PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATIONS BY PRINT MEDIA SA

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PRESENTATION TO THE PARLIAMENTARY PORTFOLIO
COMMITTEE ON COMMUNICATIONS BY PRINT MEDIA SA
  AN INTRODUCTION TO THE PRINT MEDIA INDUSTRY
17TH AUGUST 2004
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Introduction

• The Print Media SA Team
• Connie Molusi,
• Chief Executive Officer, Johnnic Communications
• Patricia Scholtemeyer,
• Chief Executive Officer, Media 24 Magazines
• Khulu Sibiya,
• Senior Manager, Special Projects, RCP Media
• Ivan Fynn
• Editor, Cape Argus, Independent Newspapers
• Natasha Stretton
• General Manager, Print Media SA

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Introduction

• Presenting to Parliament in two phases
• Phase 1 Introductory over view
• Background to Print Media SA
• Self regulation
• Ownership trends
• Development and empowerment
• Skills development
• Promotion of print
• Circulation and readership trends

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Introduction

• Phase 2 detailed analysis
• Present again to you later in the year
• Build on the on the first presentation
• Look in detail
• Technology
• Systems
• Transformation
• Media market place

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Background

• Print Media SA Umbrella organisation
• 3 Member associations
• Total of 617 members
• Print Media SA is representative of the majority
  of the participants in the print media industry

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Newspapers Association of South Africa (NASA)

• 43 national regional newspapers
• 133 community newspapers
• Majority of the titles are published in English
  and Afrikaans but there are titles published in
  isiZulu and Chinese
• Spread of titles
• urban and metropolitan daily
• Weekly
• monthly
• sold and free neighbourhood newspapers that are
  predominantly weeklies

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Magazine Publishers Association of Southern
Africa (MPASA)

• 400 magazines
• spread across consumer, trade, technical and
  business - to business, customer titles
• Members
• Media 24
• Ramsay Son and Parker
• Mafube Publishing
• Associated Magazines
• Yired
• Caxton Publishers Prinrters
• Johnnic Communications

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Community Press Association

• 41 small independent publishers
• In the process of being restructured
• Survey was conducted to ascertain needs
• Skills development
• Collective procurement
• legal and business advice
• The association will be launched and re-named in
  September

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Print Media SA

• Operates in the collective interests of members
• Issues are varied
• Negotiations with representatives in the
  advertising, marketing, printing and paper
  industries on matters of common interest
• Campaigns that promote print media and awards
  which recognize excellence in the industry
• Discussions and negotiations with government
• Example - establishment of the Media Development
  and Diversity Agency (MDDA)
• Represents members on other industry bodies

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Self - Regulation

• Key principle
• Vigilant self-regulation is the hallmark of a
  free and independent press
• There are a number of Codes of Practice
• Industry is bound by these
• Form the self-regulatory framework within we must
  operate

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 Press Ombudsman's Code of Practice

• Important mechanism of self-regulation for the
  print media
• Established to provide the public with an
  accessible, impartial and independent complaints
  mechanism
• Free, available to the public
• Parties who subscribe to the Code of Practice
  are
• South African National Editors Forum (SANEF)
• Forum for Community Journalists (FCJ)
• South African Union of Journalists (SAUJ)
• Media Workers Association of South African
  (MWASA)
• Print Media SA - NASA, MPASA and the CPA
• Funded by the print media industry

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The Advertising Standards Authority of South
Africa (ASA)

• Independent body set up and paid for by the
  marketing communications industry to
• Regulates the content of advertising
• Partnership
• marketers who pay for the advertising
• advertising agencies who are responsible for
  content
• media which carry the adverts
• All three sectors work together to manage the
  process
• The ASA works closely with consumer
  organisations, government
• Recourse for the public

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Chapter 9 Bodies

• These Bodies can influence the conduct of the
  media
• Some Chapter 9 bodies
• Human Rights Commission
• Pan South African Languages Commission
• Gender Commission
• The MDDA is also a Statutory Body
• The industry is bound by the agreement it has
  signed with the Agency

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Other Bodies and Acts

• The Competition Commission
• Extensive powers of intervention
• Concentration of power in the hands of one
  competitor
• Independent Communication Authority of South
  Africa (ICASA)
• Regulates broadcasting in the public interests
• Regulates the telecommunications industry

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OWNERSHIP TRENDS AND TRANSFORMATION

• Significant changes in the ownership, control and
  composition within the mainstream print media
  industry since 1994
• Some of the changes are
• 1995Independent News and Media bought the Argus
  Group
• 1995 Guardian Newspapers Limited became a
  majority shareholder in the Weekly Mail which was
  renamed Mail and Guardian
• 1996 National Empowerment Consortium (NEC)
  acquired a 35 stake in Johnnies Industrial
  Corporation Limited from Anglo American, which
  included subsidiary Johnnic Communications

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OWNERSHIP TRENDS AND TRANSFORMATION

• 1997Independent Newspapers sold its share in
  Sowetan to New Africa Investment Limited (NAIL)
• 1997Allied Publishing restructured its
  shareholding to extend ownership and control. The
  Sowetan acquired one-third of the company
• 1998Johnnic Communications acquired total
  control of Times Media Limited
• 1998Caxton (36 owned by Johnnic Communications)
  bought controlling interest in Perskor and merged
  with it

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OWNERSHIP TRENDS AND TRANSFORMATION

• 2002Trevor Ncube bought the majority share of
  the Mail and Guardian publishing company MG
  Media
• 2003 New entrant into the market, ThisDay, owned
  by Nduka Obaigena and partners
• 2004The Competition Commission approved the
  acquisition by Johnnic Communications of a
  controlling stake in New Africa Publications,
  owner of the Sowetan and 50 of its sister
  publication, Sunday World

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Ownership Trends and Transformation

• The impact of these changes have been profound
• Shifted the print media industry from a
  completely white-owned to a more representative
  spread of
• Black and white owned or managed
• Local and foreign interests.
• This is best demonstrated in the following
  analysis of urban and weekly newspapers sold in
  the country as measured by the Audit Bureau of
  Circulation (ABC)

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Table1 Ownership breakdown
Source ABC Circulation Report 39, 2004
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Table 2 Ownership breakdown
Source ABC Circulation Report 39, 2004
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Ownership Trends and Transformation

• There has also been transformation in the profile
  of the editors of the major newspapers in the
  county
• Majority of the editors are black even where the
  company is white or foreign owned
• Gender remains untransformed only 1 female
  editor Mail and Guardian
• In magazines the picture is slightly different
• Women, black and white, editors tend to dominate
  this sector particularly in womens interest
  magazines

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Ownership Trends and Transformation

• But the print media industry does recognize the
  the need for further change and diversity
• To this effect it committed itself to promoting
  diversity and the growth of media through
• the MDDA
• its own internal development unit, the Print
  Development Unit (PDU)

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Development and Empowerment

• Many difficulties facing small print media
  organizations
• Historical imbalances
• Lack of an enabling environment
• High barriers to entry
• High attrition rate
• The PDU was established to identify support
  mechanisms to help publishers in this sector
• The unit was established in 2000
• Funded by New Africa Publications, Independent
  Newspapers, Caxton, Media 24 and Johnnic
  Communications

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Development and Empowerment

• PDU developed a number of training programmes
  focusing specially on needs identified by
  emerging publishers
• Over 100 publishers and their staff participated
  in these courses
• PDU conducted extensive research into the sector
  and identified a range of problems
• Skills shortages, lack of capital, insufficient
  advertising revenue, high printing and
  distribution costs
• It proposed solutions
• Information highlighted in publicationNew
  Markets, New Readers, New Publishers,

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Development and Empowerment

• PDU was closed down once MDDA was established
• MDDA is a critical intervention in stabilizing
  this sector so that a diverse media landscape
  can be sustained in the long run
• MDDA is a unique public private sector
  partnership
• we have worked closely with government
• Print media has made a considerable financial
  contribution
• Independent Newspapers, Caxton, Media 24 and
  Johnnic Communications committed R24m over the
  next 5 years.

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Skills Development

• Development of skills remains critical to our
  industry
• Pressure to produce quality content that speaks
  directly to our readers
• In 2002 South African National Editors Forum
  (SANEF) commissioned a skills audit which
  identified a number of problems
• Juniorisation of the newsrooms
• Challenges of transformation
• Apparent lack of training
• Management within newsrooms
• Standard of practical teaching at some of the
  tertiary institutions

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Skills Development

• Report recommended greater contact between print
  media and the training institutions
• Get a better understanding of the skills
  shortages
• Therefore respond more effectively to these.
• A number of print media companies have committed
  funds to support tertiary intuitions to address
  these shortages
• Media 24 R1m every year to a nationals schools
  newspaper programme (partnership with
  Stellenbosch University)
• Johnnic Communications committed R4,6m to Rhodes
  University Department of Journalism and Media
  Studies
• Caxton funds the Caxton Chair at University of
  Witwatersrand

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Skills Development

• Companies are also doing in-house training
  spending approximately 5 of their payroll on
  training
• Ongoing commitment and challenge in making sure
  we meet the equity targets we have set
• Most companies have programmes in place
• Long-term process
• Smaller companies often have difficulties in
  attracting ad retaining equity candidates

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Skills Development

• Industry has established the Media Advertising
  Publishing Printing Packaging (MAPPP) SETA to
  which it also contributes1 of its payroll to
  training
• MAPPP SETA must play a critical role in skilling
  and reskilling people working in this industry
• The industry must continue to develop people with
  the skills
• to take advantage of the opportunities of
  empowerment
• meet workplace needs

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Promotion of print

• Number of bodies have been establish to provide a
  service to media, marketing and advertising
  industries
• Single out 2 key bodies
• Help us understand our markets better
• provide us with a currency to buy and sell
  advertising space

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1. Audit Bureau of Circulation (ABC)

• Established 1947
• Self- regulating auditing body
• Tripartite alliance between marketers,
  advertising agencies and publishers
• Audits and measures circulation figures of
  newspapers and magazines
• Independent transparent currency
• Therefore both the buyers and sellers of print
  can be confident about the value of the titles
  they invest in
• ABC releases verified circulation figures to
  market on a quarterly basis

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2. South African Advertising Research Foundation
(SAARF)

• Established in 1974
• Provides on-going, comprehensive and reliable
  measure of mass media and product usage
• Data helps
• marketers and advertising agencies make decisions
  about the selection of media,
• Media owners sell advertising space
• Owned jointly by these three stakeholders
  ensures that
• research is accepted and supported
• SAARF measures readership (AMPS, radio audiences
  (RAMS), television audiences (TAMS)

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2. South African Advertising Research Foundation
(SAARF)

• Latest four year tender has been awarded
  jointly
• Shonigani Consortium
• African Response
• SAARF has recently extended into Africa formed
  the Pan African Media Research Organization
  (PAMRO) to promote media and conduct research
  there

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Circulation and Readership Trends

• Print media has gone has gone through a difficult
  time globally in the last 15 years
• Circulation and advertising margins have been
  under pressure from
• Price hikes
• Depressed consumer markets
• Challenges from new media
• The print media in South Africa ha suffered
  similar problems
• Steady decline of circulation figures in both
  newspapers and magazines titles in the 1990s

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Circulation and Readership Trends

• This trend appears to be reversing
• The latest ABC figures (January June 2004) show
  that there is an increase in circulation across
  all the different sectors of the print media
• There are also indications that this is taking
  place globally -
• According to the World Association of Newspapers
  -circulations are up and the long awaited
  advertising recovery is underway

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    Table 3 ABC Circulation Figures  
Mike Leahy, IBIS Media DATA Service, August 2004
Mike Leahy, IBIS Media DATA Service, August 2004
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Circulation and Readership TrendsNewspapers

• Urban Dailies have shown a growth of 19 since
  2001
• With a 14 growth for the same period in 2003
• Community Free Sheets have shown an enormous
  growth of 65 since 2002
• With a 11 growth year on year
• This is reflected in gross advertising investment
  in this category since 2001

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Circulation and Readership TrendsNewspapers

• The latest AMPS 2004 supports this growth in
  newspapers
• Newspapers readership is stable with daily
  newspapers showing an upward trend
• The big success story is the daily newspaper
  sector remains the Daily Sun which continues its
  phenomenal growth
• The papers readership has grown
• AMPS 2003B 5.9 to AMPS 2004 7.6
• 2,292 million readers

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Circulation and Readership TrendsMagazines

• Net sales in magazines are up 24 since 2001
• They show 13 growth since the same period last
  year
• There is evidence of a move to more focused
  titles with male interest, youth and leisure
  categories gaining strength
• Although net sales are up this is a highly
  competitive industry and a number of new titles
  have been launched over the last five years
• In real terms this has meant some magazines have
  in fact lost circulation
• This following table illustrates this

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Table 4 ABC Circulation Figures
Mike Leahy, IBIS Media DATA Service, August 2
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Circulation and Readership TrendsMagazines

• The latest AMPS 2004 survey reveals that all
  magazines readership has taken a knock
• The AMPS Survey gives possible reasons
• Lower than usual increases in household income
  (0.1 below CPI)
• Shifts in the population estimates now
  proportionally more men
• In general there are more women who read
  magazines than men.

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Table Advertising spend in media  
Source Martin Venter, Nielsen Media Research,
August 2004 Share of Voice
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Table 8 Advertising spend in print  
Source Martin Venter, Nielsen Media Research,
August 2004  
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Advertising Trends

• Gross advertising investment in print is 58
  since June 2001
• However, prints share of voice has declined by 1
  according to figures released by Nielsen Media
  Research
• These figures exclude
• Classified, staff vacancies and property
  advertising
• These account for a major portion of print
  adverting
• If these categories were included then print
  share of voice in advertising spend would be
  higher
• Ten years on into the new democracy these figures
  show that despite economic difficulties of the
  past years, print media is healthy and vibrant

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Conclusion

• There are a number of systems in place in the
  print media industry
• There are also a number of issues we are
  grappling with
• in particular
• Transformation, media diversity and skills
  development
• We have implemented systems to address these
  issues
• We look forward to addressing you in the future
  on the progress of our actions
• We remain committed to growing a vibrant and free
  press
• Thank you for this opportunity