COMPANY REPORTSe.tv

“Investment in new local programming has seen the channel’s audience figures grow and regain

previous highs.”

e.tv is South Africa’s only independent free-to-air television channel. The channel offers viewers a mix of local and international entertainment as well as current affairs programming.

e.tv saw advertising revenue under pressure as a result of a sharp drop in market share starting in the previous financial year. While market share has recovered, it came at a considerable investment in local programming which resulted in cost of sales ending the year on R673 million compared to R555 million, an increase of 21%. This investment was necessary and with the market share of e.tv now stable for the latter part of the financial year, advertising revenue should once again be more reflective of market share.

The investment in new local programming has seen the channel’s audience figures grow and regain previous highs. The core entertainment block of Rhythm City, Scandal! and telenovela block of Ashes to Ashes, which has been replaced by Gold Diggers, from 19:00 to 20:30 saw an audience share increase of 33% against All Adults from the 2014/2015 to 2015/2016 fiscal. Adults LSM 5-7, which is the core target market for local content, increased by 36.7% in the same period and Adults LSM 8-10 increased by 16.8%.

The 18:00 to 22:00 prime time block increased 3.9% against All Adults and 6.2% against Adults LSM 5-7, but decreased by 3.8% against Adults LSM 8-10.

The weekend 20:00 to 22:00 time block share increased by 10.8% against All Adults, increased by 11.5% against LSM 5-7 and increased by 1.2% against Adults LSM 8-10. This was largely due to an improved movie line up.

The local content strategy was successful in increasing e.tv’s share across both All Adults and Adults LSM 5-7, but lost 3.8% of Adults LSM 8-10 share. A remedial strategy focusing on regaining the LSM 8-10 market has been gradually implemented and has already started to see gains. Part of this has included the establishment of strong blockbuster movies and series slots.

e.tv recorded a net loss of R31 million, with advertising revenue amounting to R1.285 billion [2015: R1.387 billion], a 7% decrease year-on-year. Included in the net loss after tax are losses of R233 million [2015: R189 million] for the e.tv multi-channel business. These channels include: eKasi +, eMovie +, eToonz+, eNolly + and Beatlab.TV and are broadcast on the OpenView HD platform.

12 eMedia Holdings Integrated Annual Report 2016

SCANDAL!SELLO MAAKE KA-NCUBE

SCANDAL!BRIGHTON NGOMA

eSat.tveSat.tv continued to perform satisfactorily for the year under review. Despite downward pressure on advertising revenue in the television sector, eSat.tv’s 24-hour news channel eNCA continues to receive the highest audience share on DStv with over 50% of the news viewership on the platform and a daily cumulative audience in excess of one million viewers.

During the 2015/16 financial year e.Sat.tv embarked on a process of cost cutting in key areas. Most notably it shut down non-profitable entities, such as its Pan-African news division and China bureau, and removed the channel from the Sky bouquet in the UK.

Towards the end of the financial year the Group restructured certain senior management positions. Anton Harber was appointed as the Editor-in-Chief of eNCA on 1 February 2016 after Patrick Conroy was appointed as the Managing Director at sister company Platco Digital, owner of the OpenView HD platform. Anton Harber has extensive media experience as a journalist and manager and is a highly respected professional in the media industry. His role includes mentoring and growing future leaders of the television news industry.

eSat.tv’s digital division continues to successfully aggregate content across all its platforms, including live streaming, mobile and online. Digital audiences have grown to over 1.65 million unique browsers and one million active social media followers of the brand. While digital advertising revenues remain modest, these are increasing as eNCA’s digital properties increase their market share in this sector.

"eNCA has a daily cumulative audience in

excess of one million viewers."

eNCA ANCHORJOANNE JOSEPH

eMedia Holdings Integrated Annual Report 2016 13

Platco Digital is South Africa’s first free high-definition (“HD”) satellite television service, offering premium local and international content; including movies, music, drama, lifestyle and culture, learning, kids and religious programming.

Platco Digital’s key differentiator in the satellite market is that it offers HD quality multi-channel television entertainment with no monthly subscription fees. The platform offers 100% signal coverage across Sub-Saharan Africa, meaning that all South Africans can access free, quality television.

Platco Digital’s OpenView HD on the IS-20 and SES-5 satellites offers over 20 television channels and six radio stations.

OpenView HD ended the 2016 financial year with set-top box activations at 388 812. This is a year-on-year improvement of approximately 276 097 or 245%. At the time of preparing this report (24 August 2016) activations had increased to over 502 000.

In an effort to increase the number of retailers who stock STBs, Platco management has started engaging with a wider range of retailers.

PLATCO DIGITAL

"In terms of set-top box activations, OpenView HD has seen growth of approximately

245% this financial year."

HD

14 eMedia Holdings Integrated Annual Report 2016

COMPANY REPORTS CONTINUED

Continued strained market conditions and reduced marketing budgets across the national spectrum have resulted in YFM closing financial year 2015/2016 at a 4% revenue decline from financial year 2014/2015. We expect financial year 2016/2017 to yield more positive results for a number of reasons including an increase in political advertising during the run-up to the local government elections that took place in August 2016.

TRAINING AND DEVELOPMENTYFM continues to uphold its training-ground reputation and remains the leader in creating and harnessing new talent for the larger industry and forging pathways for young, ambitious individuals. 60% of the Y Academy intake from financial year 2015/2016 have been employed by YFM with at least four Y Academy alumni appearing in its current daytime programming line-up.

YFM was certified as a Level 2 B-BBEE contributor for financial year 2015/2016.

PROGRAMMING AND AUDIENCE MEASUREMENT As measured by South African Audience Research Foundation (“SAARF”) Radio Audience Measurement Survey (“RAMS”), during the 2015/2016 financial period YFM yielded an average of 1.4 million listeners between the ages of 15-34 in the LSM 6-10 categories per seven day period. This figure has been reasonably stable year-on-year since 2012.

MARKETINGAs the biggest media player in its target market, YFM’s marketing efforts tend to focus on events and experiences rather than above-the-line advertising. Notable experiential projects during the 2015/2016 financial year included YFM’s significant presence at the 2015 Loerie Awards and the Durban July. These events yielded significant client spend as anticipated. The Marketing team continues to explore new experiential avenues to ensure YFM’s presence in the relevant markets.

OUTLOOKYFM’s success is largely dependent on the content and quality of the broadcast service and its ability to amass the targeted calibre and quantity of listeners. The appointment of the new radio currency service provider is expected to make significant changes to the audience measurement figures, directly translating into revenue adjustments from the third quarter of 2016/2017.

Looming alcohol advertising bans and restrictions on advertising unhealthy foods pose a threat to advertising revenues in the medium term. Strategies to build alternative revenue streams to bridge the potential revenue gaps are being evaluated and implemented. YFM’s digital community of almost one million active members enables the programming department to issue a call-to-action on air with immediate feedback. This also creates the opportunity for visual elements complementing the on-air component being sold. The online reach of YFM’s digital platform and its ability to engage its members on a real time basis is a useful unique selling point with advertisers and has translated into a revenue stream of its own.

YIRED (“YFM”)

"YFM yielded an average of 1.4 million weekly listeners. This

figure has been reasonably stable since 2012."

YFM DJSMASH AFRIKA

SASANI STUDIOS

16 eMedia Holdings Integrated Annual Report 2016

Sasani Africa continued to perform satisfactorily in the 2016 financial year.

In a year that should have seen a decline in profits due to a fire at the Big Brother house, Sasani still managed to exceed last year’s results; Sasani recorded a R24.2 million profit after tax compared to R24.1 million in the prior year.

The Voice Angola and The Voice South Africa were the main contributors to the better than anticipated results, as was the initial block of The Voice Nigeria, which was completed in the third quarter of the year. For the year ending 31st March 2016, Sasani recognised R15.8 million of the R24 million gross contract value for the three series combined.

The challenges facing Sasani are twofold:

Firstly, post-production remains a challenge for our industry as equipment becomes increasingly accessible to smaller entities.

Sasani has, however, managed to secure a reasonable project in post-production, this being The Voice Afrique Francophone, which will be broadcast in West Africa. This series will run from September 2016 – February 2017 and will generate revenue of R807 868.00 in post-production. In addition, Sasani will facilitate the shoot to the value of R3,8 million this financial year. Sasani has the first right of refusal on a second season of this production should such be produced.

Secondly, an aggressive competitor Sky Rink Studios is on the horizon, actively attempting to poach clients from Sasani. 7de Laan was due to relocate to these new studios in the Carlton Centre from 1st January 2017. Danie Odendaal Productions, the producer of 7de Laan, has made the decision to remain with Sasani for the foreseeable future. This does not minimise our risk, as more profitable contracts, such as Isidingo or Skeem Saam, may still be poached by Sky Rink. Sasani is however making every effort to combat this threat, and to ensure that we retain all our clients.

On a positive note, Sasani currently awaits feedback regarding further seasons of The Voice South Africa and The Voice Nigeria.

COMPANY REPORTS CONTINUED

The Group has once again shown an improvement in its results and recorded a profit after tax of R8.7 million as compared to R904 000 for the prior year. There were many factors that influenced the results for the Group during the year. The figures were improved by the significant weakening of the rand and the acquisition of Moonlighting Films.

The results were negatively affected by the retrenchment of staff at Searle Street Post, the impairment of assets at Searle Street Post and general local economic conditions.

The weakening of the rand has given further impetus to international production companies to shoot in South Africa. There has been growth in both the international commercials market as well as the international film and television production sector coming to South Africa.

The Group restructured its loss making post-production facilities in Cape Town which led to some impairments and retrenchment costs that were included in the numbers for 2016. Subsequent to the restructuring, Searle Street has been running at a profit and is much better positioned to take the business forward.

EQUIPMENT RENTAL SEGMENTThis segment had exceptional results with revenue up by 48% from the prior year. This increase was attributable to the increase in international commercials, films and television productions coming to shoot in South Africa, driven by the weakening exchange rate.

The cost of new equipment has risen significantly due to the weakening rand, but the Group was able to acquire lighting and lenses from Arri Rental UK at a significant discount, which increased the capacity for the Group to service the local market. This increased capacity further assisted in raising revenue.

POST-PRODUCTION SEGMENTThe results for this segment were in line with expectations. This segment is under pressure due to continuous changes in technology and the extent to which this market has become more accessible. The restructuring and retrenchments at the Cape Town facility will improve the viability of this segment and improve its profitability.

Revenue is slightly ahead of last year, however the opportunity for growth is limited. The business units are looking at further diversification to grow revenue in other areas of production and post-production.

PROFESSIONAL FILM EQUIPMENT SALES SEGMENTThis segment delivered exceptional growth for the Group and ended 48% ahead of budget for the year. The camera brands that Moviemart represents all had multiple new product releases that were instrumental in revenue growth. The severe weakness of the rand in the last quarter of the year put pressure on revenue growth and will extend into the new financial year.

PRODUCTION SERVICESThe Group acquired Moonlighting Films, a commercial and feature film production services company that facilitates a number of the Hollywood productions that shoot in South Africa.

The transaction was effective December 2015 and the full effect of acquisition will only be evident in the new financial year.

SILVERLINE360

“The equipment rental segment had exceptional results with revenue up by 48% from the prior year.”

eMedia Holdings Integrated Annual Report 2016 17