I personally think that it is a shame and will be a huge dent in our country's freedom and democracy. I even told my mother last night that if it is happening I will be leaving the country as I don't want us to become another Zimbabwe.
It sounds like the South African government, like many governments, is simply uncomfortable with the idea of having a media that is beyond its control. Media free of state control will inevitably report on government mistakes, scandals, and generally criticise the state. They will also report the news as they see fit, regardless of whether it supports the government's agenda.
I can understand the concern over publicity damage caused by false reporting. But the alternative to freedom of the press is censorship. South Africa's freedom of the press is relatively new, so it seems logical there would be some concern. Still, as you say, it's important for the country's democracy that it not change.