Small black-owned media and advertising agencies are battling to stay afloat in the face of dominance by multinationals, and hope the plan to create an Economic Development Fund out of massive fines paid by media companies after a Competition Commission investigation into price-fixing will come to fruition soon.
If not, says the owner of 10 year old agency, June15, a number of them could go under. Mxolisi G Buthelezi says there is a “serious issue of racial exclusion of black-owned agencies, and the chief culprit is BEE. Well established multinationals and local independent (white-owned) agencies can easily score BEE points and then the status quo remains. Most black-owned agencies (start-ups or not) cannot compete. So, in a nutshell, this aid should go beyond start-ups and include black SMME agencies,” he says.
For the past several months, The Media Online has been trying to source more information from the MDDA and the Competition Commission on progress in setting up the Economic Development Fund, an initiative ordered by the Competition Commission. The idea was to create such a fund from the fines issued to media houses as part of its probe into price-fixing and cartel-like behaviour of powerful media companies. The Competition Commission ordered that it should be overseen and managed by the Media Development and Diversity Agency (MDDA).
People know that the fund exists, and that so far over R5 million has been paid into it, but that is about as many facts as can be established at present.
The MDDA responded with a generic sent statement in response to questions, which said, “The Media Development and Diversity Agency (MDDA) and the Competition Commission of South Africa are currently in consultation with regard to finalising the administration of the Economic Development Fund,” it said.
“Once this current consultation phase has been completed, and the operation of the Economic Development Fund has been finalised, the Fund will be advertised, with details of how applications can be made to the Fund, being made public.”
The respondents also reiterated that, “The Fund was established by the Competition Commission to develop black-owned small media or advertising agencies that require assistance with start-up capital, and to assist black students with bursaries to study media or advertising, among others.”
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The Competition Commission picking the MDDA (which has a questionable history with allegations of corruption, incompetence and maladministration levelled at it) to oversee the fund, has many people in the South African media space worried, particularly since no information about the fund has been disseminated.
As Buthelezi points out, neither the MDDA or the Competition Commission has asked for input from the very agencies the fund is supposed to help. “I am more than happy to engage with them and have been lobbying both the MDDA and CompCom in this regard,” he says. “I honestly think that people who are not privy to our issues are tasked with developing solutions for us… how they even think they can do that beats me. I’ve lobbied other small agencies and they’re ready to engage as well.”
Buthelezi would like the Competition Commission to look into the advertising industry in total. He says the multinational groups that dominate are “actually killing the industry, but more so the often-small, black-owned agencies”.
He points to an example of a recent pitch by a leading alcohol client with various brands. “After the pitch process, two multinational groups emerged, one handling ATL and other BTL. Basically, now they can spread those brands within their respective networks thus rendering a number of small agencies out of business. ABSA did the same thing and we are seeing lots of clients going this route, hence my assertion that funding of start-ups without dealing with this systemic exclusion of small black-owned agencies is fruitless,” he says.
Safety concerns around the fund
The MDDA refused to respond to the question of how it will police the fund (ensuring it is not abused), and what security measures would be in place to ensure that the money is spent for its intended purposes, rather than ending up being “unaccounted for”.
The Competition Commission’s head of communications Sipho Ngwema, previously responded to the question of why the MDDA was chosen with this, “Given the impact of the cartel conduct to the small, particularly black, media and advertising agencies, we had to look for a vehicle that is entrusted with development and empowerment of small media enterprises. This falls squarely into the mandate of the MDDA”.
While the MDDA’s mandate suits this situation perfectly (it looks like a match made in heaven on paper), the execution of how this fund will be managed is a concern for many. It is fact, however, that the MDDA has experienced its fair share of problems which to date, do not appear to be resolved.
In fact, as recently as April, the Mail & Guardian reported that a group of concerned staff had started an internal movement to “Save the MDDA from the CEO and the board”. Former communications minister, Ayanda Dlodlo, said it was “common knowledge” there were problems within the agency. These involved fruitless and wasteful expenditure, excessive board fees and a host of other issues.
This is a serious amount of money, which is meant to help develop the South African media industry’s smaller, black-owned players and provide them with much needed assistance. Clarity on just how this will work, and be distributed in an ethical and just manner, is of vital importance.
Asked how he envisioned the Fund being utilised, Buthelezi says, “The fund needs to assist small agencies with operational costs for a certain period to allow them to trade. This includes office rentals and associated costs. I don’t think that people are looking for hand-outs… but a chance to compete”.
