IPO news > Archive 2007

Minutes of the IPO Annual General Meeting held at 15:30 on Wednesday 31 January 2007 at Sasani Studios
Posted on 11 February 2007 at 11h00

Chairperson's report

2006 has been a year filled with industry activity and sense of renewed common purpose and great challenges for producers.

On the one had the Television industry is certainly buoyant with the SABC and MNET claiming to have increased the volume of content commissioned, (and from our thin canvassing within the producer networks this seems accurate), on the other hand in the year that saw Tsosti win an Oscar the feature film industry has seen a significant drop in local production and the hopes/promises of accelerated funding mechanisms such as within the DTI has been fraught with problems.

Whilst the IDC has affirmed its commitment to stay in the industry, it has clearly indicated that the terms of financing have been reviewed. Of the approx R 450 million invested into film, they have seen a return of 10%. Not a healthy situation.

So we find ourselves as an independent industry still predominantly dependant on the public broadcaster for our revenue and whilst there may be an increase in the volume of production there is an increasing concern around the tighter budgets/decrease in production overhead and asphyxiating commercial terms of trade.

The producing community (by this I mean IPO, TPA and independents) have been grappling with the NFVF’s role and it’s position with regards DTI and it’s own funding.

The outgoing IPO exec (voted in on 29 March 2006 ) will report back on their activities but in summary the 1 st quarter of our tenure was mainly active around the critical DTI rebate payouts that at the time threatened many of the feature film production companies. We also worked towards building unity between the IPO, TPA and SASFED. It was our intention to ensure that whilst we wanted to remain independent from SASFED, we also wanted to ensure unity and create an alliance – so as not to further fragment our industry.

Clearly our industry is one of the least organised sectors and many of our critical concerns with broadcasters and government are further hampered by our divisions. We have been of the opinion that a mature and consolidated voice is most beneficial to all.

The IPO hosted an Indaba for SASFED, TPA, DFA and IPO to find a common purpose. This took place in May and was well attended. From this we collectively created a position paper which was distributed to all industry stakeholders from DAC, DOC to broadcasters and funding institutions.

The first third was also largely used to resolve outstanding IPO administration hiccups.

The 2^nd third focused on industry unification and DTI intervention.

The final third for rigorous SABC intercession and DTI engagement.

The IPO has a vital and important role to play in the industry growth and development and we should see our collective experience as our strength.

Treasurer's report

The IPO Treasurer was unable to attend the meeting due to illness. His apologies were noted. Leon Noussis tabled the report on his behalf. It was noted that the IPO's major corporate governance issues have been taken care of and that most of the IPO's funds have been spent on telephone costs and a part-time administrator's salary. Leon drew attention to the list, included in the report, of paid and unpaid subscriptions by members.

David Wicht thanked James Whitehouse for introducing reporting systems where previously they had been non-existent in the IPO.

Report from the Broadcast Committee

The IPO and the TPA have developed a good working relationship and presented a united position at meetings with the SABC.

A high-level meeting took place with the SABC towards the end of 2006 to discuss renegotiating the terms of trade, with particular reference to IP. The SABC delegation included Mvuzo Mbebe, Solly Mokoetle, Dali Mpofo, Yvonne Kgama, Kamscilla Naidoo, Eddie Manzingana, and representation from the SABC's legal department. Robbie Thorpe, Rehad Desai, Pule Dipare, Niel Brandt and Joy Thapelo, with Howard Varney providing legal counsel, represented SASFED/TPA. Desiree represented the IPO at the meeting.

The SABC has undertaken to explore, together with the IPO/TPA & SASFED IP issues in-depth and has acknowledged that currently there are difficulties with regard to contracting and commissioning and daily interactions between producers and the SABC. The SABC has established a dedicated office under Eddie Manzingana to fast track the process of addressing independent producers' concerns.

Two working groups have been established consisting of representatives from the SABC, SASFED/TPA and the IPO. One of these groups is specifically focusing on IP ownership. The first meeting of the group was held a month ago and a second meeting is scheduled for 14 th February. In preparation for this meeting, the IPO/TPA will propose four or five principles which we believe should governing the negotiations as we move forward. Once these principals have been agreed then the real work of interrogating IP and renegotiating will commence..

The SABC will cover the costs of legal research to be commissioned jointly by the IPO/TPA and SABC. The legal team will be charged with researching current IP contractual arrangements and international best practice. An exploration of the impact of digital migration on IP, the Copyright Act and the SABC's current contracts, will all be analysed as part of this process, which will culminate in a proposal to the SABC. If the SABC agrees, the next step will be to interrogate how producers would like IP to change. As part of this process, the SABC has committed to hosting two indabas to elicit broader input from the industry.

The second phase will be to engage lawyers to start to redraft contracts. Currently the basic contract gives all rights to the broadcaster.

The second working group is tasked with examining all other aspects. The critical issue is increasing micro management of productions by the broadcaster as well as margins and production admin costs. The Content Hub has launched an initiative called EVAM which requests the producers to arrange pitch session with all HOD’s and CAST to CE’s for approval. This is of grave concern and many members have taken issue with this.

A meeting of the second task group (above) is scheduled for the third week of February.

The IPO exec agreed to ensure IPO take a leading position on both working groups.

SABC Film Fund

A first meeting had been held with IPO and TPA and the SABC consultants to discuss the SABC Film Fund. A team of Media Africa consultants appointed by the SABC, including Shan Moodley, Thami Nxasana, and Glynn O'Leary, called the meeting . The team has put together a 43-page questionnaire in response to a mandate from the SABC. The IPO/TPA teams felt they needed to understand the SABC's objectives before engaging with the questionnaire so as to put context. The team of consultants is working to tight deadlines and hoped to submit their final report/policy proposals to the SABC in time for endorsement by the SABC Board in April. The producer bodies were adamant that they would not be able to give the kind of input they were being asked for in time for the board meeting. The IPO/TPA said they were prepared to participate as a partner to develop the policy, but wanted to ensure that all information gathered was available for our organizations and we have full access so as to build our own database. In order to achieve a thorough response IPO and TPA requested funding to pay for someone to canvass al the members and fast track the process. It was also agreed that the response to the questionnaire may be constructed as a narrative document using where applicable the headings from the questionnaire.

The research team will revise their questionnaire and it will be distributed to the entire industry. Part of the team's mandate is to ensure regional producer feedback.

The TPA/IPO team has agreed to respond within eight weeks if SABC agreed to cover the costs as requested. The IPO and the TPA will submit independent proposals, but continue to work closely together.

Shan said the R45 million announced at Sithengi was reffered to as seed funding. He added that the first R 45 million was allocated to the SABC's 'icon' project.

Reports from the Longform Committee

The Longform Committee, which consists of IPO and TPA members, has been active since July 2006. The task teams that fall under the committee include a team dealing with the DTI, coordinated by David, and IDC team, coordinated by Brigid Olen, a SARS team, coordinated by Marvin Saven and an NFVF team, coordinated by Dan Jawitz from the TPA. The teams are essentially working towards industry positions on various short- and long-term issues.

The bulk of the work over the past six months has been working with the DTI to clarify the DTI's Customised Sector Programme (CSP) documents, which spell out intervention in the industry across five areas.

The task team is pressing the DTI for clarity on the CSP document and trying to get programmes into action.

Other elements include 24F and SARS and the continuing reluctance to entertain structured investment around 24F.

In relation to the DTI, a series of meetings were held - in Johannesburg , Durban and Cape Town - to review the rebate and to see what was required in terms of amendments. After these meetings, the DTI reported back on 13 December. The committee tried to get some feedback from the DTI representatives on what they anticipate doing on the large rebate and to get clarity on the proposal for a new rebate to stimulate the local film industry.

Barclays has established a fund, offset from transactions such as the arms deals. The meeting also explored the issue of enterprise development to make companies more skilled and self-sustainable.

The team is also researching export councils and marketing programmes. The task team believes the industry needs to work with DTI to implement programmes, there are precedents to be learnt from, the craft industry, for example. David said the DTI saw the task team as the entry point into the industry as a whole.

Summary of discussion

Responding to a question about what had happened to the R600-million linked to the CSP, it was noted it is not easy to gauge what happens internally within the DTI to review programmes and how they fit into broader policy affecting the Department of Arts and Culture, the NFVF, the Department of Labour, etc. It is a constant battle to keep the keep the issue of the R600-million on the table.

David said that the process followed in government is that if money is not spent within a specified time frame, it gets taken back and you need to reapply. He said that the industry should continue to motivate for intervention programmes that make sense for sustainability and the long-term future of the industry. There appear to be pockets of resistance within the DTI as well as supportive elements and there are tensions between the two.

Report on the Large budget film incentive

David spoke to the task team's recommendations on amendments to the large budget film incentive were distributed at the meeting. He said the industry's proposal for a new incentive to kick-start the local feature film industry was quite ambitious and aggressive. He said a meeting was scheduled with the DTI to discuss the recommendations. The incentive would change the face of the South African film industry completely. If succesfull one could anticipate that by March 2008, 10-12 feature films will make use of the incentive and the following year the number should double.

David said the task team had made important gains and had developed a vibrant working relationship with the DTI. He said the question of transforming the industry and BEE was high on the DTI's agenda and the rebate will be linked to this. The situation is made more complicated by the new broad based BEE rules (BBBEE) rules that have come out. Companies that turn over less than R5 million are automatically exempt. The DTI has the right to agree to the rebate depending on these BBBEE codes. David said a new IPO/TPA task team had been set up, coordinated by Helena Spring from the IPO, to come up with real and achievable scorecards. The task team's work will involve wide consultation in the industry to try and access missing statistics. David said the new rebate would not become a reality without a clear industry scorecard. He called for more producers to join the task team.

Report on PAYE

Marvin Saven reported. He said on PAYE there are currently high levels of disharmony in the industry because of different interests and agendas. The ACA (representing the advertising agencies) and the PMA (representing the talent industries) are locked into a feud about whether crewing agents and talent agents are labour brokers. This has complicated things for production companies, since responsibility for withholding PAYE falls on the agent.

A letter was sent to by the ACA to SARS asking for a ruling that the crewing agents are the labour brokers. If SARS confirms this, it will send a shockwave though the industry. The IPO believes this is not the way to go. The IPO's position is that production companies hire talent and should therefore continue to withhold/manage taxes. The task team feels that to hand over responsibility for labour to the agent will prejudice producers from a work environs perspective. The team recommends that production companies should hire crew and talent directly, and withhold taxes.

The issue of what code to assign to crew is not clear. SARS says the relevant code is the code to contract them as employees rather than independent contractors. There is a lot of disgruntlement among crew members around this but it cannot be resolved at a production company level.

On the issue of foreign artists, the new tax laws make foreign artists liable to pay tax at rate of 15 per cent from day one. The task team has spoken to the SARS unit that handles tax for foreign artists and a meeting is scheduled for February to discuss practical issues, once of which is the obligation of production companies to report to SARS that there are foreign artists in the country.

Report on Section 24

Section 24 is a very sensitive area that should be changed at Treasury level. The task team was hopeful that the license investment company would also drive changes with regard to 24F. Marvin said some work had been done with SARS and there is a willingness from SARS to support the industry.

SARS and the Department of Labour would need to understand the industry's perspective and requirement for the kind of special dispensation that has been in operation for years in other countries.

Report on the IDC

Brigid reported on an IPO/TPA meeting with Chris Mullin of the IDC. She said foremost in the IDC’s policy is it’s mandate to create and sustain commercial viability within the industry which is primarily to promote and protect commercial viability, to build local producers, and to promote co-productions through which South African producers are earning and retaining rights in the projects in which they are involved. Brigid said that the meeting was not very well attended by the IPO/TPA team and she called for more participation from the industry.

Election of the new IPO Executive

The meeting proposed to adopt the list of nominees as a whole rather than going through the normal process of completing ballot papers. There was unanimous agreement.

The IPOs new Executive Committee

Eleven members were elected:

• Desiree Markgraaff, Bomb (Chairperson)
• Leon Noussis, Sasani (Treasurer)
• David Jammy, Curious Pictures
• Philip Key, Moonlighting
• Briged Olen, DO Productions
• David Wicht, Film Afrika
• Mfundi Vundla, Morula Pictures
• Roberta Durrant, Penguin Films
• Coco Cachalia, Kagiso TV
• Friedrich Stark, Stark Films
• Levern Engel, Ochre Media

Closure

It was noted that members of the Executive Committee would be required to attend four meetings during the course of the year. The appointment of new members to the working committees will be ratified at the first meeting of the Executive Committee. Dates were not set at the meeting.

The Chairperson closed the meeting at 17.30.