State may force pay TV to fund SABC

Broadcaster says its channels have benefited the likes of MultiChoice

In the hunt for new revenue streams for the SABC, government could allow the cash-strapped broadcaster to charge payTV operators such as MultiChoice a fee for carrying its channels on their platforms.

In terms of the regulations, pay-TV operators must carry three SABC channels as a free-to-air public service. But SABC, which relies on advertising spend and mandatory licences paid by all SA households with a television set to fund its day-to-day operations, has long argued that the requirement is unfair as it hands its competitor free content without it getting paid for it.

In a draft white paper, or broad statement of government policy, the department of communications said while the policy forcing pay-TV broadcasters to carry SABC channels for no fee has ensured the public broadcaster will meet its universal access obligations, it may distort the market in the face of increasingly intense competition for audience and content.

Should the law come into force, the socalled retransmission fees, which are already a major source of revenue for public broadcasters in the US, would be a major boon for the public broadcaster, which is looking to unlock new sources of revenue to deal with its crippling financial problems.

The white paper, which was published last week, comes as the SABC struggles to dig itself out of years of financial mismanagement, often requiring government bailouts. It has debt of nearly R2bn, a huge infrastructure maintenance backlog and an unsustainable wage bill. It spends over R3bn a year on salaries of more than 3,000 permanent employees.

It received a R3.2bn bailout from the government late in 2019, which it used to pay off most of its debt. But with advertising revenue falling due to the economic crisis made worse by Covid-19, the broadcaster is forecasting a budget shortfall of at least R1.5bn in the 2020 financial year.

The must-carry channels have commercially benefited MultiChoice Africa at the expense of the public broadcaster ... SABC1, SABC2 and SABC3 are among the most-watched channels on MultiChoice s DStv,” the SAB Chas said.

Some of its series, like Generations, have attracted huge audiences and advertisers, but the SABC said it got nothing after they had been aired on MultiChoice platforms.

The white paper proposes an overhaul of the SABC s funding model to ensure that it has adequate funds to meet its public mandate.

The SABC is heavily reliant on advertising and revenue from licence fees to stay afloat. It receives 85% of its revenue from advertising, sponsorships and other commercial partnerships, 3% from the government and 12% from TV licence fees.

On Monday, a MultiChoice spokesperson said the company had noted the release of the white paper and the document did not reflect any final decision by government on must-carry regulations.

We will be responding to the proposals made in the white papers which will impact the entire audiovisual sector.”