IPO SASFED presentation to the Portfolio Committee on Trade

IPO/SASFED presentation to the Portfolio Committee on Trade and Industry Friday 16 th October 2009

Why are we here? • Our industry is unusual: – – Cultural, social, political impact Economic impact High profile, local and international Unquantifiable benefits • It faces a crisis • It has significant growth potential We must act now to defuse the crisis to allow the growth to materialise.

Our industry • Includes film, TV, commercials, corporate, documentaries, wildlife. • High-growth in past 5 years – included in ASGISA • Estimated employment: – Direct: 25 000 – Indirect: 100 000 • • High multiplier – estimated 2. 5 times Estimated turnover R 8 billion p. a. Very specialised, emotional 80% SMMEs. “It’s like herding cats…”

Quick guide SKILLS • Writing • Planning • Art • Design REVENUE • Actors • Camera • Sound • Lighting • Make-up • Wardrobe • Art/Design • Admin • Finance • Catering • Security • Transport (10 %) COSTS • Formal • Pirated (7%) • Editing • Sound • Graphics • IT • Marketing • Sales • PR Postproduction Production Creative • Script dev. • Legal • Tax • Pitching DVD Distribution TV • SABC • E-tv • MNET (70%) FILM • Cameras • Lighting • Studio • Set • Props • Travel • Accommodation • Crew • Cast • Legal • Accounting • Insurance (60%) • Edit suites • Sound studio • Music • Duplication • Graphics • Storage (20%) • Advertising • PR • Duplication • Transport • Local • Foreign (15%) (10%) WWW & MOBILE (7%)

Crisis? What crisis? • The recession – Ad volumes down 15% or more – Severe drop in film investment • SABC melt-down – R 500 million virtually ‘frozen’ – Recession has compounded problem • Incentive competition – SA lagging as a destination – Currency strength ‘Triple-whammy’

How bad is it? • Production sector – SABC cash flow crisis – historical and future – Big and small players closing down/cutting back • Post-production sector – Volume drops up to 70% – Established players closing down – Equipment being sold (to offshore) • Service sector – Foreign films dropped for first time in 5 years (back to 2004 level) On the brink of de-industrialisation…

What growth in the future? • Digital – Proliferation of channels (from 6 to 40) will need local content • Local model – Jerusalema/Tsotsi/White Wedding/Yizo-Yizo • International model – District 9/Blood Diamond/Hotel Rwanda • Services – 20 years of skills history already in place – Foreign investment of R 2. 5 billion Iast 5 years Growth from 2010 should outperform the economy

Government is proactive already • Initiatives – DTI, IDC, NFVF, Sec 24(f), Film Offices • Many current collaborative projects – – – DTI Rebate and Film Fund IDC film finance, proposed SABC bridging finance BBBEE structure for industry SARS discussions on Sec. 24(f) re-vamp SABC restructuring – DTI Sector Development Strategy of 2005 has been crucial to the industry. So what are we asking for?

Support your agencies in their efforts to support us • Accept that we “punch above our weight” in the economy • Approve short-term assistance in the crisis – Distressed Industry – SABC bridging • Enhance structures for growth – – – Roll-out 2005 Sector Development Strategy’s other projects Refine rebates New funding structures (IDC & DTI) Re-vamp stalled Sec 24(f) Revisit Lottery plans Funds for working committees

Thank you (and please remember) … pay your TV licence, go to the movies, and don’t buy pirated DVDs.