Introduction

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

2. 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

3. 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;

4. 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;

5. 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;

6. 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;

7. 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;

8. 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 ;

9. 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;

10. 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;

11. 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;

12. 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;

13. 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;

14. Other Bodies and Acts • The Competition Commission: • Extensive powers of intervention; • Concentrationof power in the hands of one competitor; • Independent Communication Authority of South Africa (ICASA): • Regulates broadcasting in the public interests; • Regulates the telecommunications industry;

15. 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: • 1995:Independent 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;

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

17. OWNERSHIP TRENDS AND TRANSFORMATION • 2002:Trevor 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; • 2004:The 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;

18. 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);

19. Urban Daily Newspapers (January – June 2004) Category Total Copies Sold % Black Owned / Managed Foreign Owned Institution Owned 253,146 512,176 627,797 18,2 % 36,8 % 45,2 % Total 1,393,119 100 % Table1: Ownership breakdown Source: ABC Circulation Report 39, 2004

20. Urban Weekly Newspapers (January – June 2004) Category Total Copies Sold % Black Owned / Managed Foreign Owned Institution Owned 973,480 479,290 1,317,574 35,1% 17.3 % 47,6 % Total 2,770,348 100 % Table 2: Ownership breakdown Source: ABC Circulation Report 39, 2004

21. 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 women’s interest magazines;

22. 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);

23. 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;

24. 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 publication:New Markets, New Readers, New Publishers,

25. 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.

26. 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;

27. 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;

28. 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;

29. 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;

30. 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;

31. 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;

32. 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);

33. 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;

34. 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 1990’s;

35. 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;

36. Table 3: ABC Circulation Figures January - June 2001 January - June 2004 % Increase Urban Dailies (net sales) 1,224,770 1,463,398 + 19 % Urban Weeklies (net sales) 2,357,037 2,845,017 + 21 % Communities 333, 837 378,484 + 13 % Verified Free Distribution 2,883,630 4,751,122 + 65 % Magazines (net sales) 4,518,195 5,118,453 + 24 % Mike Leahy, IBIS Media DATA Service, August 2004 Mike Leahy, IBIS Media DATA Service, August 2004

37. 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;

38. 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 paper’s readership has grown: • AMPS 2003B – 5.9 % to AMPS 2004 – 7.6 % • 2,292 million readers;

39. 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;

40.  January - June 2001 January - June 2004 % Increase Magazines net sales 4,518,195 5,118,453 + 24 % Number of titles monitored 81 130 + 60 % Average title 55,780 39,373 - 29 % Table 4: ABC Circulation Figures Mike Leahy, IBIS Media DATA Service, August 2

41. 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.

42. Total Adspend: Total all Media with Print Split Value: SA Rands (Millions) Media Jul/00 – Jun/00 SOV* % Jul/03 Jun/04 SOV % Magazines 1,164 15 % 1,544 12 % Newspaper 2,178 27% 3,639 29 % Total All media 8,029 12,721 Table: Advertising spend in media Source: Martin Venter, Nielsen Media Research, August 2004 * Share of Voice

43. Total Adspend: Total Print by Group (12 months) Value: SA Rands (Millions) Jul/02 – Jun/03 % Inc Jul/03 –Jun/04 Consumer Magazines 1,054 9 % 1,153 Trade Magazines 245 7 % 263 Business % Technical 115 11 % 263 Daily Newspapers 1,688 10 % 1,861 Weekly Newspapers 815 18 % 959 Country & Free Sheet 487 68 % 819 Total Print 4,404 18 % 5,182 Table 8: Advertising spend in print Source: Martin Venter, Nielsen Media Research, August 2004

44. Advertising Trends • Gross advertising investment in print is 58 % since June 2001; • However, print’s 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;

45. 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