The future of South African content in a

The future of South African content in a new broadcasting & convergence environment Setting a course for sustainability

IPO • INDEPENDENT PRODUCER ORGANISATION – Medium size enterprises. TPA THE PRODUCERS ALLIANCE – Small to Macro enterprises

We are the producers of local content with the exclusion of News and Sport which is produced by the broadcasters. We produce Drama, Actuality, Documentary, Children and Youth, Variety, Entertainment and Educational programmes.

REPRESENTATION • Collectively, we represent over 100 production entities & produce 80% of all local content in SA • Independent Production Companies are the businesses that producers run in order to make content

• Producers initiate and manage - idea development, scripting, budgeting, raising funding/pitching to broadcasters, hiring key personnel, shoot supervision, the overall quality and survivability of a production, arranging for distributors, delivery of the final product.

WHY WE ARE HERE

PURPOSE • Concerned with sustainability & growth of our sector • Challenges that face immediate & future sustainability • Vision for future growth & sustainability • Seek government support & intervention where appropriate

OUR ROLE • Collators of our history, living within communities, gathering and curating our stories and committing them to our collective memories.

• We investigate, educate, inspire and challenge. • We promote the diverse heritage of our nation – telling stories in our own languages. • It is our stories that capture who we are, where we come from and where we may go.

• Not an industry of arts & culture alone • Key role – content creation for SA public communicated mainly through broadcasters • Our industry generates in excess of R 12 billion worth of economic activity per year (source: Deloitte Survey)

THE CHALLENGE • Create sustainability that will lead to growth & development • Create employment, minimize underemployment • Speed up transformation • Seize opportunities created by government (Asgi. SA) • Grow independent production industry to be economically profitable industry • Capture rich cultural heritage

THE CHALLENGE • Intellectual property ownership vests in creators • Create allure for storytellers & investors • Access capital for development & research • Ensure choice for SA public • Creation of enterprises & self-sustaining jobs

THE GLOBAL INDUSTRY New media platforms & digital convergence = increased demand for content. • • Gearing up to meet the need Global brands vs Cultural identity Producers at the centre of supply chain Content is being democratized globally – proliferation of global television brands.

THE SA INDUSTRY There is a growing demand for reliable, high quality expertise • Our industry is on the brink of the new media explosion • New broadcast licenses & advent of regional television • SABC: primary consumer of local content therefore largely determines terms of trade for industry • Creative & business skills are required • Incentivised businesses

TRANSFORMATION • THE CHALLENGE • Skills transfer throughout the value chain • Luring & retaining talent in key areas • Lack of financial rewards, stability & growth

TRANSFORMATION • THE PROGRESS • Skills development initiatives not only at entry level • Increase in employment equity • BBBEE plan for industry being formalized • Unity of purpose • Diversity is now a source of strength & pride

CHANGING THE FACE OF A NATION • 80% of top TV shows in SA are local • Broadcasting Act created impetus • SABC and Producers partnered in effecting change

CURRENT PREDICAMENT • Financial stability, securing investment, sustainability • Production sector = small & macro enterprises: – Limited infrastructure – No ability to acquire skills or business acumen – Inability to access capital for research & development – Inability to access business infrastructure capital – no clear business model / system with reasonable guarantees

CURRENT PREDICAMENT • • • Reliance on 3 broadcasters & commissioning process All equity belongs to broadcaster Broadcaster terms of trade Performance does not translate into business building Broadcaster obligations & accountability • THE RESULT – A DISEMPOWERED PRODUCTION SECTOR

A Bouyant industry • Industry is not one of poverty but one of great cultural wealth • • Highly bankable industry Increase in ad spend – 7. 7 Billion AD Spend SABC profit / income Advertisers & investors recognize valuable audiences & culture

BUT we are not delivering a self-sustaining ecology from local content - WHY? LIMITING FACTORS? Are NOT regulation, audiences or lack of potential investors

THE BLOCKAGES • Terms of trade • Ownership of rights • Participation in secondary rights

CHANNEL 4 CODES EXCERPT ‘The broadcaster expects the following benefits to flow to Producers: • Producers able to build valuable rights catalogues / archives • Producers able to choose the deal structure that best supports their creative and commercial aspirations for a given project • Producers participating more fully in the value of their secondary rights • Producers finding the broadcaster professional and timely to do business with. “ Channel 4 Code of Practice for Commissioning

INDEPENDENT PRODUCERS & SABC • Meetings between independent production sector & SABC exec to find common solution • Agreement that solutions for broad growth & sustainability must be defined by blue print / declaration

INDEPENDENT PRODUCERS & SABC • Fundamental points of agreement: – – – Industry growth Empowerment Avoid excessive concentration of power & wealth Express national identity Transparency Creation of enterprises & self-sustaining jobs

SOURCES OF DISAGREEMENT • Core issues are: SABC operating model: – Producers treated as employees – One-sided contracts – Patronising & disenabling operations – Limited independence – Margins set at low rate – Intellectual property 100% owned by SABC

CONCERNS • young/inexperienced/un-empowered entrants into the market – how to empower • efficiency • pressure to meet ICASA regulations and deliver on a mandate within certain fiscal constraints. • Transparent and fair commissioning process • Managing IP is increasingly difficult and thorny – it is much simpler to control everything.

SOURCES OF DISAGREEMENT • At core of problems are: – Increased control – Lack of creator ownership – Heavy-handed management policy • RESULT Industry sustainability problems

INDUSTRY STRUCTURE – Broadcast not open competition industry – Dominated by a large government owned buyer with a complex mandate – public and commercial

SOURCES OF DISAGREEMENT – MARGINS – Low & inflexible margins & cost of capital – no sustainable growth or investment – No work, no income – INTELLECTUAL PROPERTY – No differentiation based on quality – No capital value – No exploitation of IP results in lost IP • No exploitation of multiple IP rights by SABC, yet creators are denied these rights • Tragic under-utilization of national asset

SOLUTIONS – Recognition of independent production sector as businesses operating in a competitive environment – Terms of trade to reflect this – IP to rest with / accrue to creator/s

BENEFITS • OPERATIONAL • Greater independence • Accumulation of skills • Less onerous on broadcasters • INTELLECTUAL PROPERTY • Empowering • Increase IP value • Owners invested in exploiting properties

WAY FORWARD Difficult changes need to be mediated

CONCLUSION • A commitment to interrogate current industry / broadcaster model with independent producers and broadcasters – re-shape & re-design to create a globally competitive growth model • A process that gives birth to a vibrant & viable industry that is self-sustaining

THANK YOU