Senior Business Correspondent
THE huge challenge facing the SA media industry lay in the clamour of competing pressures from shareholders, the public, political figures and independent journalism, said Johnnic Communications group CEO Connie Molusi on Friday.
Molusi's comment comes at a time when the media industry has been struggling in a slowing world market in which advertising budgets have been slashed.
Molusi said it was sobering to consider that advertising revenues for the biggest international weekly financial titles had been halved within the space of 18 months.
He said at the National African Federated Chamber of Commerce's Empowerment Club in Johannesburg that with expensive distribution systems and high editorial costs, it was not surprising margins were being squeezed.
Increasingly cost-effective production methods had led to an increase in small media businesses and products, which had fragmented the advertising market.
"In 1965, it took three commercials in the US to reach 97% of women. Today, it takes 97 commercials to reach the same number of women," Molusi said.
While technology had opened channels to markets, revenues were still slim and unreliable.
"The nature of advertising is changing as clients seek new ways to access their communities directly, without mediation," he said.
"A recent US study indicated that classical advertising had declined from 42% of marketing budgets spent 20 years ago to 12% today. The rest of the expenditure had gone into direct, below-the-line and promotional spending," Molusi said.
Johnnic's research of 54 micro and small media enterprises through the Print Development Unit found there was a litany of problems that either destroyed the businesses or forced them into a permanent hand-to-mouth existence.
Molusi hoped the Media Development and Diversity Agency, set up between media industry players and government, would be able to assist smaller firms by arranging syndicate groups of new publishers to assist them in the sector with the basic research to establish markets. He said creating a syndicated agency would help such companies to access client funds, and syndicate access to print slots, thereby reducing unit costs. Syndicated distribution networks would also keep costs down.
He said low-cost entry to media, such as online sites, community radio or desk- top publishing magazines, tended to bring low-yield income. High-cost entry to major media opportunities required big capital.
The recent massive growth of newspaper sales showed growth potential though, Molusi said.
Jun 17 2003 07:02:26:000AM Patrick Wadula Business Day 1st Edition
Tuesday
17 June 2003
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