In the early 1990s, analysts had few problems in assessing the South African leisure industry. The SABC ruled the airwaves from television to radio. In 1990, M-Net took a large slice of the top sector of entertainment viewership from the SABC.
The film industry was ruled by NuMetro (part of the Gallo group, which was owned by Premier, now called Mega) and Ster Kinekor, controlled by Kersaf through Interleisure. The gambling industry was controlled by Kersaf through another of its subsidiaries, Sun International.
Since then there has been an explosion of opportunity in the entertainment industry.
The Independent Broadcasting Authority has of late licensed more than 100 community radio stations, a number of commercial and regional radio stations and one commercial television station, with the prospect of one SABC television channel being privatised.
Provinces have begun licensing gambling operators in an industry that is expected to generate at least R20-billion a year by the year 2000.
Dramatic increases in foreign tourism have seen a plethora of new hotels and tourist-accommodation establishments, as well as increases in car-rental companies, tour operators and aviation opportunities – which will increase as the privatisation of Aventura resorts and South African Airways move ahead this year.
Primedia has moved from commercial and industrial property into radio, advertising, marketing and promotions and specialist publications. A number of their deals have been in concert with union investment companies, namely the Mineworkers Investment Company and the South African Clothing and Textile Workers Union – under their umbrella company Hoskens Limited, which now owns 25% of Midi, the successful television licence bidder.
Other restructuring includes M-Net’s development of Multichoice and its move into foreign markets, increasing its subscriber base from 430 000 in 1990 to more than a million. Last year DStv, a satellite channel, moved into South Africa too.
In the last week M-Net’s share has climbed to 500c, five times its 1990 listing price. Whether Midi will give it competition in terms of advertising and on the markets, if it lists, remains to be seen.
Early this year Safren announced it would unbundle its assets. This group controls, among others, 73% of Kersaf. A more competitive trading environment has meant that it does not have the advantages apartheid gaming laws gave it, and it is adopting a lower profile in this industry. Thebe Investments last year bought up five of its ailing casino operations, including the Marula Sun.
Kersaf’s cautious approach to the changed environment appears to have met with market approval with the share climbing 50c in the past week to reach 3 500c, but still well down from its high of 4 150c.
Kersaf’s control of the cinema industry has also eroded, despite more than R23-million in ticket sales to blockbusters like Titanic. The entrance of new television channels, radio stations and magazine titles are seeing a more discerning public making more critical choices.
The South African leisure industry is finally becoming a sophisticated, multi-choice market – no one will be able to operate in the comfort zones of the past.
And with leisure and information becoming the fastest-growing markets in the world today, opportunities abound for far-sighted investors who have the wisdom to research the market, watch international trends and take a few risks.