Far ahead of its continental neighbours, South African media is vibrant, developed, and thriving industry. This means, among other things, that it also shares many of the challenges currently experienced by media outlets around the world. Print is in decline, and publications are working hard to eke out new strategies. At the same time, television and radio enjoy broad reach across the adult population, and in these sectors, advertising revenue continues to rise.
The development of digital and new media has in many cases been rapid and innovative, but uptake remains low compared to other markets. Due in large part to low internet penetration, digital media is positioned to experience substantial growth as access barriers drop and online mobile usage picks up.
The media industry enjoyed a significant spending boost between 2010 and 2009, much of which can be attributed to the 2010 FIFA World Cup that South Africa hosted. Research suggests that media spending in 2011 for advertising and end-user expenditure reached a similar level, sustaining the previous year’s growth.
SECTOR SUMMARY: As in other large middle-income economies with relatively high adult literacy rates in certain segments of the population, print and broadcast media – both state-run and commercial – are well-established. The bigger media houses are significant players, with a number listed on the Johannesburg Stock Exchange. Media outlets have been demonstrating innovation and creativity in their entry to the digital and new media spheres. While the majority of output is in English, all of the country’s 11 official languages are represented. There is a strong Afrikaans-language market for newspapers and community radio stations targeting local audiences. Native language products are one area that has posted growth in recent years.
Local media has been affected by the uncertainties of the global economic climate as well other pressures, manifesting in declines, fragmentation of audiences, and decreasing advertiser budgets. However, the market did recover in 2010 as a result of the World Cup windfall. Increased subscription spending and broadcast advertising caused the television industry to grow by some 18.8% over the year.
A growing middle class will further buoy spending, Robin Parker, managing director of industry website Bizcommunity.com, told OBG. “The emergent middle class is set to be a powerful force in the media sector,” he said. “Combined household incomes will work to develop this huge new market.”
Rounding out the sector, radio is the country’s most accessible media, with 88.1% reach among the adult population; and television reaches some 83.9%. Print media captures a smaller portion of the population, due in part to the greater prevalence of illiteracy in parts of the country. An estimated 64.9% of the population accesses newspapers and/or magazines.
REGULATORY FRAMEWORK: The media industry emerged from a troubled history during apartheid, when severe restrictions and pressure, both formally and informally through harassment, were placed on the press. The new constitution now protects press freedom, and the sector is regulated by legislation and a number of government and independent bodies. In the past year, however, perceived threats to post-apartheid freedom of the press have elicited strong reactions from members of the press and civil society.
Broadcast media – television and radio – is regulated by the Independent Communications Authority of South Africa (ICASA), which also awards broadcasting licences and regulates the telecommunications and postal sectors. The National Association of Broadcasters (NAB) is an alternative self-regulatory body through the Broadcasting Complaints Commission of South Africa (BCCSA), which was established in 1993.
Regulatory reforms in the 1990s led to the proliferation of new television and radio stations. The virtual monopoly of the South African Broadcasting Corporation (SABC) was disbanded, with a number of its radio stations sold off to commercial operators. SABC was transformed into a company offering both public and commercial services. Over 100 community radio stations, including many broadcast in local dialects, received licences, and additional commercial radio and television stations were sanctioned as well.
Print media self-regulates through several mechanisms established and funded by industry actors. The South African Press Code, with more than 640 subscribed publications, is administered by the Press Council of South Africa. Press Council members represent both the press and the public, and delegates from the press are appointed by a range of industry bodies, including the Newspaper Association of South Africa and the Magazine Publishers Association of South Africa. The public may lodge complaints with the Press Ombudsman, who works to resolve issues prior to a formal hearing by the Press Appeals Panel.
OWNERSHIP: Guidelines exist regarding ownership in the media sector with a view to ensuring diversity. Established in 2002, the Media Development and Diversity Agency (MDDA) is a public-private partnership between government and major media houses aiming to “redress exclusion and marginalisation of historically disadvantaged communities and persons from access to the media”. The MDDA awards grants to support community and small commercial media projects.
The Black Economic Empowerment (BEE) and Broad-Based Black Economic Empowerment (B-BBEE) Codes are new frameworks for the media industry. The industry umbrella body, Print Media South Africa, estimates that the “consolidated” black ownership of the four main publishers is around 14%. The print sector has been criticised for delaying transformation of its ownership structure and failing to pursue a more aggressive restructuring when profits were high. The government has suggested the possible introduction of a print media charter to help encourage adoption of B-BBEE codes.
This diversification process has on occasion provoked criticism. “The African National Congress wants to ensure diversity of media ownership in the post-apartheid era, but in some cases hasn’t demonstrated an understanding of the distinction between ownership and editorial control,” Ingrid Louw, CEO of Print Media South Africa, told OBG.
NEW BILL: Government plans to pass a Protection of Information Bill and to create a Media Tribunal have been widely criticised. The bill was first mooted in 2010, and in late 2011, opposition peaked from civil society and select representatives of the press when Parliament’s lower house voted in favour of the so-called secrecy bill. The bill has yet to be reviewed by the upper house before President Jacob Zuma can sign it into law.
Critics argue that the bill violates constitutional safeguards of press freedom and will criminalise investigative journalism in the absence of a public interest clause. State security minister, Siyabonga Cwele, introduced the bill in March 2010 as a means of classifying information sensitive to national security. The proposed Media Tribunal, comprised of government appointees, would have the power to punish breaches of journalistic ethics. Critics say this would undermine the existing system of self-regulation and jeopardise press independence.
Defendants of the bill do not believe that perceived threats to press freedom will materialise. “Given the experiences of the apartheid era, media and journalists are capable of looking after themselves,” Phillip de Wet, journalist and commentator, told OBG. “Civil society is also very strong – demands from the middle class for improved public service delivery have helped give the population something to coalesce around.”
“There will always be access to other laws, which crucially include the constitution itself,” which enshrines the freedom of the press, added Kanthan Pillay, CEO of urban youth radio station YFM.
PRINT LANDSCAPE: Four print media houses dominate the sector: Media24, owned by South Africa’s largest media company, Naspers; Independent News and Media; Avusa; and the Caxton and CTP Publishers and Printers. Together, these firms own an estimated 85-90% of print media, including major newspapers, specialty magazines, and some internet and broadcast outlets.
Readership of daily national newspapers stood at 10.3m in June 2011 compared to 9.9m in June 2010, according to the South African Advertising Research Foundation (SAARF). However, circulation has dropped, and the Audit Bureau of Circulations, of which 850 South African publications are members, reported a 6.7% decline in the number of dailies sold in the fourth quarter of 2011 over the same time period the previous year. Readership of weekly newspapers exceeded 11.3m in June 2011, but circulation declined by 3% in the fourth quarter of 2011 over the fourth quarter of 2010.
Major players in both broadsheet and tabloid formats enjoy widespread readership. The Daily Sun, a Media24 tabloid, is the largest daily in South Africa with roughly 5.2m readers, nearly 2m of which are located in Gauteng Province. The Sowetan and the Afrikaans-language Die Son have daily readership in excess of 1m. Other notable publications include Isolezwe, a daily Zulu-language newspaper with a readership of 756,000; the Star, a Johannesburg-based daily with a readership of 576,000; and the Afrikaans-language daily Beeld, with a readership of 511,000. Weekend broadsheets the Sunday Times and City Press boast readerships of 3.67m and 1.6m, respectively. While posting lower readerships, daily and weekly newspapers like Business Day and Mail & Guardian enjoy success as niche products.
“There is still room in the market for more analytically focused products that fall somewhere between news and opinion,” said De Wet. “There could also be more micro-interest products, including in the technological and financial spheres.”
GOING DIGITAL: According to SAARF, monthly magazine readership was 12.7m in June 2011, a slight increase over the 12.5m readers one year earlier. Total circulation of consumer magazines grew by 1.4% in the fourth quarter of 2011 compared with the same period in 2010. One positive development stemmed from the sale of digital consumer magazines, specifically of business and news periodicals. Sales numbers reflect the still nascent state of the digital market, but reports suggest that the popularity of the iPad in South Africa will open up opportunities in the magazine sector.
“As elsewhere, the question is whether print can springboard into the digital and tablet market while maintaining its revenue stream,” said Pillay, who was previously managing editor of the Cape Times.
Media24, which oversees the publication of more than 60 titles, is the dominant player in the consumer magazine sector, according to the MDDA. Following the setbacks of the 2009 recession, the consumer magazine market grew by an encouraging 3.4% in 2010. While a number of leading special-interest magazines, such as Psychology Today and women’s magazine Femina, have closed due to decreases in circulation and advertising revenue, in early 2012 popular Italian fashion magazine Grazia announced plans to enter the market through Media24. Such developments are a promising indication of future sector growth.
“It’s an incredibly mature market,” Louw remarked to OBG. “Print as a stand-alone is dying, but online and special interest will provide the sector with longevity. The question is at what speed can publications incorporate print and online to ensure that longevity.”
BROADCASTING LANDSCAPE: While print has remained relatively static in recent years, the broadcasting sector has seen more movement, notably in the subscription television market and in commercial and community radio. According to SAARF, the number of households with access to television services – including free-to-air, subscription, terrestrial and satellite access – increased by 5.13% from 10.65m in mid-2010 to 11.2m in mid-2011. In the radio segment, it is estimated that more than 10m households countrywide have access, while nearly 90% of all South Africans age 15 or over listen to radio broadcasting weekly.
Public service broadcaster SABC dominates the television market, and its three free-to-air channels account for more than two-thirds of the country’s total television audience. Combined with e.tv, the privately owned free-to-air channel launched in 1998, such broadcasting accounts for a total of 90% of viewing.
SABC’s monopoly on television broadcasting came to an end in 1986 when M-Net, a subscription-based analogue service, was first launched. Later, the satellite pay-TV service DS tv, owned by MultiChoice, evolved out of M-Net and was launched in 1995. MultiChoice continues to dominate the satellite television market in South Africa and in several countries across the continent, boasting a continental total of 4.9m subscribers at the end March 2011, 3.5m of which are located in South Africa (see analysis).
MultiChoice’s 12-year monopoly of subscription television effectively came to an end in 2007 when the regulator ICASA awarded four new licences to pay-TV operators. Telkom South Africa, ODM, e-Sat and Walking on Water TV (WowTV) were all granted licences, while MultiChoice was also awarded a licence to regulate its existing position. ODM launched TopTV to rival DS tv, although it has struggled to make a dent in market share. The remaining licensees have yet to launch or have abandoned project plans.
Given domestic competition, MultiChoice has succeeded in extending its market share through lower priced packages, including DStv Compact and DS tv Lite. “Typically satellite providers have looked beyond South Africa for business, but the domestic opportunities are also increasingly being recognised,” said De Wet.
UPGRADES: New platforms are emerging that will help extend the reach of broadcasting services. In 2010, ICASA awarded two mobile television licences to e.tv and MultiChoice, and both providers quickly rolled out several mobile products. The regulator also approved a number of platforms for the delivery of digital terrestrial television (DTT). Digital migration is expected to be complete by December 2013, despite repeated delays to the process. South Africa is party to the 2006 Geneva Agreement, brokered by the International Telecommunications Union, the UN agency that coordinates telecommunications services. The agreement sets a June 2015 deadline for terrestrial broadcasters to switch from analogue to digital.
Given the affordability and accessibility of radio, this broadcasting medium remains one of the most important in South Africa. The radio landscape comprises of a number of national broadcasters, as well as a wide-range of regionally focused stations. Leading national stations include public service frequencies and commercial stations, such as the urban music station YFM and news and talk station 702 Talk Radio that broadcast out of Johannesburg.
“When the government opened the airwaves in the mid-1990s, it began selling regional radio stations,” said Pillay. SABC stations to hit the market included Gauteng's Highveld Stereo and Radio Jacaranda, KwaZuluNatal's East Coast Radio, the Western Cape's KFM, the Eastern Cape's Radio Algoa and the Free State's OFM.
“In the second round in 1997, it was more about greenfields, which saw the creation of stations like YFM,” added Pillay. In addition to YFM, seven other commercial radio licences were granted for stations broadcasting out of Johannesburg, Cape Town and Durban. In February 2012, ICASA announced plans to award an additional six licences for commercial stations.
Community radio now plays a major role as a result of the many licences handed out by ICASA. The National Community Radio Forum (NCRF) counts over 120 community radio stations among its members, most of which are operational and on air. Weekly community radio listenership is estimated to exceed 8.3m people.
“If the economy opens up further, radio could be a huge market,” said Pillay. “Johannesburg has great potential, but rural and local stations don’t attract national-level advertising campaigns and are less lucrative.”
ONLINE & MOBILE: Online media is an arena with significant potential, the scope of which is being explored. While sector players report that investment remains cautious, increases in internet penetration and mobile phone usage will encourage the segment’s growth.
The number of internet users reached 6.89m by June 2011, representing penetration of 20.3%, up from 15.6% a year earlier. Growth has surged in part because of the number of people using mobile internet services, with 2.11m of those accessing the internet via their mobile phone. A 2011 study of 20m South Africans over the age of 16 suggested that these numbers might be even higher, reporting that 39% of urban South Africans and 27% of rural users are now browsing the internet on their phone. The most popular destinations are social networking sites Mxit, Facebook and Twitter, but mobile email use is also increasing rapidly, with urban use rising from 10% in 2009 to 27% by the end of 2010.
Regardless of connection type, users’ primary activities include search and browsing, instant messaging and chat, email and social networking. But news and entertainment consumption via online media is not insignificant – 1.13m users report reading newspapers or magazines online, while 762,000 listen to radio online and 159,000 watch television. Some 982,000 users report using the internet to “obtain the latest news”.
Most newspapers, magazines and broadcast outlets have companion websites. Print media in particular is still investigating how to best integrate their products across multiple social media platforms. Established media groups, using existing in-house resources, are posting notable profits in the online space, although outlays are limited. Media24 and the Mail & Guardian have made a point to prioritise online content. Media24’s News24.com news website is the most popular in South Africa with 1.7m unique browser viewers in June 2011.
Several publishers, such as BDFM Publishers, which holds both print dailies and related online content, are exploring other profit-making schemes in the online arena, including the provision of targeted networking services. Elsewhere in the sector, including among major media houses, the online space is reportedly suffering from a lack of investment.
There is hope that the declining cost of bandwidth will encourage the earmarking of funding. “The demand for online output is certainly there, so we may start to see investment in the online space,” said De Wet. “Spending should focus on building and developing products, all of which will need to be scalable.”
NETWORK LEVERAGE: Certain particularities of the South African context, including its large rural population, combined with the declining cost of smartphones, will intensify the consumption of mobile media. “Mobile data has the potential to leapfrog other formats if products are repackaged appropriately,” Parker explained to OBG. “SuperSport, which broadcasts international football matches, will likely attract a vast market as it distributes products repackaged for mobile.”
Many media have yet to reformat their content into mobile-specific products, something that may change in the near future as demand begins to drive mobile-specific development. Mobile phone companies are also investing money into this area, especially as available bandwidth increases.
“The cost of production for online and mobile remains relatively high as it is a new industry,” added De Wet. “But skills are emerging everywhere and there are now solid, trustworthy players in the sector.”
OUTLOOK: As elsewhere, print media in South Africa is in decline and the future of the country’s extensive stable of publications will depend on their ability to adapt and innovate in the online and mobile spheres. The broadcasting landscape remains dominated by several key players, especially in television, but robust increases in advertising and audience figures suggest that further growth is likely in both television and radio.
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