Title: Peripheral Capital Goes Global: Naspers, globalization and global media contraflow. Tomaselli, K. G. Abstract Naspers, a South African media conglomerate worth USD$64 billion in 2016, operates across a range of media and information platforms in 120 countries, including many ‘emerging markets’. Naspers is an exemplar of media markets’ contra-flow, conceptualised as the movement of information, media content, consumer goods and capital from the ‘developing world’ into more developed markets. This study i) examines how Naspers has diversified its core media holdings (print and satellite) into digital information service providers and e-commerce; ii) how this was achieved both globally and domestically; and iii) how this diversification allowed Naspers to maintain its pre-eminent position in the South African media market. South African financial magazine articles, between 2010 and 2014, reporting on Naspers’s globalisation, are thematically examined with regard to globalization, diversification, ownership and control and collaboration. These themes frame a 1 political economy analysis of how Naspers penetrated, expanded and solidified its e-commerce business operations nationally and globally. Keywords: Naspers, Tencent, globalization, emerging markets, diversification, BRICS, contra-flow 2 Introduction Although a global conglomerate and the dominant company listed on the Johannesburg Stock Exchange (JSE), little has been published on Naspers (National Newspapers). While some historical research has been done by Botma (2008), Anonymous (1989) and Viljoen (2006), our study focuses on the contemporary phenomenon of Naspers’ digitization and globalization. We briefly discuss Naspers at a macro-level, in terms of contra-flow of information between South Africa and China and Naspers’ stake in Tencent Holdings in the context of China’s battle for dominance in cyberspace (Thussu et al., 2017). Apart from passing references (Wasserman and Rao, 2008; Saville, 2011; Wasserman, 2015) and atheoretical much reportage by online media, the only case studies found were student projects (Giannakos, 2008; Li and Gao, 2011). 3 Once a predominately print-media company, Naspers’ constitution has undergone a reconfiguration that has seen the company’s Internet/ e-commerce platform become its main source of global capital. Adopting a political economy approach, and drawing much of the data from online archival newspapers published by prominent South African financial magazines, we illustrate the manner in which a small regional media house, heavily dependent on its patron-relationship with the previous apartheid government, has transformed itself into a global player in the digital arena. While Naspers is South African, the case study resonates internationally, not only because of the reach into many global emerging markets, but also because it demonstrates how corporate media longevity can be assured through redeploying accumulated assets into new ventures. Naspers’ astute (and often lucky) identification of perceived gaps in less developed and relatively unsaturated markets found risky, but frequently profitable returns. Naspers after 2000 bought into media and IT firms throughout Europe, India, China, Nigeria, the Philippines, Latin America, and especially in Russia. A nationally- focused, previously ideologically-driven newspaper company thus became primarily a content service provider after 1990. To start, a sketched overview is provided of 4 the current scope of global and South African businesses in which Naspers has a significant interest, to indicate their varied geographic locations, most of which are in ‘emerging’ or ‘transitional’ economies across the world. The early establishment of subscription television, initially encrypted terrestrial, was followed by satellite delivery, recently extended to include online streaming. The establishment of MNet in 1993 in turn gave birth to DSTv in 1996 and ShowMax in 2015. Trading under the umbrella of MultiChoice, the conglomerate includes programme production and curation companies as well as a distribution network of franchised international channels. The company’s branching out into online distribution, such as on-demand downloads and streaming, is covered later in the article. Below, we summarise the main ventures according to business type, indicating the names of the companies in which Paspers is invested, their geographic location and the main domain competitors. This section is not comprehensive nor chronologically sequential, but offers a taste of the global nature of the enterprises. 5 Internet and e-commerce platforms are the most important in terms of market value. Such notable companies include minority shareholderings in Tencent (China) and Mail.ru (Russia). Allied to e-commerce are online messaging services, grab-all services that integrate messaging, addressing and cross-platform referrals. In China, WeChat, owned and controlled by Tencent QC, provides an omnibus service of video streaming, micro-blogging, video calls, games, shopping, gaming and financial transfers. In global terms, its closest competitor is Facebook, not permitted within the boundaries of China. Mail.ru (Russia) is the second biggest investment after Tencent. Online retailing and online classifed advertisements are areas of growing value to digital commerce in general and to Naspers specifically. Online ‘classifieds’ were an early foray into the digital marketplace and provided a direct transition from print media experience. OLX was founded in 2006, and Naspers bought a majority shareholding in 2010. Further investment increased their share to 95% in 2014. Naspers operates in 45 counties and retains its position as the largest online classified company in Brazil, India, Pakistan, Ukraine and other Eastern European countries. In Russia, Avito, another Naspers classifieds site, underscores the 6 advantage of classifieds in that no logistical backup is required, since sellers and buyers interact directly without third party involvement. Less than 2% of retail sales in South Africa are transacted online, although the portion is much higher in other emerging markets; China, for instance, conducts about 17% of retail sales online. Therefore, the potential for expansion is significant. Naspers’ first South African venture in this area was in 1998 with Kalahari.com. In 2014 the corporation acquired a 42% share in the American company, Takealot.com, subsequently merging it with Kalahari under the name of Takealout (van Zyl, 2015:np). In 2017, Naspers acquired a majority stake in Takealot (Fin24, 2017:np). The Middle East has proven a lucrative area for retail, with souq.com operating out of Dubai, UAE, and selling into the Saudi and Egyptian markets. Online sales need logistical backstops, including payment platforms. Naspers initiated PayJar in 2010, renaming it PayU the following year, solely in order to facilitate online purchases from Naspers’ retail acquisitions. 7 Delivery is another vital support mechanism for online trade. A minority stake in Flipkart (India) acquired in 2012 was sold in 2018, but investment in online food delivery was increased in Swiggy (India), Delivery Hero (Germany) and iFood (Brazil) (Bloomberg, 2018). Finally, other ‘backend’ services include bus ticketing and travel, most notably RedBus and Ibibo Group, both in India. Historical Background Naspers started as a Cape-based mutual company in 1914 producing Afrikaans- language newspapers from 1915, founded by a consortium of affluent members of Cape society geared towards promotion of the Afrikaans cultural movement (Anonymous, 1989: 119; Giliomee, 2003: 374). The firm increased its capital through diversification, specifically with the expansion of its business operations nationally. Diversification satisfied its cultural objectives (political and ideological mobilisation of Afrikanerdom) and to a lesser extent its commercial premise (Anonymous, 1989: 121). Naspers’ thus engaged in a series of acquisitions, mergers and start-ups that expanded its businesses nationally. Initially spearheaded by the Afrikaner cultural 8 movement working towards cultural, political and economic development (see Anonymous, 1990), Naspers became an important mouthpiece for the National Party (NP) that ruled apartheid South Africa between 1948 and 1994 (Anonymous, 1989: 119-139). The firm’s premier family magazine De Huisegenoot1 (later changed to Huisegenoot – House Companion), cross-subsidised the company’s newspapers 2 since the magazine generated most of Naspers’ profits at the time. In the early stages of NP rule during the 1950s, Huisgenoot’s shifted the direction and structure of its conservative content to advance Afrikaner Nationalism. Huisgenoot embraced the ‘Graphic Revolution’ (Viljoen, 2006: 18) and mass culture production,3 by reneging on its “brand identity” fro being an “idealised and formalised [Afrikaner] cultural life to [a more] profit-driven populism” (Froneman, 2004: 61). This would see Huisgenoot’s magazine cover and content shift from male-dominant use of historical figures and monuments of Afrikaner history to female-orientated, romanticised and imagined Afrikaner community, with more visual content (Viljoen, 2006: 18-21). This change is an early example of the pragmatic flexibility that allowed Naspers to thrive while other businesses experienced more turbulent trading conditions. 9 One ingredient for Naspers’ commercial success was its direct alignment to the government during apartheid (1948-1990). Naspers provided much of