1 sabc presentation to portfolio committee on communications 15 august 2007

1

SABCPRESENTATION TO

Portfolio Committee on Communications

15 August 2007

"Broadcasting for Total Citizen Empowerment" 2

AGENDA

1. Introduction Chairpersons

2. Relationship with IPO and Production industry Group CEO , MM

3. PSL Rights Update Group CEO, AT, MM

4. Any other business All5. Questions & Answers All6. Closing Remarks Chairpersons


RELATIONSHIP WITH IPO, ETC

The SABC engages the South African production industry through

Meetings with their industry bodiesNational workshopsGenre specific training, development Master classes


RELATIONSHIP WITH IPO,ETC

Workshops for commissioned programmes

SABC focused conferences e.g.

• Encounters Film festival

• Durban International Film

• West Film festival

• Provincial Roadshows


RELATIONSHIP WITH IPO, ETCWhere are we as an organisation:-

Close to 60% of television content is outsourced – far in excess of ICASA quota of 40%

Only News and Sports programming are produced internally

Production Industry is strategic business partner

Regular meetings are held with the industry to discuss business operations as well as editorial matters


COMPOSITION OF THE INDUSTRY FORUM

Organisation consists of different bodies that the SABC engages with, namely :-

The Independent Producers Organisation

The Producers Association

Black Filmmakers Network


COMPOSITION OF THE INDUSTRY FORUM

July MeetingForum was expanded to include for the first time:Creative Workers Union of South Africa (CWASA)SA Scriptwriters AssociationVarious talent agenciesObjective: Empowerment and consultation across the value chain


Local v foreign content

0

200000

400000

600000

800000

1000000

2003 2004 2005 2006 2007

Years

R000's Foreign purchases

Local commissioning

Internal production

Local vs Foreign Content


ENGAGEMENT WITH THE PRODUCTION INDUSTRY

SABC Board and Executives – once a year

Group CEO,COO,Divisional Executives and Content Enterprise Units – three meetings

Content Hub – every month


PARTNERSHIP CONT. Managing Commercial realities that govern

relationship between IPO and SABC

Changes in the Industry such as digitization

The pay TV licensing process

Emphasized the importance of working together to develop industry charter/ transformation score card – SABC pledged material support

Transformation to include other broadcasters (eTV/ Multichoice/New Players


LONG TERM GOALS Facilitation of growth in the production

industry Drive transformation process Use technology to improve management of

proposals, customer care and proposal tracking

Develop guidelines on how to pitch Introduces disability guidelines Capacity building in Regions


PSL-SABC

Rights Negotiation Update


BACKGROUND

In 2002 the SABC and PSL signed an agreement for the television broadcasting of all a select number of a games under the auspices of the PSL with other rights as listed below.

- Pay TV

- New Media

- Radio

- Advertising and association rights


BACKGROUND (CONT) In exchange for a rights fee in excess of R500 million

over the 5 yrs PSL most importantly granted the SABC first right of refusal and matching rights

Further to this the amount to be paid in the first year of the rights was not sufficient to meet the PSL’s financial demands the SABC came to aid with a non-refundable loan/grant of a further +/- R10 million

Most importantly the PSL and the SABC collectively reached agreement on the contract to be engaged.


SABC EXPECTATION Through out the 5 yr period, the SABC was by far the PSL’s

biggest financier contributing in excess of 45% of the leagues annual sponsorship revenue.

The expectation was that the PSL would engage the SABC as per the terms and conditions of the contract

If agreement was not reached in during the process and outlined by the contract then the expectation was that the last matching

rights would be granted to the SABC as per contract

The SABC expected to pay more for the rights than what was paid in the out going contract as has been the norm in all rights renewals.


SABC EXPECTATION The issue around the dispute had little to do with

financial conditions but more with the terms of the contract renewal

Expectations was that the rights in of the renewal would resemble the rights afforded to the SABC in the original contract.

The expectation was also that the PSL would put forward a price for the rights held by the SABC in the old contract as was the case in 2002 and as undertaken by them in correspondence.


WHAT TRANSPIRED

The in December 06 meeting held to start the negotiations agreement reached on process surrounding the negotiations

January 07 the SABC and PSL entertain an arrangement wherein the SABC would fully underwrite the PSL ensuring that optimal prices are achieved for all its properties.

Feb 07 the PSL sends the SABC an Invitation To Tender (ITT) which requested the SABC to submit a price on a list of rights not equivalent to the rights currently held by the SABC.

Feb 07, the SABC and PSL reached a deadlock on the rights on offer and the process for reaching a financial settlement.


WHAT TRANSPIRED March 07 the PSL puts the rights currently held by the

PSL out to tender inviting various broadcasters to tender prices.

March 07 the SABC successfully stops this process through a court decision after requesting the PSL to refrain from breaking the processes outlined in the currently standing contract.

Arbitration starts and the SABC and PSL are engaged in arbitration meanwhile the PSL proceeds with its tender process post the 25th of May awarding the rights to Multichoice on 14 June 2007.


THE WAY FORWARD

Supersport retains the main rights holder status for the PSL rights, carrying a bulk of the rights that belonged to the SABC.

National outcry including organisations, political parties, unions, Portfolio Committees, SABC Board, etc. for PSL to reconsider.

PSL-SABC-SuperSport reached an agreement that allows the SABC to show some matches

- 143 games in total

- 110 Exclusive

- 33 shared games

- All semi’s, finals and A grade games shared.

- Production will be shared on the shared games up to 50%

- Radio Rights to be negotiated bilaterally

- Arbitration right retained and discussions mooted


THE WAY FORWARD This will result in limited access to matches for

the public as some high profile matches will be on Supersport. The current deal is based on the assumption that SuperSport /PSL deal is valid – a matter still to be determined in arbitration.

This agreement does not negate the SABC-PSL arbitration and should the SABC be successful, this would reverse the current rights agreement.


Misinformation Campaign by Print and other Commercial Media

Print media has taken a collective biased view against the SABC especially City Press which has a shared parenthood with SuperSport i.e. Naspers. Others have a political or commercial agenda.

Hence misinformation and blatant untruths have been published, e.g“SABC showed only 75 games last season”“SABC paid R300 million for British Premier League”“SABC was unwilling to pay as much as SuperSport”“SABC failed to make the bidding deadline”“Mbeki forced parties to settle”


Good Prospects of Success

We have sought an opinion from our team of 3 Senior Counsel on the prospects of the SABC being successful in the arbitration

The opinion received was that our chances of success are higher than 50%

We therefore remain optimistic that the gatekeeper rights will return.


THANK YOU

1 sabc presentation to portfolio committee on communications 15 august 2007

Documents

internallyproduction

industry forumorganisation

production industry

production industry

etcthe sabc

yeargroup ceo

editorial matters broadcasting

rights updategroup ceo