[SIZE=4]Acquisition by Ringier hits a dead end after discovering Ghafla manipulated figures [/SIZE]
After three months of a shaky marriage, news site Ghafla and Swiss media firm, Ringier, are divorcing. Ringier management announced the fallout this morning, sparking confusion among Ghafla employees who have been left without an office as they had been absorbed by Ringier.
“After a 3 months’ partnership between Ghafla & Ringier Kenya this collaboration will now end with the start of December,” Tim Kollmann, the Managing Director of Ringier Africa Digital Publishing said in a memo. “This partnership saw the great broadening of the vision of Ghafla, as well as training & connection with our pan-African Pulse brand. While further integration together was always an option, both sides have decided that this is not the best way forward for now.”
This weekend is the last partnership period and will be used for transition, with Ghafla reverting to its old website and operational structure. Ghafla will now have to look for a new home. “…with good joint planning, Majani and myself have decided that this first week-end of December is ideal to transition back again – including tech transition back to the old platform as well as team transition to another office space,” said Mr Kollmann.
According to people familiar with the matter, Ringier management fell out with Ghafla founder and co-CEO Samwel Majani after discovering that he had exaggerated numbers to attract a higher price for the buyout. Majani, who founded the website a decade ago while in college, had been retained for a year to allow for transition.
Since Ringier moved in, it has been combing Ghafla’s books and website backend to ascertain its true value. It brought in web experts who have trawled the net, especially social media and search engines for evidence of its popularity.
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Ghafla founder Samuel Majani was retained as co-owner for one year.
Just before the relaunch, they discovered somethings were not adding up. So the buyout was put on hold and the mining of information continued. Ringier also withheld funds and forced Majani to continue paying Ghafla staff salaries. But to save face and keep the planned relaunch on course, they opted to work as partners as they sort out the issues. Ringier also changed the terms and introduced a revenue sharing model instead of a financial acquisition to protect their investment, something that could have thrown the spanner in the works.
The acquisition had been in the works for some time and was solemnized in October when Ringier management took over operations of Kenya’s leading entertainment news portal. Cracks in the deal, estimated at about Ksh60 million, began to emerge just before the relaunch when Ringier sent out a press release announcing the acquisition only to recall and reward it to a partnership.
Manipulating systems
Among the things Ringier discovered is that Ghafla had manipulated its website hits and social media fan-base using web tricks of bots (robots) that gave it huge numbers. An internet bot, also known as robot or simply bot, is a software application that runs automated tasks (scripts) over the internet. Typically, bots perform tasks that are both simple and structurally repetitive, at a much higher rate than would be possible for a human alone.
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Ghafla is today ranked 53 in Kenya.
In Ghafla’s case, the robots had been programmed to multiply hits by a factor of four, according to an insider. It also used the same manipulations for its Facebook pages. It claimed in its filings with Ringier that it had over one million fans, but after an audit that involved Facebook experts, it emerged that 40% of the likes were indeed fake, cutting its fan-base to just 600,000.
Big blow for Ghafla
This is a major blow to Ghafla, which was repositioning itself into a mainstream news portal with hopes of attracting a bigger audience and a large advertising pie. It had begun developing a more credible mien in digital publishing. Ghafla will also suffer reputational issues as current advertisers who relied on the disputed statistics are likely going to renegotiate their deals or even pull out altogether.
This will also put other websites playing robotic tricks on the alert, as prospective investors will have to recheck the numbers before pouring in their funds or committing advertising budgets.
How it all started
A notice put in a section of the press few months before the launch indicated Ghafla was to transfer its business and assets, including intellectual property rights, contracts and office equipment to Ringier Kenya Ltd. The deal was seen as a milestone for digital publishing in Kenya, with more investors joining the market such as Genesis of Russia through its TUKO portal.
Ghafla has rejected offers from Radio Africa Group, which reportedly gave a bid of Ksh5 million. After that, Radio Africa started Mpasho, which will be celebrating its rival’s woes. On entry, Ringier poached high-profile journalists led by former Nation Media Group education reporter Benjamin Muindi as head of content. Muindi, who worked as a consultant left after the rebrand to focus on his PhD studies at Daystar University. Efforts to get a replacement have not attracted a credible candidate, with Alphounce Shiundu, formerly Standard Parliament editor, declining to join the team.
So what next?
The matter is likely to end up in court or arbitration. It’s not clear whether the financial details have been ironed out, but Ringier may want to seek recourse for being misled. If indeed the audit is credible then Majani could face charges of fraud. Now Ringier is back to its initial plan of starting off a new website, which is more tedious. It may shop around for a less popular website but stable and grow it.
FULL MEMO BELOW
Dear Ghafla Team,
After a 3 months partnership between Ghafla & Ringier Kenya this collaboration will now end with the start of December. This partnership saw the great broadening of the vision of Ghafla, as well as training & connection with our pan-African Pulse brand. While further integration together was always an option, both sides have decided that this is not the best way forward for now.
Therefore with good joint planning, Majani and myself have decided that this first week-end of December is ideal to transition back again – including tech transition back to the old platform as well as team transition to another office space. Majani will accordingly further coordinate.
The whole Ringier team as well as myself want to thank you for your cooperation and motivation and wish you all the best for the future!
Best regards,
Tim