SABC PRESENTATION TO

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SABCPRESENTATION TO

• Portfolio Committee on Communications
• 15 August 2007

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AGENDA

• 1. Introduction Chairpersons
• 2. Relationship with IPO and
• Production industry Group CEO , MM
• 3. PSL Rights Update Group CEO, AT, MM
• Any other business All
• Questions Answers All
• Closing Remarks Chairpersons

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RELATIONSHIP WITH IPO, ETC

• The SABC engages the South African production
  industry through
• Meetings with their industry bodies
• National workshops
• Genre specific training, development
• Master classes

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RELATIONSHIP WITH IPO,ETC

• Workshops for commissioned programmes
• SABC focused conferences e.g.
• Encounters Film festival
• Durban International Film
• West Film festival
• Provincial Roadshows

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RELATIONSHIP WITH IPO, ETC

• Where are we as an organisation-
• Close to 60 of television content is outsourced
  far in excess of ICASA quota of 40
• Only News and Sports programming are produced
  internally
• Production Industry is strategic business
  partner
• Regular meetings are held with the industry to
  discuss business operations as well as editorial
  matters

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COMPOSITION OF THE INDUSTRY FORUM

• Organisation consists of different bodies that
  the SABC engages with, namely -
• The Independent Producers Organisation
• The Producers Association
• Black Filmmakers Network

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COMPOSITION OF THE INDUSTRY FORUM

• July Meeting
• Forum was expanded to include for the first
  time
• Creative Workers Union of South Africa (CWASA)
• SA Scriptwriters Association
• Various talent agencies
• Objective Empowerment and consultation across
  the value chain

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Local vs Foreign Content
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ENGAGEMENT WITH THE PRODUCTION INDUSTRY

• SABC Board and Executives once a year
• Group CEO,COO,Divisional Executives and Content
  Enterprise Units three meetings
• Content Hub every month

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PARTNERSHIP CONT.

• Managing Commercial realities that govern
  relationship between IPO and SABC
• Changes in the Industry such as digitization
• The pay TV licensing process
• Emphasized the importance of working together to
  develop industry charter/ transformation score
  card SABC pledged material support
• Transformation to include other broadcasters
  (eTV/ Multichoice/New Players

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LONG TERM GOALS

• Facilitation of growth in the production industry
• Drive transformation process
• Use technology to improve management of
  proposals, customer care and proposal tracking
• Develop guidelines on how to pitch
• Introduces disability guidelines
• Capacity building in Regions

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• PSL-SABC
• Rights Negotiation Update

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BACKGROUND

• In 2002 the SABC and PSL signed an agreement for
  the television broadcasting of all a select
  number of a games under the auspices of the PSL
  with other rights as listed below.
• - Pay TV
• - New Media
• - Radio
• - Advertising and association rights

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BACKGROUND (CONT)

• In exchange for a rights fee in excess of R500
  million over the 5 yrs PSL most importantly
  granted the SABC first right of refusal and
  matching rights
• Further to this the amount to be paid in the
  first year of the rights was not sufficient to
  meet the PSLs financial demands the SABC came to
  aid with a non-refundable loan/grant of a further
  /- R10 million
• Most importantly the PSL and the SABC
  collectively reached agreement on the contract to
  be engaged.

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SABC EXPECTATION

• Through out the 5 yr period, the SABC was by far
  the PSLs biggest financier contributing in
  excess of 45 of the leagues annual sponsorship
  revenue.
• The expectation was that the PSL would engage the
  SABC as per the terms and conditions of the
  contract
• If agreement was not reached in during the
  process and outlined by the contract then the
  expectation was that the last matching rights
  would be granted to the SABC as per contract
• The SABC expected to pay more for the rights than
  what was paid in the out going contract as has
  been the norm in all rights renewals.

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SABC EXPECTATION

• The issue around the dispute had little to do
  with financial conditions but more with the terms
  of the contract renewal
• Expectations was that the rights in of the
  renewal would resemble the rights afforded to the
  SABC in the original contract.
• The expectation was also that the PSL would put
  forward a price for the rights held by the SABC
  in the old contract as was the case in 2002 and
  as undertaken by them in correspondence.

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WHAT TRANSPIRED

• The in December 06 meeting held to start the
  negotiations agreement reached on process
  surrounding the negotiations
• January 07 the SABC and PSL entertain an
  arrangement wherein the SABC would fully
  underwrite the PSL ensuring that optimal prices
  are achieved for all its properties.
• Feb 07 the PSL sends the SABC an Invitation To
  Tender (ITT) which requested the SABC to submit a
  price on a list of rights not equivalent to the
  rights currently held by the SABC.
• Feb 07, the SABC and PSL reached a deadlock on
  the rights on offer and the process for reaching
  a financial settlement.

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WHAT TRANSPIRED

• March 07 the PSL puts the rights currently held
  by the PSL out to tender inviting various
  broadcasters to tender prices.
• March 07 the SABC successfully stops this process
  through a court decision after requesting the PSL
  to refrain from breaking the processes outlined
  in the currently standing contract.
• Arbitration starts and the SABC and PSL are
  engaged in arbitration meanwhile the PSL proceeds
  with its tender process post the 25th of May
  awarding the rights to Multichoice on 14 June
  2007.

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THE WAY FORWARD

• Supersport retains the main rights holder status
  for the PSL rights, carrying a bulk of the rights
  that belonged to the SABC.
• National outcry including organisations,
  political parties, unions, Portfolio Committees,
  SABC Board, etc. for PSL to reconsider.
• PSL-SABC-SuperSport reached an agreement that
  allows the SABC to show some matches
• - 143 games in total
• - 110 Exclusive
• - 33 shared games
• - All semis, finals and A grade games shared.
• - Production will be shared on the shared games
  up to 50
• - Radio Rights to be negotiated bilaterally
• - Arbitration right retained and discussions
  mooted

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THE WAY FORWARD

• This will result in limited access to matches for
  the public as some high profile matches will be
  on Supersport. The current deal is based on the
  assumption that SuperSport /PSL deal is valid a
  matter still to be determined in arbitration.
• This agreement does not negate the SABC-PSL
  arbitration and should the SABC be successful,
  this would reverse the current rights agreement.

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Misinformation Campaign by Print and other
Commercial Media

• Print media has taken a collective biased view
  against the SABC especially City Press which has
  a shared parenthood with SuperSport i.e. Naspers.
  Others have a political or commercial agenda.
• Hence misinformation and blatant untruths have
  been published, e.g
• SABC showed only 75 games last season
• SABC paid R300 million for British Premier
  League
• SABC was unwilling to pay as much as
  SuperSport
• SABC failed to make the bidding deadline
• Mbeki forced parties to settle

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Good Prospects of Success

• We have sought an opinion from our team of 3
  Senior Counsel on the prospects of the SABC being
  successful in the arbitration
• The opinion received was that our chances of
  success are higher than 50
• We therefore remain optimistic that the
  gatekeeper rights will return.

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• THANK YOU