CFO Lufuno Siphugu is dealing with new realities in an evolving media landscape

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Broadcasting, television, and media have changed significantly over the last couple of years as multiple crises and the increasing adoption of technology set new precedents for entertainment, says Urban Brew Studios CFO Lufuno Siphugu, who has creatively chartered a course through the industry.

Lufuno Siphugu joined Urban Brew Studios – one of South Africa’s premier content creators, recognised for being a leading facilities provider and a creative hub for entertaining and informative content – in January 2020, right before the onset of Covid-19.

Renowned for delivering compelling content that has captivated audiences for over 30 years, the company is celebrated for consistently brewing a picture-perfect blend of creativity and technology from vision to viewer. However, the pandemic brought a halt to the organisation’s operations - and the entire broadcast production industry.

“It was a very challenging period across the sector,” Lufuno says. “Across the industry, stakeholders were devising strategies on how TV productions could continue while keeping people three metres apart, conducting daily health screenings, providing the correct personal protective equipment such as sanitisers, masks, gloves, face shields, and various other challenges. Policies and procedures also had to be put in place to ensure that people were safe, and remote working became the norm overnight. The industry as we knew it had come to a halt, bringing a cash flow crunch that impacted everyone in the sector.”

Urban Brew Studios navigated the difficult period by going back to basics and conducting cash flow forecasts, as well as strengthening collaborations with suppliers and clients.

“The value of all stakeholders becomes apparent to a business during difficult times. All stakeholders become invested in the survival of the business,” he says.

This foundation for a “new normal” prepared Lufuno and Urban Brew Studios for a post-Covid-19 reality that included new opportunities created by the boom caused by digital offerings such as Netflix, Showmax, Amazon Prime, etc. All major players in the content space had turned their eyes to Africa as their next growth opportunity.

According to FNB, consumer spending on audio and video streaming services increased by 70 percent from the period before the pandemic up to the end of June 2022. This trend continued into 2023 with a rapid rise in subscriptions to video-on-demand (VOD) services. Urban Brew expanded its content offering to cater to these new opportunities, resulting in hit shows such as Young, Famous, and African produced for Netflix.

However, these opportunities also came with challenges for the industry. The rapid increase in demand for highly-skilled professionals in the field led to the need to execute content at the standards that international players are accustomed to. The scarcity of these highly-skilled resources created a classic law of demand situation, where costs started to increase substantially due to the shortage of skills. As a result, professionals began demanding higher remuneration for their services and expertise.

For CFOs in the space, this evolution of the sector required a delicate balance between talent acquisition and financial sustainability. “As a business that has been around for three decades and is one of the biggest production houses in South Africa, we are better placed to take a lead within the industry in terms of being able to put together programmes that can upskill people and drive talent development within the industry,” he says. “It's about building the industry and ensuring that it is sustainable because if demand keeps growing and there aren’t enough skills, it’s not good for anyone. This is something we have been committed to for years through our skills programmes, and we are proud to build on this.”

At the same time, Lufuno emphasises the importance of building relationships with producers. This approach ensures that people feel at home at Urban Brew Studios and understand the need to continuously develop their skills and the impact it has on the industry as a whole.

Geopolitical and socio-economic uncertainties like the Russian invasion of Ukraine, rising inflation globally as well as load shedding and high-interest rates in South Africa further contributed to increased costs to manage the business.

“As a result, service providers began to pass down their costs, causing upward pressure on our business’ input costs. This also required a delicate balance to determine how much of our costs we can raise through price increases while considering whether our clients can afford these adjustments, given that they are also facing the same challenges,” he says.

“It’s all a balancing act as we try to navigate these challenges. We needed to prioritise and go back to basics where we categorise costs in terms of needs versus ‘nice to have’. Adaptability and agility are key during challenging times like these,” he adds.

A changing landscape

As with many professions impacted by the pandemic, Lufuno observed a shift in the CFO role. “The days where CFOs only looked at numbers are long gone,” he says.

“We can no longer be reactive. Proactive planning is crucial for every aspect of the business, no matter how extreme or hypothetical the situation may be.”

The pandemic also highlighted the significance of collaborative leadership, and Lufuno’s approach of valuing inputs from various stakeholders continues to prove instrumental.

“When it comes to examining business structure costs, for example, it’s difficult to critically examine the structure of the team, costs, and base when times are good. It may be that the structure seems optimal in terms of equipment, staff resources, and other aspects. However, when times are difficult and resources are not in abundance, one must look at the business critically and almost look from outside the business lens,” Lufuno says. “From that scenario, what the pandemic has done is started those types of conversations within our business where we had to look at essential costs until things turn positive.”

Once again, Lufuno says it all comes down to balancing. Balancing the budget, balancing the team, ensuring that skills are developed, and that demand for professional development happens through skills programmes to enable the continued growth of the industry.

“This is why collaboration is key, as it is going beyond the traditional role of a CFO of just examining the books,” says Lufuno. “The groundwork that we put in now that will shape our tomorrow, and I want to be in the forefront of that.”

This article was originally published in Edition One of the 2024 CFO South Africa Magazine, which you can download and read here!

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