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SABC AND PAY-TV SCRAP

The public broadcaster and the pay-TV industry are already at loggerheads, ahead of the launch of a number of new commercial TV stations next year.
At the centre of the dispute is the SABC’s insistence that it should be paid for the content which the pay-TV operators are obliged to make available on their platforms “subject to commercially negotiable terms”. This, according to the Electronic Communications Act, is to help the public broadcaster achieve its mandate of universal access and service.

The pay-TV industry fears that should the public broadcaster’s request be granted by the Independent Communications Authority of SA (Icasa), consumers will bear the brunt of the costs as viewers will have to pay twice for the same content just because it’s available on diiferent platforms.

MultiChoice Africa and new pay-television operators Telkom Media and On Digital Media have asked that they be obliged to pay for only the distribution of content. The SABC should pay for its content production costs.

Christian-based broadcaster Walking on Water TV has asked that it be exempted from this obligation.

Nolo Letele, CEO of MultiChoice, which is already carrying SABC 1, 2 and 3 and SABC Africa, says MultiChoice pays no fee to the public broadcaster for its three channels. It commissions SABC Africa and therefore pays for it.

SABC CE Dali Mpofu says the arrangement with MultiChoice, which expires in March next year, is “irrelevant as a reference point” and will be subject to the new draft legislation.

Pay-TV providers argue that SABC channels are of little commercial value and do not warrant remuneration. Multi-Choice says SABC channels are not in the top-10 list of most-watched channels.

The SABC’s poor financial performance in the past two years has raised suspicions that it may be trying to use the must-carry commercial contracts to boost its financials. Its profits fell by 52% to Rl83m in the 2006/2007 financial year.

The SABC is heavily reliant on advertising, which accounts for over 60% of its revenue. For 2006/2007, revenue rose to R4,3bn from R3,9bn, though the growth rate has slowed to 9% from 16% the previous year. Direct funding from government in the form of grants went up by just 1% to R84m while income from licence fees fell by 1% to R760m.

Mpofu defends the SABC’s stance: “If the SABC provides content to a third party it’s entitled to compensation. I don’t understand why that should differ under a must-carry agreement.”

He believes that SABC channels are of commercial value to subscription-TV. “Research shows that people would subscribe if SABC were absent,” he claims.

At Icasa hearings last week, free-to-air broadcaster e.tv also submitted that it should be considered eligible in the must-carry obligations. “E.tv’s only source of revenue is advertising and given its public service obligations, e.tv should be afforded must-carry status in the regulations,” said e.tv COO Bronwyn Keene-Young.

E.tv’s suggestion has been dismissed by the other broadcasters, who point out that it is privately owned and does not qualify as a public service broadcaster.

Icasa will have to regulate on other issues surrounding the pay-TV launch:

– The implementation date, which the SABC suggests should be three months after launch. The operators want 18-36 months.

– The extent to which Icasa should be involved in the commercial negotiations.

– Whether pay-TV operators should be obliged to carry programmes or channels and whether new channels launched by the SABC must also be carried.

Telkom Media GM, marketing & communications, Michelle Garden, says the company has budgeted for the cost of carrying the SABC.

Source: Financial Mail – Matebello Motloung