e tv in the South African regulatory context

e. tv in the South African regulatory context

Policy Objectives

Broadcasting policy – 1994 to date • Establishment of IBA in 1994 • Triple Inquiry Report: – Community radio – Ownership and control of broadcast media – Public broadcasting: integrity & viability • Recommendations to Parliament Bronwyn. K: Refer page 3 and 4 of submission

Regulatory imperatives • Focus on radio (community empowerment) – Licensing temporary community radio stations • Community of interest • Geographically-defined communities – Privatising SABC regional radio services – Issuing new commercial radio licences • Introduction of licence conditions for M-Net and Open Window • Signal distribution licences

Private television • Feasibility study into introduction of private commercial television – Based on assessment of TV market – SABC as public broadcaster but relying heavily on ad revenue • Public hearings into television policy

Position Paper on Introduction of First Private Free-to-Air TV Channel • Policy took account of: – Availability of adspend – Competitive environment – Viability of SABC – 3 x PBS channels – Frequency availability – Minimum conditions for licence applicants – Conditions applying to 3 SABC services – Provision for Promise of Performance Bronwyn. K: Refer pages 6 to 8 of submission

TV licence hearings - 1997 • e. tv preferred applicant owing to: – Black empowerment shareholding – trade unions – Promise of performance on programming – Promise of performance on staff quotas and training – Proposals concerning news

Broadcasting Act 1999 • White Paper on Broadcasting Policy 1998 – Initiated by government – Regulatory objectives for SA broadcasting system – Structure & functions of public broadcasting system • Broadcasting Act – Division of SABC into PBS and CBS – Public service objectives of SABC Bronwyn. K: Refer P 10 of submission • Local content regs consequently amended

e. tv: Summary of Licence

e. tv’s Promise of Performance • 45% local content in performance period • 4 hours prime time drama per week • 16 hours children’s programming per week – 20% local – 20% languages • 19 hours information programming per week (2 in prime time) • Minimum weekly language obligations

e. tv’s Promise of Performance • • • 40% African staff 35% female staff 5% disabled staff Management majority historically disadvantaged Training commitment – 11% of salary bill All local programming other than news & current affairs commissioned from independent sector • Licence compliance measured on annual basis

e. tv’s Promise of Performance • Promise of Performance made in context of policy statements on SABC in Triple Inquiry, Position Paper, Broadcasting Act, local content regulations • Local content requirement of SABC at the time was 50% - all three channels • Commercialisation of one channel not envisaged

e. tv: Business Overview

e. tv timeline • • • Six-hour service launched in October 1998 News service launched in January 1999 24 -hour service launched in February 1999 Management shake-up: June 1999 Rand crash: December 2001 Additional investment requiring licence amendment: 2001/2002 • e. tv becomes 2 nd largest channel in SA: 2002 • Break-even: March 2004

Cost of Broadcasting • • Set-up, infrastructure & technology Signal distribution Local programming (R per minute) News International programming ($ per hour) Staff Operational

e. tv Investment • Projected: R 500 m over three years • Actual: R 1. 5 bn over five years (requiring new shareholder investment) • 1 st profit of R 30 m at end of fifth year • Profit potential limited by unfair competitive broadcasting environment

Principles governing commercial broadcasting Advertising Audiences Programming

Principles governing commercial broadcasting • Commercial TV is a business – overriding objective is to make a profit • Primary purpose is to raise advertising by drawing audiences attractive to advertisers • To attract audiences, the broadcaster must offer them programming which interests them • Tension between regulation and commercial imperative of commercial media

Most popular programming e. tv • Wrestling • Movies • Local (Backstage) General • Local • Movies

Regulation for a competitive environment

Revenue sources • e. tv: - Advertising (limited to 12 mins per hour) • SABC: - Advertising (no limits) - Licence fees - State funding • M-Net – Advertising (open window: added benefit) – Subscription fees

Why regulate commercial media? • Public service philosophy: – TV frequencies are a scarce resource and must therefore be allocated to ensure diversity and public benefit – May change with new technology • Competitive market philosophy – Ensure a vibrant media market by placing restrictions on media to allow plurality and diversity (e. g. radio licence formats)

Why regulate public media? • PBS is funded by public money & advertising • In other parts of the world, PBS is not regulated by independent regulator – governed by publicly appointed board (same as SABC) accountable to Parliament • What is the difference in SA? • Why must the SABC be regulated by the independent regulator?

Current regulatory issues

SABC amendment application • SABC presently has no specific licence conditions • Broadcasting Act requires SABC to apply for amendment to its licence to reflect: – Reorganisation – To impose appropriate licence conditions

SABC amendment application • SABC legal argument: – Provisions of Broadcasting Act are sufficient licence conditions – Imposition of specific licence conditions entails infringement of freedom of expression – SABC accountability is to Parliament through publicly appointed board – SABC itself must determine licence conditions through policies & ICASA must monitor compliance with these policies

SABC amendment application • SABC market argument: – Provision of public service programming is expensive – therefore important to maximise ad revenue – SABC serves a greater lower-income audience unattractive to advertisers – e. tv has eroded SABC’s audience and market share – Continued growth by e. tv will have devastating effect on SABC – Therefore light-touch regulation should apply

e. tv submission (legal) • Broadcasting Act sets out general statements of principle – not licence conditions • Licence conditions must be measurable and quantifiable to be enforced • Licence conditions determine quotas and not content – therefore no Bo. R infringement • Proper regulation of SABC key to ensuring fair competitive environment in SA (s 2 objectives in IBA Act & Broadcasting Act) • e. tv licence conditions more onerous than SABC • SABC CBS must have same licence as e. tv

e. tv submission (market) • e. tv growth has stagnated from early 2004 owing to commercialisation of SABC • e. tv serves a higher low-income market than any SABC channel other than S 1 (Nielsen) • SABC is a virtual monopoly – Three TV channels & 19 radio stations – Cross-promotion – Counter-scheduling (competition in acquisitions) – Cross-selling (anti-competitive discounting)

e. tv proposals: licence conditions • P. O. D: – (1) SABC serves public, not audience (prime time as imp. in PBS TV as commercial TV) – (2) SABC benefits from multiple outlets with multiple revenue streams • PBS proposals – specific & measurable public service obligations in prime time – Limit on no. of advertising minutes per hour • CBS proposals – same conditions as e. tv

e. tv proposals: licence conditions • Proper separation of PBS and CBS • No cross-promotion between CBS and PBS • Repeat programmes aired on other channels not counted towards local quota • Airtime sales of PBS and CBS to be separated • Programme acquisitions of PBS and CBS to be separated

Future regulation • • SABC application to be heard in September New public regional services to be licensed M-Net Open Window to be closed Introduction of digital transmission