Thebe Mabanga in your ear The battle for the hearts and minds of South Africa’s 28-million adults has spawned an industry that in 1999 attracted advertising worth R4,3-billion. According to a report by PriceWaterhouseCoopers, between 1995 and 1999 returns on capital invested in the entertainment and media declined by 34%. But taken at face value, this could be misleading. For as someone like Marc Termor, media analyst for UBS Warburg, will tell you: “Looking at returns on capital is wrong. This is because the driving companies in the sector, MIH and Naspers, have just made huge outlays on Internet business, interactive technology and pay per view operations. It is still too early in their growth cycle to start looking at the returns on capital.” Another contributing factor for this performance is that for traditional media companies, the advertising cycle has been relatively depressed due to the state of the economy. Lara Kantor, the newly appointed executive director of the National Association of Broadcasters (NAB) believes that, through no fault of their own, policy makers have struggled to devise a flexible framework to adapt to rapid change. This has led the NAB to propose a number of changes to broadcasting policy. The major change that they have proposed is the ownership limitation. Currently, a media house is allowed to own only two fm licences, two am licences in different markets and a TV station. The NAB would like to see this increased, because, as Kantor points out: “It was conceived for a pre-1994 broadcasting environment.” More importantly, it can help owners to spread risk across a broader range of entities. Another major change that the NAB has asked for is the review of foreign ownership. The association would like to see this increased from the current 20% to about 30%. The rationale for this proposal is understandable. This figure would be in line with the telecommunications companies and in line with the industry undertaking with the World Trade Organistation. The final major change that broadcasters would like is a review of the 20% local content quota for radio. This sounds very much like an attempt to shirk a responsibility broadcasters are currently struggling to fulfil, but Kantor explains it by pointing out that the association would like to see issues like African content being credited.
Ultimately, people who have a thorough grasp of integrated media aesthetics and a feel for the bottom line will drive – and cover – the broadcasting industry. One such person is Stan Katz. The former chief executive of Primedia Broadcasting who went on to guide Kaya fm through an impressive spell that saw the station’s listenership grow by 80% and revenue threefold has now established United Stations. “I like to work with struggling stations,” Katz says about his latest venture. United Stations is an airtime sales outfit representing the ailing Punt Gesels Radio and the established Radio Algoa and OFM (Radio Oranje). This is in addition to representing radio stations and TV channels in 26 African countries. Here Katz hopes to exploit a crucial feature of the broadcasting industry – dominating by entering first. This is showing faith in the continental market equalled perhaps by pay TV operator Multichoice. Other investors can learn.