a briefing to the parliamentary portfolio committee on communications 14 june 2011

A briefing to theParliamentary Portfolio Committee

onCommunications

14 June 2011

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The MDDA Team

Dr Tanja Bosch (Board Member) Ms. Nadia Bulbulia (Board Member) Mr Lumko Mtimde (CEO) Mr Nkopane Maphiri (Projects Director) Ms. Nontsasa Memela (Legal and Contracts Manager) Mr Tumelo Tshabalala (Project Officer – Research and

Training)

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Background, Context and Legislative basis

Section 16 and 32 of the Constitution Act No. 108 of 1996MDDA Act No. 14 of 2002

provides for the freedom of expression and access to information.

establishes a statutory body called the MDDA.

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The MDDA is entrusted with the responsibility of promoting media development and diversity in S.A. by providing financial and other support to community (non-profit) and small commercial media projects.

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The MDDA Act defines media defines media development

as all forms of mass communication, including printed publications, radio, television and new electronic platforms for delivering content.as the development of the media environment and infrastructure, so that historically disadvantaged communities and persons have access to the media as owners, managers, producers and consumers of media.

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The MDDA Act defines community mediadefines small commercial media

as any media project that is owned and controlled by a community where any financial surplus generated is reinvested in the media project; and “community” means a geographically founded community or any group of persons or sector of the public having a specific ascertainable common interest.as independent media enterprises or initiatives that are run for personal gain as micro, very small or small businesses as classified in the National Small Business Act, 1996 (Act No. 102 of 1996) .

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OBJECTIVES OF THE AGENCY IN TERMS OF THE ACT

Encourage ownership and control of, and access to, media by HDC as well as by historically diminished indigenous language and cultural groups,Encourage the development of human resources and training, and capacity building, within the media industry, especially amongst HDGs,Encourage the channelling of resources to the community media and small commercial media sectors,Raise public awareness with regard to media development & diversity issues

Support initiatives which promote literacy and a culture of reading,Encourage research regarding media development & diversity,Liaise with other statutory bodies, such as ICASA and USAASA

Vision

“Each and every

SA citizen

should have

access to a

choice of a

diverse range of

media”

Mis

sion

“A d

evel

opm

ent

Agenc

y th

at w

ill

assi

st in

bui

ldin

g an

envi

ronm

ent w

here

a di

vers

e, v

ibra

nt

and

crea

tive

med

ia

flour

ishe

s an

d

refle

cts

the

need

s of

all S

outh

Afri

cans

”

Mandate

CREATE AN ENABLING ENVIRONMENT FOR MEDIA DEVELOPMENT AND DIVERSITY WHICH REFLECTS THE NEEDS AND ASPIRATIONS OF ALL SOUTH AFRICANS

REDRESS EXCLUSION AND MARGINALISATION OF DISADVANTAGED COMMUNITIES AND PERSONS FROM ACCESS TO THE MEDIA AND THE MEDIA INDUSTRY

PROMOTE MEDIA DEVELOPMENT AND DIVERSITY BY PROVIDING SUPPORT PRIMARILY TO COMMUNITY AND SMALL COMMERCIAL MEDIA PROJECTS

APPROACH

The provision of grants and subsidies – both to individual media projects and to create an enabling environment for media development and diversity Leveraging resources and support through technical assistance Conducting and funding research

Facilitating capacity building Advocacy for media diversity


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Introduction

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• The advertising industry has over the years come under scrutiny for its slow empowerment advancement, which led to two parliamentary hearings in the early 2000s to probe allegations of racism and poor transformation progress. During the hearings industry bodies, like-minded organisations and stakeholders reported on progress made and the challenges experienced by the industry. The transformation process in South Africa has been a lengthy and complex one, with the government gradually enacting enabling legislation.

• The pace of the transformation process in the advertising industry over the last ten years of democracy has received much condemnation.

• After finding that the pace of transformation in the value chain was unacceptably slow, the Portfolio Committee on Communications directed government, through Government Communications (GCIS) and the Department of Communications, to facilitate a consultative process with all stakeholders to find a common blueprint for transforming the industry.


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Introduction cont …

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• This mandate resulted in the first joint undertaking by all stakeholders to commit to a unified view and common approach.

• This was codified as "The Values Statement of the Marketing and Communication Industry". It was endorsed by all stakeholders, adopted and signed on 23 April 2003.

• The MDDA also conducted a research into the Print , Distribution, Circulation and Marketing of grass roots press and found glaring gaps in the industry’s model. Out of this research the MDDA has developed interventions plans aimed at addressing the challenges of the sector


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• The GCIS and DoC research reports spoke in the main on the need for transformation in the industry having regard to

a) Affirmative Action b) Employment Equity targetsc) Ownership and Control commitments d) Enterprise development targete) Mentorship and Skills development plans

• The research did not investigate the business practices of the industry and how these promote and or hamper transformation.

• The call by the portfolio committee to understand the road travelled by the industry in relation to their transformational commitments is a crucial one more so since the industry’s business practices have enormous implications on downstream industries.


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• In March 2011, the Parliamentary Portfolio on Communications Committee requested the MDDA to assist in facilitating the oversight visits to the projects supported by the MDDA in the Eastern Cape and Kwa-Zulu Natal. A total of 7 site visits, two community media stakeholder consultation meetings were held. One of the stakeholder meetings was attended by 20 projects representing community media and small commercial media in the greater eThekwini and the surrounding areas.

• The Committee noted with concern during its recent oversight visit to the Eastern Cape and KwaZulu-Natal that there are still challenges facing the advertising industry.


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• Community Media projects lamented the lack of advertising support for community radio & TV stations, small commercial media and community print media projects.

• This lack of support is as a result of lack of understanding by the advertising industry of the community media sector.

• Some research has also established that the “real” reason why ads are not placed with the grassroots, according to some marketers, is that the lower segments of the market have too little disposable income. But the question is disposable for what?

• Research shows that LSM 1-6 spends over 80% of its income on food stuff and transportation. Social income (SASSA grants) have gone some distance to alleviate poverty and improve quality of life.


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• These improvements in the standards of living are an indication of a society in transition.

• This transition is also reflective in the consumer purchasing behavior and lifestyle choices of modern consumers.

• Community media has over the years performed best against this target market, therefore the assertion that LSM 1 – 6 has no buying power and that community media is no credible audience delivery platform is a misnomer.

• To illustrate the point further we have looked at the SAARF RAMS figures to trend community radio audience patterns over the past three years and the conclusion is one that says there is steady growth in the sector and one that shows no signs of back paddling

’000 7 713 7 858 8 291

%

7 831

Total Community

’000 3 803 3 940 4 234

%

3 951

7 DAYS

AVE. MON-FRI

Apr-10 Dec-10 Feb-11 Apr-11

Source: SAARF


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Transformation of Advertising

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• Community Radio audiences have increased by 578 000 cumulative listeners since April 2010 which is a 1.4% year on year increase from 7.7 million to 8.2 million listeners in the same period in April 2010.

• Total Community Radio share of audiences is 25% from a total radio audience of 34 million. (source: SAARF)

• Total revenue traded on 120 Community Radio stations in the 2010/11 financial year was R53 million (GCIS R35 million and advertising industry R18million). (Source GCIS and The Media Connection)

• Total private sector advertising spend in 2010 was R2.3 billion. Radio accounted for 12% (R276 million) whilst Community Radio received 6.5% (R18 million) of the total ad spend against a 25% total audience market share. (source: http://www.firstpage.co.za/tag/advertising )


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Transformation of Advertising (cont.)

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• According to Capro R45 million was spent in 2010 on independent publisher’s titles. This figure includes some of the Caxton owned publications. (Source: CAPRO)

• There are no reliable figures showing the accurate total spend on community print and small commercial publications as defined in terms of the MDDA Act of 2002.

• The MDDA is now working with GCIS and other organs of state to channel Government advertising to community and small commercial media projects. These will be projects that fall within the definition of the MDDA Act of 2002.


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Challenges for Community Media

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• The advertising value chain has been less than effective in the past. Government advertising was channeled through a media buying agency which resulted in an inequitable distribution of government advertising.

• The move by GCIS to centralize the media buying service is positive and has the potential to yield positive benefits .

• The MDDA is in discussions with GCIS to develop a pipeline for community media to facilitate equitable access to Government advertising spend that would be accountable and deliver on the mandate of government.

• The advertising industry doesn’t understand community media and there has been very little effort to reach out to this important media platform, despite the evident and relentless audience growth year on year.

• The MDDA through its partnership with AMASA will be hosting seminars and roundtables with the advertising industry to demystify the sector and provide support to agencies that require access to the sector.

• Discussions are also underway with AIP to ensure the industry understands the sector in accordance with definitions provided in the MDDA Act.


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Challenges for Community Media (cont.)

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• The MDDA research on Print, Distribution, Circulation and marketing of grass roots press in South Africa, has found that, because of the predominance of the bigger media companies, they are able to manage market conditions to some extent to suit their needs and may actively or by default limit the access of smaller players to the market.

• This exclusion can be seen in the way distribution is commanded by a handful of operations owned by the mainstream press; and in the way that media buyers fail to see opportunities in the lower end of the marketplace as it is below their radar.

• Given these prevailing market conditions, the MDDA has been positioning itself to energize the sector by coming up with ideas, facilitating printing and distribution discounts for small commercial and community media and by establishing a centralized online booking platform for all community media and small commercial media platforms to help all deserving media to access the much needed advertising revenue base and to help with the professionalization of the sector at large.


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Transformation Charters

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• Since the first phase of the BBBEE Codes was made public in December 2004, various industries have prepared documents stating their commitment to transformation.

• Section 12 of the BBBEE Act (No. 53 of 2003) made provision for the gazetting of transformation charters, but there was no comprehensive framework on the basis of which to develop and benchmark the charters.

• The advertising industry had already completed and implemented two transformation charters by the time government approved phase 1 of the BBBEE Codes. Statement 003 provides a complete regulatory framework to direct the formation of transformation charters, which also allows for them to be gazetted either in terms of Section 9 or 12 of the BBBEE Codes. As already mentioned, the MAC Transformation Charter (the industry’s third charter) was gazetted on 29 August 2008 under Section 12 of the BBBEE Act (Act No. 53 of 2003).


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Current state of Affairs of transformation

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The BBBEE baseline 2007 survey was commissioned to determine the state of BEE in South Africa. A sample of over 1 780 organisations across industries, size and type were selected. Almost 8% of the responses were from the transportation, storage and communications (TSC) sector (which includes advertising agencies) (Consulta Research 2007). The results of this survey concluded that organisations have begun the process by implementing the BBBEE elements that provided the most direct benefits (ownership and skills development), whereas the indirect strategy of empowerment was mostly disregarded (Consulta Research 2007). (Source: Southern Africa Business Review)


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Milestones to date

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• The dedication of the Association for Communication and Advertising (ACA) resulted in the Marketing and Advertising and Communication (MAC) Transformation Charter being gazetted on the 29 August 2008.

• The Objective of the MAC Charter is to give meaningful expression and implementation of the BBBEE Codes of Good Practice gazetted by the DTI, by facilitating and expediting transformation within the industry, by assuming the role of a national policy-making body that will give mandates to the MAC Charter Council, by formulating policies agreed upon, and with guidance of the MAC Charter Council, tracking its progress.


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Applicable Laws

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• Section 2 of the BBBEE Act states that :The objectives of this Act are to facilitate broad-based black economic by:

(a) promoting economic transformation in order to enable meaningful participation of black people in the economy;

(b) achieving a substantial change in the racial composition of ownership and management structures and in the skilled occupations of existing and new enterprises;

(c) increasing the extent to which communities, worker, cooperatives and other collective enterprises own and manage existing and new enterprises and increasing their access to economic activities, infrastructure and skills training;


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Applicable Laws

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(d) increasing the extent to which black women own and manage existing and new enterprises, and increasing their access to economic activities, infrastructure and skills training;(e) promoting investment programmes that lead to broad-based and meaningful participation in the economy by black people in order to achieve sustainable development and general prosperity;(f) empowering rural and local communities by enabling access to economic activities. land, infrastructure, ownership and skills; and(g) promoting access to finance for black economic empowerment.


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Applicable Laws

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Section 12 of the BBBEE Act states that the Minister must publish in the Gazette for general information and promote a transformation charter for a particular sector of the economy, if the Minister is satisfied that the charter-

(a) has been developed by major stakeholders in that sector: and(b) advances the objectives of this Act.


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Conclusion and recommendation

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• The answers to transformation problems will ultimately be determined by whether individuals, companies, act in a manner that satisfies their own self-indulgence and political agendas or the spirit of real transformation.

• Government should add legislation to the existing BEE framework that recognizes and rewards transformation endeavors, over and above the seven elements of BBBEE, as well as publicise and heavily fine companies that are found guilty of dishonest BEE practices.

• The Agency supports the Cabinet’s decision to centralize all Government advertising with GCIS and we recommend that a proportional advertising budget be set aside for Community and Small Commercial Media


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Conclusion and recommendation

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• The advertising industry through its charter also commits a proportional budget allocation to community media as defined in the MDDA act.

• The Agency commends the Committee for this initiative and hopes that the process will lead to enhancement of the goals and vision of a communications sector serving the people of South Africa.

• The Agency will be willing to work with the industry in further enhancing this submission and assist in providing lasting solutions for all, thereby promoting and encouraging media development and diversity.

CONCLUSION

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The Agency would like to express our appreciation and thanks to the Portfolio Committee for placing this issue on the agenda and afford us an opportunity to engage with it .

Further we hope –

to see this discussion shape into a process that will lead to the transformation of the industry.

to see equitable access to advertising by community and small commercial media, for meaningful commitment by the industry to support the this important sector of the

media.Thank you

14 June 2011

a briefing to the parliamentary portfolio committee on communications 14 june 2011

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