehem
Afr/Eng
Meyerton Ster 
7,193
1997
Meyerton
Afr/Eng
Noord Vrystaat Gazette 
6,457
2000
Parys
Afr/Eng
__________

(1)
Audited Bureau for Circulation (“ABC”) figures: average per issue, last three months (above: April - June 2006).
 
The newspaper division is equipped with a modern network of newsprint facilities. All five of the major print facilities have been upgraded or completely replaced since 1997. These projects, which required significant capital expenditures,
 
 
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are expected to yield advantages over the lifetime of the printing presses due to expected lower future operating costs, improved quality and an increase in third party commercial work. Further capital investments are planned to provide additional capacity.
 
Magazine Publishing
 
Media24 is a leading publisher of consumer magazines in South Africa. This division publishes a portfolio of consumer magazines in South Africa which include the family magazines Huisgenoot, You, Drum, tvplus and Move!, the women’s magazines Sarie, Fairlady and True Love, the creative living magazines, Ideas (formerly known as Woman’s Value and Dit), Tuis and Home, as well as the leading financial magazine, Finweek. The Touchline-subsidiary with its magazines, such as Men’s Health, Shape, Sports Illustrated, Golf Digest, Kick Off, Bicycling SA and Runner’s World also forms part of this segment. This division has entered into partnerships with international partners such as Emap plc to publish international titles, such as FHM and Heat. In 2005 they entered into a license agreement to publish Readers Digest. In fiscal 2006 new title launches included Go! (which was launched due to the success of the Afrikaans outdoor magazine, Weg!), Shop and Lééf met hart en siel, Your Child, Men’s Health Living, Real Simple (under license from Time Inc) and MaxPower (under license from Emap plc). In July 2006, Media24 acquired the motoring portfolio of magazines including TopCar, TopDeal and TopBike titles as well as a television magazine program TopCar for Rand 15.5 million. The existing titles are being repositioned and TopCar was relaunched with an Afrikaans language edition called TopMotor.
 
The following is a summary of the significant titles published by Media24’s magazine division:
 
Magazine
Circulation(2)
Year Established
Frequency
Language
         
Finance
       
Finweek 
29,457
1979/1984
Weekly
English/
Afrikaans
         
General interest
       
Huisgenoot 
354,266
1916
Weekly
Afrikaans
You 
227,879
1987
Weekly
English
tvplus  
164,626
1999
Fortnightly
English/
Afrikaans
Heat
78,429
2004
Weekly
English
Drum 
75,367
1951
Weekly
English/Zulu
Reader’s Digest
62,399
2005
Monthly
English
Landbouweekblad 
42,164
1919
Weekly
Afrikaans
Insig 
14,044
1987
Monthly
Afrikaans
         
Men’s
       
FHM
111,260
1999
Monthly
English
Men’s Health 
89,249
1997
Monthly
English
         
Parenting
       
Your Pregnancy(3) 
30,058
1998
Alternate-monthly
English
Baba & Kleuter 
25,463
2000
Monthly
Afrikaans
Your Baby 
24,609
1995
Monthly
English
Your Child(3)
15,133
2005
Alternate-monthly
English
         
Sport
       
Kick Off SA
62,113
1994
Fortnightly
English
Sports Illustrated 
37,806
1986
Monthly
English
Golf Digest 
28,821
1995
Monthly
English
Bicycling SA(3)
20,347
2002
Alternate-monthly
English
Runner’s World 
18,702
1993
Monthly
English
Zigzag Surfing Magazine(3) 
15,282
1976
Monthly
English
The Wisden Cricketer(3)
10,728
2004
Alternate-monthly
English
         
Teen /Youth
       
Saltwater Girl(3)
45,360
2001
Monthly
English
 
 
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Seventeen
39,546
2003
Monthly
English
National Geographic Kids
27,695
2004
Monthly
English
Blunt(3)
13,207
1997
Monthly
English
         
Women’s
       
Sarie
131,280
1949
Monthly
Afrikaans
True Love
117,819
1972
Monthly
English
Cosmopolitan
114,340
1984
Monthly
English
Fair Lady 
82,881
1965
Monthly
English
Move!
72,208
2005
Fortnightly
English
Shape  
46,975
2000
Monthly
English
Leef
43,794
2005
Monthly
Afrikaans
Real Simple
34,502
2005
Monthly
English
         
Creative Living
       
Tuis/Home
86,933
2004
Monthly
Afrikaans/ English
Idees (formerly Dit)
79,097
2001
Monthly