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Presentation on Needletime Amendments by the National Association of Broadcasters

Presentation on Needletime Amendments by the National Association of Broadcasters. 9 October 2001. Introduction. Introduction. Our team today: Randall Abrahams, Chairperson, NAB Lara Kantor, Executive Director, NAB Peter Grealey, Webber Wenzel Bowens Who the NAB represents:

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Presentation on Needletime Amendments by the National Association of Broadcasters

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  1. Presentation on Needletime Amendments by the National Association of Broadcasters 9 October 2001

  2. Introduction

  3. Introduction • Our team today: • Randall Abrahams, Chairperson, NAB • Lara Kantor, Executive Director, NAB • Peter Grealey, Webber Wenzel Bowens • Who the NAB represents: • All TV broadcasters • All SABC radio stations • The commercial radio industry • 40 community broadcasters

  4. Introduction • Will focus on potential solution to plight of SA artists • SA Music Development Fund will see broadcasters and other stakeholders making financial contributions • Also open to pursuing other proposals

  5. Introduction • Why are broadcasters concerned about needletime? • Potential impact on broadcasting • Unsure whether it will address SA artists • No impact studies undertaken • Formulation of amendments

  6. Introduction • Structure of presentation: 1. The impact of needletime on broadcasting 2. Whether needletime will substantially advantage SA artists 3. Our concerns about the formulation of the amendments 4. Our proposal for a SA Music Development Fund

  7. Section One The Impact of Needletime on Broadcasting

  8. Impact of Needletime on Broadcasting • Background on broadcasting • Significant transformation since 1994 • Significant intervention from govt and ICASA • Substantial public interest contributions e.g. • Ownership provisions • Programming conditions • Coverage stipulations • Justifiable exchange for use of public frequencies

  9. Broadcaster support for SA music • Wide support for and compliance with 20% minimum quota • AMPCOM proposal • In-kind support to the value of R20m per year • Indication of good faith on part of broadcasters

  10. Broadcasting still in flux • Broadcasting young and not fully stabilised: • Only one greenfields radio station has broken even • Etv not yet broken even • Community radio struggling to reach sustainability • SABC revenue doesn’t support vast mandate • New levies will increase financial difficulties - radio likely to be most affected

  11. Impact on Radio • Over R50m in gross annual advertising income • Highveld Stereo • Jacaranda • East Coast Radio

  12. Impact on Radio • R30m - R50m in gross annual advertising income • Metro FM • 5FM • Ukhozi FM • KFM • 702

  13. Impact on Radio • R15m - R30m in gross annual advertising income • Radio Sonder Grense • Umhlobo Wenene • Good Hope FM • Lesedi FM • OFM • YFM • Algoa • Cape Talk

  14. Impact on Radio • R5m - R15m in gross annual advertising income • Classic FM • Thobela FM • Motsweding • SAFM • Good Hope FM • Kaya FM • Lotus FM • Radio 2000

  15. Impact on Radio • Under R5m in gross annual advertising income • Ligwalagwala • Munghana Lunene • P4 Cape Town • Phalaphala FM • P4 Durban • Ikwekwezi FM • Punt Radio - Cape Town • Punt Radio - Johannesburg • All community stations

  16. Radio Stations by Annual Income

  17. Impact on Radio • Negative real growth in 2001 • Only six commercial music stations profitable • Dire position of community radio • SABC stations cross-subsidise public mandate • 2001 SA’s worst advertising year since 1985

  18. Conclusion - Impact on Radio • Broadcasting facing difficulties • Needletime will increase cost of doing business • Needletime will add to existing content costs • Needletime payable by all stations

  19. Conclusion - Impact on Radio • Likely consequence - profitability of a few stations reduced, bulk of sector driven into further debt, closure of stations could follow • Disincentive for future investment • Reduction in media voice • Potential negative impact on music industry • Full impact study needed

  20. Section Two Will Needletime Substantially Advantage SA Artists?

  21. Will Needletime Substantially Advantage SA Artists? • Primarily intervenes in relationship between broadcasters and recording companies • Radio and Recording industries are similar in value and have symbiotic relationship • Legislation already protects right to control selling and hiring of sound recordings • Needletime doesn’t intervene in relationship between record companies and artists

  22. KPMG Scenarios • Preliminary • Do not measure royalty flows on actual music flighted • Trends demonstrate underlying impact of economic structure of SA music industry

  23. Scenarios • Needletime payable on all music - benefits may therefore flow to those who produce and sell international music • Local content quota currently 20% - unable to sustain significantly higher quota due to lack of SA material being produced • Even with increased local content, benefits to SA artists not substantial

  24. Scenario One - 20 % local music • R10 to SA artists • R40 to international artists • R1, 00 to independent record companies for SA music • R9, 00 to major record companies for SA music • R40,00 to major record companies and international independent companies for international music

  25. Scenario Two - 35% local music • R17, 50 to SA artists • R32,50 to international artists • R1, 75 to independent record companies for SA music • R15, 75 to major record companies for SA music • R32,50 to major record companies and international independent companies for international music

  26. Will SA artists substantially benefit? • Preliminary scenarios show benefits to artists likely to be small • Royalty inflows from other countries likely to be small - less than 4% of total revenues? • No guarantee that record companies will reinvest royalties • Other more sustainable strategies • Need further studies

  27. Section Three Analysis of Amendments Under Consideration

  28. Analysis of Amendments • Lack of consensus • Questionable policy basis • Disregard for international best practice • Inappropriate extension of exclusive rights

  29. Analysis of Amendments • Lack of reciprocity • Misunderstanding of international obligations • Additional impact on TV broadcasters and film industry

  30. Section Four An Alternative Solution

  31. An Alternative Solution • SA Music Development Fund: • Broadcasters will make contributions • Beneficiaries will be SA artists and recording companies • Significant rather than incidental benefits to SA artists and recording companies • Funds to remain in SA • Dynamic and flexible • Holistic solution • Accountability

  32. Conclusion

  33. Conclusion • In broadcasters view, needletime not a suitable solution • Doesn’t effectively address problems of SA artists • Broadcasting could be damaged • Need holistic strategy • SA Music Development Fund could form part of this

  34. Thank you

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