IPO/SASFEDpresentation to the

Portfolio Committeeon

Trade and Industry

Friday 16th 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

ProductionProduction Post-production

Post-productionCreativeCreative DistributionDistribution

DVD•Formal•Pirated(7%)

TV•SABC•E-tv•MNET(70%)

FILM•Local•Foreign(15%)

WWW & MOBILE(7%)

SKILLS

COSTS

•Writing•Planning•Art•Design

•Actors•Camera•Sound•Lighting•Make-up•Wardrobe•Art/Design•Admin•Finance•Catering•Security•Transport

•Editing•Sound•Graphics•IT

•Marketing•Sales•PR

•Script dev.•Legal•Tax•Pitching

(10 %)

•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

(10%)

REVENUE

Crisis? What crisis?

• The recession– Ad volumes down 15% or more– Severe drop in film investment

• SABC melt-down– R500 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 R2.5 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.