IPO/SASFED presentation to the Portfolio Committee on Trade and Industry Friday 16 th 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: – Indirect: 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 Production Post- production Post- production Creative Distribution 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.