The nice thing about being in the TV local-content business is that the stress kills you before the cigarettes do. The lousy thing is that everyone wants to get in on the act. It’s the highest profile business in the world, but fame and fortune are elusive, except for a fraction of the aspirants.
The business in South Africa hinges around local content quotas, which are not particularly onerous.
Despite the fact that local production costs seven to 10 times as much as imported foreign programming, it can be made to work for both broadcaster and producer.
Local content sits at about 55 percent for SABC1 and SABC2. For SABC3, it’s 35 percent; e.tv: 45 percent and M-Net, 10 percent.
Who’s who
M-Net and e.tv have a mandate to meet their quotas and that’s all. Despite this, both broadcasters spend a lot developing the industry – training, supporting workshops and bursaries. They know that it is in their interest to develop their suppliers – and that this is ongoing, as many producers get stale very quickly.
Because they have no other restraints, they are able to acquire their content from the creative independent producer best equipped to handle it. Thus, their commissions usually go to the established production houses, and newcomers get in only when their concepts are stunning, and they can show they have experienced expertise on board.
Then there’s the SABC, which has all sorts of mandates apart from the quotas. These include developing the industry, giving opportunities to newcomers and spreading their commissions over a broad base of suppliers.
This is a hard act, especially as the SABC accounts for about 80 percent of all the work handed out to independent producers. But then, argues everyone else, they have the licence revenue, and the footprint that gobbles up 80 percent of the advertising revenue, so it should be no great headache to the SABC.
The established producers get work because they deliver on budget and on time. Then there are those whose talent is undiscovered because they just don’t get a chance, unless the SABC feels that they haven’t achieved their quota of “new entrants”. In this case, they get a small production which they often mismanage.
Globally, countries that South Africa wants to emulate are four times richer, with far greater adspend and wealthier populations. They can afford the big budgets that it takes to sell the product on the global markets, which is where the profits ultimately lie.
South African content doesn’t fly globally. We just don’t have the budgets to compete. We sell good wildlife on the foreign markets, but precious little else.
These markets only want programming in English, and because they are rarely exposed to it, they find the South African accent hard to understand. The reality is that we are stuck with ourselves, or with our neighbours in Africa.
Follow the money
The core of local content is a contract between the broadcaster and the independent producer, which both parties are obliged to keep confidential. Therefore, the business tends to be highly secretive, and there is no published data.
Also, anyone who tells you anything verbally has a personal agenda, so all data gets distorted accordingly.
Commentators like myself have no option but to rely on the helpful URS (Usually Reliable Source).
It’s simple: Take the most profi table of all SABC localcontent programmes, “Generations”. URS tells me it costs about R7,000 per fi nished running minute (pfrm), or about R160,000 an episode. URS also tells me that advertising is fully booked, in fact oversubscribed – what the industry calls a “full house”.
The rate card sells 30-second spots for about R65,000.
There are 12 slots per programme.
So, according to URS, “Generations” costs about R40-million a year, and brings in about R75-million.
By contrast, broadcasters pay about R1,000 ($100) per finished running minute for foreign soaps like “The Bold and the Beautiful”. Which means that it generates roughly the same income at one-seventh of the cost.
However, few local programmes (notably “Jam Alley” and “Egoli”) have this excessive track record. Local content on both M-Net and e.tv is generally highly profitable, but rarely on the SABC.
URS has been out on the set of some M-Net and e.tv programmes, where the audience popularity is high, and reports that they are produced quite fast – the crews are lean and mean, and there are seldom disasters. However, URS’s older sister, (Highly Reliable Source or HRS), tells me that SABC crews are much larger, and that only the producers who have been in the business for seven years or more seem to run efficiently.
At the other end of the scale, the small producers get a fi ve- to seven-part documentary series at R5,000 pfrm, which comes to R625,000 (R5,000 x 25 x 5), of which the SABC’s bureaucratic system allows a profi t margin of 16 percent. Therefore, after maybe three months’ work, the producer walks away with a net profi t before tax of R100,000 with which to keep the company going until the next job. Pretty lousy life.
The SABC usually loses on this type of deal. It may be broadcast when an advertising slot costs R20,000, and only 70 percent of slots are sold. Using the formula earlier, revenue will just top R450,000 (while it costs R625,000).
So, there has to be some neat footwork to cushion production costs with sponsorship, trade exchanges or archive material.
Fast forward
Multi-channel is going to make or break the broadcasters.
The ability to pack seven to 10 digital channels into the same spectrum as one analogue channel means that approximately 16 channels will have to share the same 30-million-strong audience as the five. They also have to share the same adspend pot.
Content costs have to come down, and programming will have to focus on a small, dedicated niche audience, like we get on satellite TV today.
KykNET is a prime example. No one is going to claim that KykNET’s programming is high budget and world class. In fact, it’s low budget. But the audience loves it.
URS and HRS tell me that lifestyle programmes that cost R3,000 pfrm on SABC cost only R650 pfrm on KykNET. Ten years ago we called this “fit for purpose” (FFP): The budget
fits the value of the product. Broadcasters are now going to have to take FFP very seriously.
If production costs have to come down, it makes sense to use archive material instead of going to the costs of shooting new footage.
This happens all the time abroad, and reduces production costs to as much as 20 percent of the cost of a new programme. But you have to have a fully functioning archive, where each shot is catalogued and material is digitally retrievable; and where there are researchers and scriptwriters who are geared to sourcing this material, and fast.
HRS tells me that the SABC’s efforts to achieve this highly desirable state of affairs has resulted in programming that costs more than brand-new material.
Reversioning is supposed to make programming FFP at a low cost, but it requires expertise and experience.
Howard Thomas has been working in entertainment and media for 40 years. He is a media business consultant, trainer and specialist in audience psychology.
- This column first appeared The Media magazine (March 2009).
The nice thing about being in the TV local-content business is that the stress kills you before the cigarettes do. The lousy thing is that everyone wants to get in on the act. It’s the highest profile business in the world, but fame and fortune are elusive, except for a fraction of the aspirants.
The business in South Africa hinges around local content quotas, which are not particularly onerous.
Despite the fact that local production costs seven to 10 times as much as imported foreign programming, it can be made to work for both broadcaster and producer.
Local content sits at about 55 percent for SABC1 and SABC2. For SABC3, it’s 35 percent; e.tv: 45 percent and M-Net, 10 percent.
Who’s who
M-Net and e.tv have a mandate to meet their quotas and that’s all. Despite this, both broadcasters spend a lot developing the industry – training, supporting workshops and bursaries. They know that it is in their interest to develop their suppliers – and that this is ongoing, as many producers get stale very quickly.
Because they have no other restraints, they are able to acquire their content from the creative independent producer best equipped to handle it. Thus, their commissions usually go to the established production houses, and newcomers get in only when their concepts are stunning, and they can show they have experienced expertise on board.
Then there’s the SABC, which has all sorts of mandates apart from the quotas. These include developing the industry, giving opportunities to newcomers and spreading their commissions over a broad base of suppliers.
This is a hard act, especially as the SABC accounts for about 80 percent of all the work handed out to independent producers. But then, argues everyone else, they have the licence revenue, and the footprint that gobbles up 80 percent of the advertising revenue, so it should be no great headache to the SABC.
The established producers get work because they deliver on budget and on time. Then there are those whose talent is undiscovered because they just don’t get a chance, unless the SABC feels that they haven’t achieved their quota of “new entrants”. In this case, they get a small production which they often mismanage.
Globally, countries that South Africa wants to emulate are four times richer, with far greater adspend and wealthier populations. They can afford the big budgets that it takes to sell the product on the global markets, which is where the profits ultimately lie.
South African content doesn’t fly globally. We just don’t have the budgets to compete. We sell good wildlife on the foreign markets, but precious little else.
These markets only want programming in English, and because they are rarely exposed to it, they find the South African accent hard to understand. The reality is that we are stuck with ourselves, or with our neighbours in Africa.
Follow the money
The core of local content is a contract between the broadcaster and the independent producer, which both parties are obliged to keep confidential. Therefore, the business tends to be highly secretive, and there is no published data.
Also, anyone who tells you anything verbally has a personal agenda, so all data gets distorted accordingly.
Commentators like myself have no option but to rely on the helpful URS (Usually Reliable Source).
It’s simple: Take the most profi table of all SABC localcontent programmes, “Generations”. URS tells me it costs about R7,000 per fi nished running minute (pfrm), or about R160,000 an episode. URS also tells me that advertising is fully booked, in fact oversubscribed – what the industry calls a “full house”.
The rate card sells 30-second spots for about R65,000.
There are 12 slots per programme.
So, according to URS, “Generations” costs about R40-million a year, and brings in about R75-million.
By contrast, broadcasters pay about R1,000 ($100) per finished running minute for foreign soaps like “The Bold and the Beautiful”. Which means that it generates roughly the same income at one-seventh of the cost.
However, few local programmes (notably “Jam Alley” and “Egoli”) have this excessive track record. Local content on both M-Net and e.tv is generally highly profitable, but rarely on the SABC.
URS has been out on the set of some M-Net and e.tv programmes, where the audience popularity is high, and reports that they are produced quite fast – the crews are lean and mean, and there are seldom disasters. However, URS’s older sister, (Highly Reliable Source or HRS), tells me that SABC crews are much larger, and that only the producers who have been in the business for seven years or more seem to run efficiently.
At the other end of the scale, the small producers get a fi ve- to seven-part documentary series at R5,000 pfrm, which comes to R625,000 (R5,000 x 25 x 5), of which the SABC’s bureaucratic system allows a profi t margin of 16 percent. Therefore, after maybe three months’ work, the producer walks away with a net profi t before tax of R100,000 with which to keep the company going until the next job. Pretty lousy life.
The SABC usually loses on this type of deal. It may be broadcast when an advertising slot costs R20,000, and only 70 percent of slots are sold. Using the formula earlier, revenue will just top R450,000 (while it costs R625,000).
So, there has to be some neat footwork to cushion production costs with sponsorship, trade exchanges or archive material.
Fast forward
Multi-channel is going to make or break the broadcasters.
The ability to pack seven to 10 digital channels into the same spectrum as one analogue channel means that approximately 16 channels will have to share the same 30-million-strong audience as the five. They also have to share the same adspend pot.
Content costs have to come down, and programming will have to focus on a small, dedicated niche audience, like we get on satellite TV today.
KykNET is a prime example. No one is going to claim that KykNET’s programming is high budget and world class. In fact, it’s low budget. But the audience loves it.
URS and HRS tell me that lifestyle programmes that cost R3,000 pfrm on SABC cost only R650 pfrm on KykNET. Ten years ago we called this “fit for purpose” (FFP): The budget
fits the value of the product. Broadcasters are now going to have to take FFP very seriously.
If production costs have to come down, it makes sense to use archive material instead of going to the costs of shooting new footage.
This happens all the time abroad, and reduces production costs to as much as 20 percent of the cost of a new programme. But you have to have a fully functioning archive, where each shot is catalogued and material is digitally retrievable; and where there are researchers and scriptwriters who are geared to sourcing this material, and fast.
HRS tells me that the SABC’s efforts to achieve this highly desirable state of affairs has resulted in programming that costs more than brand-new material.
Reversioning is supposed to make programming FFP at a low cost, but it requires expertise and experience.
Howard Thomas has been working in entertainment and media for 40 years. He is a media business consultant, trainer and specialist in audience psychology.
- This column first appeared The Media magazine (March 2009).
