Broadcasting Bill: public hearings

Documents handed out
Association of Advertising Agencies (Appendix 1)
Freedom of Expression Institute (Appendix 2)
Multi-Choice (Appendix 3)

DETAILED MINUTES
Association of Advertising Agencies
Ms B Reed read out the submission made jointly by the Association of Advertising Agencies and the Media Directors Circle. They stated that they supported the process of restructuring the broadcasting sector, and that they want a sustainable broadcasting sector that would provide them with opportunities to effectively reach their markets. Their viewpoint is underpinned by a concern for the economic viability of all broadcasting endeavours and that idealism must be tempered with financial realism. Comments were confined to sections of the Bill directly relevant to their business.

Some of the recommendations made were:
In terms of section 2c regarding ownership and control of media by diverse groups, the AAA recommended that training would be vital to obtain these objectives because for a healthy and viable broadcasting sector, it would be necessary to focus on the promotion of qualified and competent persons.

The AAA also expressed concern that clause 2a and 2b concerning the "strengthening of the spiritual and moral fibre society" and "safe guarding, enriching and strengthening the cultural, political, social and economic fabric of South Africa" should not provide cover for censorship. They stated that they would welcome the recognition of the role of debate and the possibility of diverse viewpoints.

While the objects stated a need to develop a health South African broadcasting industry, it was also necessary to recognise that we live in a global village and therefore they recommended that international standards and technical developments should be acknowledged.

In clause 3.6 dealing with the extension of programming in the Republic’s official languages to all South Africans, the AAA recommended that the wording "circumstances permit" should be rephrased to read "where economically viable".

In terms of the broadcasting service the AAA recommended that there be a distinction between satellite and terrestrial broadcasting.

Questions by committee members
Mr Green (ACDP): You’ve indicated that there is a problem with financial viability. What further funding would you propose? You’ve also suggested that community of interest should go beyond geographic area. Are you aware that frequency is a scarce resource?

Response by Ms Reed: [Question (1) wasn’t answered]. They do acknowledge that airwaves is a scarce resource and that they did not have a solution. But still felt that geographical area was too limiting.

Ms S der Merwe : What are your views with regard to satellite and terrestrial broadcasting? How do we improve the moral fibre of society?

Response by Ms Reed: In broad terms satellite broadcasting has moved into pan regional mode. Moral fibre could be improved through a decrease in hate speech. However they felt that the South African laws should cover that.

A committee member asked with regard to advertising why everything was still "lily white"? He also wanted to know why the AAA was so conservative in terms of the transformation.

Ms Reed responded that the AAA had to admit that they have a reputation for being conservative. but that was mainly due to the fact that they invest clients’ money. She went on to say that she realised that because blacks were disadvantaged, they are underrepresented. However she said that the agencies provides bursaries for the disadvantaged. She also went on to say that transformation is pointless if there is just a black face. They want a person who could contribute and add value to the organisation.

A committee member asked why do you say you do not understand the intention of distinction between public and commercial broadcasting? Ms Reed said that the AAA did not want to see two bureaucracies built up in the SABC again. She then added that maybe they misunderstood this section of the Bill.

A departmental official said that the intent is to create a viable business unit not a bureaucracy. There was also a deliberate attempt to go from public to private (commercial).

A committee member asked about the protection of children in terms of what adverts may be offensive. His second question was to gain the AAA’s view on not being able to advertise tobacco.

Broadcasters are being responsible in that they mention "Some scenes may be offensive" and by that they provide a guide to censorship. The rest is up to the parents in terms of what they allow their kids to listen to or watch. With regards to the tobacco question, he said that it was unfair because if it is a legal product, there should not be a problem with advertising it. He saw it as an infringement of freedom of speech.

Freedom Of Expression Institute.
They welcomed that there was an acknowledgement of community broadcasting. They were concerned however because no work was ever done on community broadcasting. Also in the case of free to air broadcasting, the Bill does not take into account issues such as topography. The community must not be restricted to only free-to-air broadcasting.

There is a need for an institution/agency that ensures media diversity and development so that historically disadvantaged groups have the opportunity to broadcast. With regard to regulation and policy directives, the Bill does not properly distinguish the powers of the Minister and this should be reviewed.

Regarding the SABC, changes have been made but appointment procedures must be spelt out more clearly. They recommended that provision should be made to increase public access to the board. With regard to the SABC’s charter, the institute felt that it had been modeled heavily on the BBC charter (ten clauses had been taken directly from the BBC’s charter). Further consideration should be given to what goes into the charter because at present it is not very strong. The independence of the SABC was not guarranteed in the charter. The most probable reason is that it is so in the BBC charter. The charter should set out its own aims and go beyond the BBC’s charter. Regarding corporatization, the question is from where should the core funding of the SABC come? If the SABC does not get funding from government then it is a corporarization. If it does receive funding then it is not corporarization. The Freedom Of Expression Institute does not understand nor supports corporatization.

The BBC and ABC are called corporations but they do not return the dividends to the fiscus. Therefore according to the institute they are corporations in name only. In this area the institute supports only limited commercial activities.

Questions by committee members
Mr Green: You seem adamant against corporization. Would this not be the channel to bring funding necessary to cross subsidise?

Response: Corporatization is not always proportionate to commercialization. The institute feels that maybe the SABC should venture into commercialization. However, as far as corporotization goes, it kills off cross subsidization.

Mr Marsh enquired into the composition of the institute.

Response: There is a membership of 350 people. In terms of spread they are mainly in the Gauteng region. It is an extremely diverse group but very small. They fight to gain access to information and to obtain freedom of speech.

Appendix 1: Association of Advertising Agencies

ASSOCIATION OF ADVERTISING AGENCIES I MEDIA DIRECTORS CIRCLE

ORAL SUBMISSION TO THE PORTFOLIO COMMITTEE ON COMMUNICATIONS CONCERNING BROADCASTING BILL (B94-98)

7 September 1998

Introduction

This submission is made jointly by the Association of Advertising Agencies and the Media Directors Circle (Gauteng).

We value the opportunity to participate in and contribute to the process of South African broadcasting policy formulation.

Collectively our members are responsible the bulk of media selection and placement in South Africa. In this, we are concerned with all media - print, outdoor, cinema - as well as television and radio. Adindex estimated above the line advertising across all media as R6,149 billion for 1997.These advertising funds play an important subsidy role in helping to provide affordable media to the citizens of South Africa.

We fully support the process of restructuring the broadcasting sector. We want a robust, world class and sustainable broadcasting sector, that will provide us with opportunities to effectively, appropriately and cost efficiently reach our markets. We desire to see a range of broadcasters, therefore, that meet the needs and demands of the various sectors of the South African nation.

Our viewpoint is underpinned by a concern for the economic viability and sustainability of all broadcasting endeavours. We believe that idealism must be tempered with financial realism.

Due to the relatively limited time available we have confined our comments to sections of the Bill, directly relevant to our business and where we believe we have the necessary qualifications.

Objects of the Act

The AAA and MDC broadly support the Objects of the Act. We would, however, raise some areas of concern.

In reference to Chapter I, Objects of Act, point 2c, we endorse the notion of ownership and control of media by diverse groups. There is, however, the concern that the promotion of the interests of the historically disadvantaged should not simply be a process of entitlement. For a healthy and viable broadcasting sector, it is necessary to focus on the promotion of the competent and qualified. We, therefore, believe that training has a vital role to perform in the attainment of the above objectives.

We note too, that a significant injunction from the 1993 IBA Act has been discarded, namely that there should not be "undue interference in the commercial activities of licensees, whilst at the same time taking into account the broadcasting needs of the public." Whilst we recognise that all sectors of the broadcasting industry have roles to play in serving the public good, we believe that there must be the reciprocal recognition that any such goals must be economically viable.

We believe that this point of financial viability should be overtly stated with reference to points 2d, 2e, 2f, 2k, and 2m and 2r.

Clearly the encouragement of investment in the broadcasting sector (point 2a) will be dependent on the economic soundness of all ventures undertaken.

We also express a concern that 2a and 2b concerning the "strengthening of the spiritual and moral fibre of society". and "safeguarding, enriching and strengthening the cultural, political, social and economic fabric of South Africa should not provide covert cover for censorship. We would welcome the addition of the recognition of the role of debate and the possibility of diverse viewpoints. his comment refers to 3.1 .a and b in Chapter II as well.

We would also suggest that while the Objects forcefully state the need to develop and nurture a healthy South African broadcasting industry, it is necessary to recognise that we are citizens of the world. It is vital that our viewpoint is not parochial. International standards and technical developments must be acknowledged.

South African Broadcasting System

Once again we would suggest that the landscape of the South African broadcasting system, as outlined in Chapter II of the Bill is desirable. The attainability of this must, however, be considered against economic viability.

This is particularly true of point 3.6, on the extension of programming in the Republic's official languages to all South Africans, which contains the loose wording of where circumstances permit". This should be rephrased to read "where economically viable."

Classification of Broadcasting Services

In chapter III, the bill links satellite and terrestrial broadcasting activities with little regard to the distinctions and differences between the two. We would suggest that these two sectors tend to operate on different economic realities. These need to be recognised. Indeed, satellite broadcasting presents a particular challenge to the regulator. Lighter touch regulation seems necessary in this area.

Public Broadcasting Service and Charter of Corporation

We welcome the establishment of Objectives for the Corporation and the approach to sound and transparent governance of the Corporation. The editorial independence of the Corporation must, be safeguarded at all times.

We query, however, the organisational approach dividing the Corporation into two separate operational entities - a public service broadcasting service and a public commercial broadcasting service (Chapter IV 9.1 and 9.2.) Requiring these two to be separately administered would seem to provide an opportunity for duplicating bureaucracies. After the rather rigorous transformation SABC has undertaken to turn itself into a financially sound and lean organization, we caution against the loss of efficiencies this new approach seems to suggest.

It is heartening that the approach to the funding of the Corporation has been pragmatic, embracing the role of advertising and sponsorship, and recognising the need for cross subsidisation of public service programming by more commercially orientated programming.

We do, however, find it difficult to understand the intention between the division between the public broadcasting service and the public commercial broadcasting service. As the former may draw upon advertising revenue for its funding and as the latter is charged with complying with values of the public broadcasting service in the provision of programming and services, it would seem simpler and more efficient to have one public commercial service broadcaster.

Commercial Broadcasting Services

On the requirement, chapter V 26, that commercial broadcasters must hold a separate licence for each service they provide, we ask for clarification. In the case of a satellite broadcaster, it may be unrealistic to expect each channel within a bouquet to be individually licensed because of time and expense of all concerned. However, a simpler process of licensing may be applicable to ‘control’ any malicious and unsavoury broadcasting.

Also given the possibility of overlap between the classes of licences detailed in chapter III, would a broadcaster require to hold licences in each class in which it operates?

In commenting on the objectives for Commercial Broadcasters, chapter V points 27.1-7, we would state that the function of a commercial broadcaster is to deliver audiences to advertisers. In order to do this it is necessary to provide relevant and entertaining programming to well defined and viable target markets.

With this in mind, we would suggest that points 27.1 .a, and 1 .b should be amended to read "should" rather than "must". These points refer to the provision of a diverse range of programming addressing a wide section of the South African public and the provision of programming in all South African official languages. Furthermore these points should be qualified by an acknowledgement of the need for financial viability of so doing.

27.1 .d, concerning the extension of services to all South Africans, requires a similar qualification.

On 27.2.b we would ask for clarification as to what is deemed to be an appropriate amount of South African programming.

With reference to 27.3, on the provision of local South African content by commercial

subscription broadcasters, we believe that there should be further clarification as to what qualifies as local content. Furthermore, as a subscription broadcaster is reliant on meeting subscriber needs, we caution against any imposition of local content quotas that could jeopardise this sensitive relationship. The inclusion of a commercial viability clause would be advisable.

On 27.6 we advocate discarding the provision that "advertising and sponsorship revenue" may not be the largest source of revenue. The artificial limitation of such revenue invariably leads to media inflation, which in turn simply makes the broadcasting sector less attractive to advertisers.

With reference to 27.7 we commend notion of ensuring that national sporting rights should not be exclusively acquired by commercial broadcasters.

28.1 and 2 we are uncertain as to why it would be necessary to only explore the possibility of more than one additional subscription service. Surely even the provision of one additional subscription service would be a feasible option?

Community Broadcasting

With reference to chapter VI 29.3, we believe that the notion of community should extend beyond that of geographic area. Community of interest needs to be recognised.

On points 29.3 and 4, we believe that the qualification of "suitably qualified" should be added to the requirement that community stations should be introduced.

We strenuously oppose point 29.7 proposing a limitation on the amount of national advertising to be carried by community stations. This will consign this category of broadcaster to financial ruin.

Signal and Multi-channel Distributions

Given the nature of multi-channel distribution systems, we query the relevance of enforcing 33.1 .a and d. Giving priority to the carriage of South African programming and the carrying of original programming, including local, should be subject to demand and commercial viability.

General - Regulations

With regard to chapter Xl, section 37, on the powers of the Minister, we raise the concern that the powers of the Minister may be too widely defined, and therefore, unconstitutional. A similar provision was proposed in section 8 of the recent Companies Amendment Act. The State Law Advisers removed this section giving power to the Minister to make regulations due to the fact that Parliament thereby abdicates its power to legislate, which it may not do.

Cross Media Ownership

Whilst we understand the need for limitation on cross media ownership, as a means to promoting media diversity, we contend that commercial reality must be considered. The principle is generally applied in developed countries where the economies of scale make it possible to run -smaller business units.

In the South African context, care must be taken that the strict enforcement of this principle does not lead to fewer rather than more broadcasters. The 15% readership threshold is too low and should be increased.

Conclusion

We thank you for the opportunity to participate in this process, which we trust will lead to a vibrant and sustainable broadcasting sector.

Association of Marketers

Click here for the Association of Marketers response to the White Paper on Broadcasting Policy

COMMENT BY THE ASSOCIATION OF MARKETERS

ON THE BROADCASTING BILL

The Association of Marketers (ASOM) represents the interests of marketers (effectively the advertisers) in South Africa.

ASOM supports the concept of the Bill, which is to develop a broadcast policy which will provide a wide range of broadcast services for all South Africans.

We support the concept that public and commercial broadcasting services are different and should be treated as such and not subjected to the same rules and regulations. We commend the Bill for its approach in this regard.

However, we have certain comments, as follows :

- The Bill provides for the Public Broadcast Service to draw revenue from advertising and sponsorship, grants and donations as well as licence fees. We submit that the Public Broadcaster should not rely on commercial advertising for all, or part, of its funding. We fully support the concept that the Public Broadcaster obtain sponsorship for programmes, but feel that commercial advertising should remain the funding vehicle for commercial broadcasters. This is in effect the only method of funding available to commercial broadcasters.

- The Bill states that commercial broadcasting services must provide, as a whole, programming in all South African official languages. It is not clear what this means. It could mean either that -

i) the licence authorities must ensure, when granting licences, that a proper allocation of licences is granted to ensure programming in all languages across the total broadcast spectrum, or

ii) each licence holder must provide programming in all languages.

We believe that the intention of the Bill is reflected in (i). The definition contained in (ii) would be extremely onerous and unworkable. However, we believe that this section should be amended to remove the ambiguity.

- Commercial broadcasters have to supply what the market demands and therefore it would be unfair and unnecessarily restrictive to impose local content quotas on such stations to any large degree. ASOM strongly urges that local content requirements for commercial broadcasters should take this into account, and not be unduly onerous.

We also believe that careful consideration must be given to how these quotas are determined (and this applies to public broadcasters as well). For example, it should not be sufficient to require a 'local music' quota of X%. The category must be expanded and quotas for the various disciplines such as popular music, opera, classical, symphony etc, be given. Only in this way will the under-funded disciplines be able to grow, and attract sponsorship and audiences. To merely specify 'local music' could give a hugely unfair advantage to popular musicians.

- We note the provision that commercial subscription services may draw revenue from advertising, but it may not be the largest source of revenue. As we have already stated, commercial broadcasters must of necessity be market driven and we do not believe that restrictions on their funding sources should be imposed.

- We believe that community broadcasters will find it difficult to exist on revenue generated by local advertising and accordingly it is unfair to place limits on the amount of national advertising that it may obtain. Market forces will, and should be allowed to, determine the percentage of local and national advertising that any one broadcaster may attract. If a particular community station can offer advantages to national advertisers it should be allowed to do so, as this will ultimately improve the station's economic viability, and by so doing benefit the community that it serves.

- What is meant by local and national advertising is also not clear. For strategic purposes marketers may roll out a new product in one province to test that product and then roll this product out nationally over time. How will advertising for such a product be defined? When will it cross the boundary between local and national? Alternatively, can a national advertiser advertise 'locally' even if the product is only available in certain areas, or is it the size and/or geographical spread of the advertiser's business that determines its status? We do not believe that such a distinction should exist. If it does, it must be clearly defined.

- The Advisory Body is obliged to consult with the "broadcast industry" which is not defined.

ASOM urges that this should be defined as widely as possible to include all stakeholders, particularly as one of the Body's mandates is to consider financing strategies to support local content. A method of achieving this, that is often mooted, is a levy (either direct or indirect) on advertising. Advertising in South Africa is already highly levied and it is essential that the advertisers themselves (that is marketers) should be involved in such strategising.

The Association of Marketers believes that broadcasting needs light touch regulations. We request the opportunity, in the future, to continue to work with the Broadcast Authorities, to frame regulations in terms of the Act to help ensure a vibrant and economically sound broadcast industry in South Africa that will be able to achieve the objectives of the Bill.

DERRICK DICKENS

EXECUTIVE DIRECTOR

4 SEPTEMBER 1998

ATKV

COMMENTS BY THE ATKV ON THE BROADCASTING BILL

1. WHAT IS THE ATKV?

The ATKV is a voluntary cultural organisation established in 1930 with the main purpose the preservation, upholding and furtherance of the Afrikaans culture.

The ATKV, which has 80 000 enrolled adult members, is based on Christian values and non-discrimination on the grounds of race and gender.

2. WHAT IS CULTURE?

"Culture" can be described as the way of living of a specific group of people and includes components like religion, social customs, the economy, the judicial system, language(s) (including dialects of a specific language), art and sport. All these components together form a cultural unity which identifies a specific group of people and creates an environment of belonging and security for the specific group.

3. BASIS FOR THE SUBMISSION

3.1 South Africa is now one sovereign state wherein a common South African citizenship is recognized in the midst of a diverse multi-lingual and multi-cultural nation.

3.2 The ATKV supports the democratic system of government of which freedom and equality form the basis.

3.3 The ATKV supports the principle of the Rule of Law which includes the supremacy of the Constitution as well as the entrenchment of the Constitution.

3.4 The individual’s recognized fundamental right to human dignity falls within the recognition and protection of his right to free participation in cultural activities in order to establish and protect his own identity and environment wherein he (within his group, if required) can experience a sense of security. This will ensure an effective and healthy unity amongst all citizens.

3.5 It is accepted that no citizen may enforce any of his rights in such a manner that it infringes upon the rights of any other citizen, but this is balanced by the principles as entrenched in clauses 30 and 31 of the Constitution.

4 COMMUNITY BROADCASTING

The envisaged amendment of the definition of community licenses will definitely not enhance the rights entrenched by the Constitution, especially in clauses 30 and 31.

Therefore the ATKV, representing all it’s members, requests that the definition as it is at the moment in Act 153 of 1993, not be amended

KOMMENTAAR TEN OPSIGTE VAN

DIE KONSEPUITSAAIWET DEUR DIE ATKV

WAT IS DIE ATKV?

Die ATKV is 'n vrywillige kultuurorganisasie wat in 1930 gestig is met die hoofdoelstelling die bewaring, handhawing en bevordering van die Afrikaanse kultuur.

Die grondslag van die ATKV, wat tans 80 000 ingeskrewe volwasse lede het, is die Christelike waardes en nie-diskriminasie op grond van ras en geslag.

Die ATKV is 'n voorstaander van die reg tot vrye kulturele bedrywighede vir almal. Die kulturele waardes van elke burger van Suid-Afrika behoort volgens die ATKV die beskerming van die Grondwet te geniet.

WAT IS KULTUUR?

"Kultuur dui op 'n lewenswyse van 'n spesifieke groepmense en bevat komponente soos godsdiens/religie, sosiale gebruike, ekonomie, regstelsel, taal of tale (met inbegrip van dialekte van 'n taal), kuns en sport/spel. Al hierdie komponente vorm gesamentlik 'n kulturele geheel wat aan 'n spesifieke groep persone 'n identiteit gee en ook 'n omgewing skep waarbinne die groep tuis of veilig voel.

UITGANGSPUNTE VIR AANBEVELINGS

Suid-Afrika is een soewereine staat waarin 'n gemeenskaplike Suid-Afrikaanse burgerskap erken word te midde van 'n diverse, meertalige en multi-kulturele bevolking.

3.2 Die ATKV ondersteun die demokratiese regeringstelsel waarvan vryheid en gelykheid die grondslag vorm.

3.3 Die ATKV ondersteun die regstaat-beginsel waaronder verstaan word die oppergesag van die Grondwet sowel as die verskansing van die Grondwet.

3.4 Die indiwidu se erkende fundamentele reg op menswaardige behandeling noodsaak die erkenning en beskerming van sy reg op die vrye deelname aan kulturele bedrywighede ten einde sy eie identiteit te beskerm en 'n omgewing te skep waarbinne hy (binne sy groep, indien so verlang) sekuriteit ervaar. Sodoende word 'n effektiewe, gesonde eenheid tussen alle burgers verseker.

3.5 Dit word aanvaar dat geen burger sy regte op so 'n wyse mag uitoefen dat daar inbreuk gemaak word op die regte van enige ander individu nie.

4 GEMEENSKAPUITSENDING

Die voorgenome wysiging van die definisie van gemeenskaplisensie sal beslis nie die regte wat in artikels 30 en 31 van die Grondwet veskans word, bevorder nie.

Daarom versoek die ATKV namens al sy lede, dat die huidige definisie soos vervat in Wet 153 van 1993, nie gewysig word nie.

Appendix 2: Freedom of Expression Institute

Freedom of Expression Institute

FXI Submission to Parliamentary Portfolio Committee on Communications

Broadcasting Bill, 1998.

September 1998

1. General

The Freedom of Expression Institute (FXI) welcomes the fact that government is reviewing broadcasting policy, and is set to replace the Broadcasting Act of 1976. We have for years now called for the repeal and/ or amendment of censorship legislation inherited from apartheid that is still on the statute books; finally this is happening with respect with the statute that allowed the government so much control over the South African Broadcasting Corporation (SABC). We therefore fully support the need for a policy and legislative review.

We also express our support for the aims and objectives of the broadcasting sector as outlined in the White Paper on Broadcasting and s. 2 of the Bill. We believe that freedom of expression will become a reality only once universal service and access to a diversity of services is achieved.

This submission is based on an analysis of the Bill produced by the FXI, and summarises its main findings. For more detail on specific items, please refer to this paper (See Annexure 1 at the end of the submission). For your interest, we have also included research conducted by Article 19, entitled ‘The Organisation and Funding of Public Broadcasting’: our paper makes a great deal of use of this paper in benchmarking the proposals around the restructuring of the South African Broadcasting Corporation (SABC). We believe that this exercise is necessary as the White Paper on Broadcasting refers on a number of occasions to the need to bring our broadcasting policy in line with ‘the best of international practice’, and an assessment needs to be made of the extent to which this is in fact so. While we accord with the White Paper’s sentiment up to a point, we also think it important to develop policies that accord with the political and legal realities of our own countries: the ‘benchmarking’ exercises are therefore conducted with this qualification in mind.

We hope this information will be of interest to the Committee.

2. Regulations (s.37) and Policy Directives (amendment to IBA Act, s. 13A (2) (j-o).

One of the aims of the Bill set in the White Paper is to define the roles and powers of the Minister, regulator and Parliament clearly. The Bill does not do so: in fact, it confuses the powers of the Minister with those of the IBA even further. More specifically, the Bill fails to draw the line the White Paper claims it wants it to draw between macro- and micro (or regulatory) policy, with the Minister being responsible for the former and the IBA the latter.

These powers are also not consistent with statutes in other countries that have similar powers: Canada, New Zealand and Australia have been studied in this regard. All these statutes give their respective Ministers, or delegated officials, the powers to issue policy directives of a broad and general nature. Also, important limitations are set on the use of these powers. In the New Zealand statute, the Minister may not issue directives in respect of programming. In the Canadian Act, the power may not be used with respect to the issuance, amendment, renewal, suspension or revocation of a licence, or to a pending licence matter. None of these statutes grant the Minister the power to issue regulations.

The dual effect of the Minister being able to issue policy directives and regulations, coupled with the unqualified way in which these powers are drafted, results in the Minister being given powers of an unacceptably wide scope.

The following is therefore suggested in the interests of clarity:

The power to issue regulations in terms of s.37 should be scrapped in its entirety.

In its place, the power to issue policy directions consistent with s.2 of the Bill should be inserted (the clause proposed as amendment 13A (2) (j) to the IBA Act). However, this clause should be re-drafted to ensure that directions are ‘of a general nature’ and are on ‘broad policy matters’.

Directives should not be issued with respect to licencing matters as specified in the Canadian Act, or programming matters, as specified in the New Zealand Act. These instances should be specified in the Act.

3. SABC (Chapter IV)

3.1. S. 12 (Composition of Board)

We welcome the fact that the Bill contains the appointment procedures of the Board, which is a significant advance on the Broadcasting Amendment Bill of 1997, which proposed that these provisions be contained in the Articles of Association. The FXI opposed this on the basis that this did not provide sufficient protection for these provisions.

A number of the provisions in this section are too broad, and could be open to varying interpretations, such as ‘participation by the public in the nomination process’. Given the political sensitivities around the appointment of the Board, it is highly advisable to spell out the appointment procedures in some detail in the statute, so that there is no room for doubt or interpretation concerning the procedures to be followed. In this regard, it is suggested that the appointment procedures outlined in the Public Broadcasting Services Bill of 1996 be included, with the amendment that the selection panel should appoint the Board, not Parliament.

Provision should be made in the Bill to increase public access to the Board. Specifically, the Board of the SABC be compelled by law to hold four quarterly report-back meetings to the public every year and that in addition it releases publicly minutes of all its meetings. The public report-back meetings must be of sufficient format and duration to enable members of the public to comment and make proposals. Further, there should be provision for specific groups to meet with the SABC Board or its sub-committees to voice their views.

The principles according to which nominees should be considered for the Board are insufficient, in that they do not list the circumstances under which someone would not be eligible for appointment. The Public Broadcasting Services Bill spells out a number of these circumstances, the most important being those concerning the disqualification of candidates who held political or government office in the previous 12 months and who have direct or indirect financial interests in the media industry. It is recommended that these be included.

The SABC should be subject to the provisions of the Open Democracy Bill as a statutory institution, which will compel it by law to be transparent on a far wider range of issues than the King Code on Corporate Governance.

3.2 Charter

We welcome the fact that the Charter has been included in the Bill to give direction to the SABC, and consider this a significant advance on the Broadcasting Amendment Bill of 1997, which contains no such Charter.

The SABC Charter is clearly modelled very heavily on the BBC Charter: in fact, ten of the sixteen clauses are taken virtually verbatim from it. The substantive omissions are instructive, and relate mainly to differences in the degree of financial independence of the SABC compared to the BBC. For instance, the BBC is able to acquire land without further permission, provided it does so to further the objectives of Corporation, whereas the SABC has to ask for permission from the Minister before doing so, and permission may be granted only in respect of transmission and reception facilities. Also, the BBC has limited powers to enter into partnerships and contracts, and conduct financial transactions such as borrowing or raising money or securing payments: in fact, a borrowing ceiling is stipulated beyond which the Corporation needs permission from the Minister. The BBC may also invest any money not immediately required for its activities, and draw on it as a reserve. In terms of the South African Bill, the SABC may not borrow any money without the prior written approval of the Minister and the Minister of Finance. These provisions will tie the SABC to the Minister in important ways and will compromise one of the key effects of corporatisation: namely to set a public institution free from government control. In contradicting this basic principle of corporatisation, the Bill also does not accord with a basic principle of company law, namely a strict separation of ownership and control, where management enjoys an arms-length relationship to the shareholder. More consideration should be given to the financial and contractual powers of the SABC under the Charter.

The process being followed currently by the government to develop the Charter is inadequate. It is in the interests of public broadcasting to develop the Charter through a transparent process of public debate, as it engages the SABC’s viewers in a practical discussion about what the SABC’s mandate should be. It is proposed that a time frame is set for the development of the Charter, and that it is passed only once more extensive public participation has taken place.

As is the case with the British Broadcasting Corporation (BBC), the Charter should cover both public services and commercial services, as this should help to prevent the prioritisation of commercial services at a management level, i.e. commercial services will operate within the general mandate of public services.

The independence of the SABC is not guaranteed explicitly in the Charter, which is a serious omission. To rectify this, the formulation provided for in s.3 of the Broadcasting Services Bill of 1996, entitled ‘independence of public broadcasters from government’ should be incorporated. Furthermore, the Board should be committed in s. 13 of the Bill to protect and promote the independence of the SABC.

The Charter should include a clause that obliges the SABC to complement rather than contradict the activities of the commercial and community sectors. This clause should also recognise that there should be a ‘natural partnership’ between the SABC and the community sector: including this in the Charter should facilitate the development of partnership projects, and in fact will oblige the SABC to pursue such activities. These could include training and facilitating studio production time and airtime.

The Charter should elaborate on its aim to make the public services available throughout the Republic: in fact, the primary function of the SABC should be defined as a domestic broadcaster for general reception on a free-to-air basis. While international broadcasting and more delivery platforms may be features of the future, domestic free-to-air will remain the most accessible form of broadcasting for years to come.

The Charter should state that the aim of the SABC should be to ‘inform, educate and entertain’, and facilitate a broad understanding of development policy and priorities with defined programmes especially for rural and peri-urban communities.

3.3 Corporatisation

In assessing the corporatisation proposal, it would seem that the starting point for the debate should not be which legal form is best suited to the SABC, but what its ideal funding base should be. If this is defined clearly, then questions of organisational form will virtually answer themselves. In other words, if one has a funding base provided by the public - either through direct government grants or licence fees - then it is logical to found the broadcaster as a legal entity which operates solely according to the provisions in its founding statute. However, if the broadcaster is to generate its own funding, then it needs an organisational form that forces it to operate self-sufficiently and commercially according to company law: corporatisation does just that.

The FXI supports public funding of the SABC. If one is to have a true public broadcaster empowered to deliver on the reconstruction and development aim of delivering a national service to all irrespective of income bracket, then this mandate presupposes public funding: the FXI has made numerous detailed proposals around how such funding could be levied (see for example, IBA Triple Enquiry submission, Appendix 3). If such funding is provided, then the need to corporatise falls away, as it is a logical inconsistency for the state to fund an institution, while at the same time expecting it to return its dividends to the fiscus. Therefore, we do not support the corporatisation of the SABC on the grounds that it would be a superfluous gesture if public funding was forthcoming.

The revenue mix identified in s. 10 (10) is too unstable, and may make it very difficult for the public services to plan ahead. Therefore, we propose that state funding constitute the core of funding for the SABC. We do not support the funding of specific projects, as this method of funding could lead to manipulation of those projects being funded. If public funding is to be provided, then it should be through a Parliamentary appropriation on a Triennial basis so that the SABC has the stability to plan ahead, It will then be able to decide how to apportion the funds itself.

Furthermore, we are opposed to the corporatisation of the SABC along the lines proposed in the Bill, for additional reasons:

The proposal is politically and financially dangerous, and may result in the withering away of public broadcasting. If the commercial arm is to return a dividend to the fiscus, there is no guarantee that the money will find its way back into the public service arm: in fact, given current budgetary constraints, especially for social services, it may well not. If it finds its way to the Minister, it may be reallocated at his/her discretion, which opens the door for political manipulation of the public broadcasting arm through financial control. To add to this recipe for disaster, according to the White Paper the government may decide to privatise the commercial arm, which will lay to rest any possibility of cross-subsidisation once and for all. The proposals amount to government abdicating its responsibility to provide a stable funding base for public broadcasting activities: in the words of Article 19, in concluding their research on the organisation and funding of public broadcasters, ‘...it remains our view that adequate public funding should remain the rule for public broadcasting’. Furthermore, the Media Institute of Southern Africa (MISA), of which the FXI is a member has concluded that, ‘In most Southern African countries, only the state has the resources to adequately fund public service broadcasting. In these countries, public radio and television must be funded by the state, at least in substantial part and for the foreseeable future.’

Our research into the only public broadcaster with a similar profile to the SABC (should it be corporatised), based in New Zealand, suggests that corporatisation facilitates the marginalisation of public service broadcasting functions in a public broadcaster, and encourages the commercialisation of operations.

We are not opposed in principle to cross-subsidisation, but it should take place within the SABC itself: a role model in this regard is the BBC. The BBC Home Services Group, which includes the Home Services and its worldwide commercial activities, and the World Service are accounted separately (the bulk of the income for the commercial services comes from the sales of television programmes and publishing activities). The licence fee revenue may not be merged with the revenue derived from the commercial services: therefore, there is no possibility of affording these services an unfair advantage over their strictly commercial competitors by using public funds to subsidise them. When we speak of commercial services though with respect to the SABC, we do not speak of radio or television stations: no radio or television station should be deemed ‘commercial’. Rather certain services like publishing and the sale of programmes, as is the case with the BBC, should constitute the commercial services.

The IBA recommendation to sell off the third television channel should be implemented, as the core public television functions of the SABC could be carried by the two remaining channels.

We are still of the view that the SABC should discontinue advertising: in this regard, advertising could be ‘sold off’ to private channels, which would ensure a transfer of revenue to these stations. This was done recently in Estonia, where advertising was removed completely from the public broadcaster, and sold off to private channels.

4. Community broadcasting

We note in the White Paper that a Community Development Trust is to be established. We welcome and fully endorse government support for community media, but question whether the proposed Trust is the best conduit. It would seem that the CDT is a severely reduced version of another proposed structure civil society organisations have lobbied for some time now, a statutory Media Development Agency ( MDA). The MDA is envisaged as a body with the powers to facilitate media diversity, and to subsidise needy media as well. The CDT will not be a statutory structure, will focus on broadcasting (not print as well), and will act as a conduit for ‘modest’ capital injections: this does not constitute a sufficiently strong commitment that the government subsidise community and independent media on an ongoing basis. While it is understood that the proposed CDT emanates from the broadcasting policy document, there is no reason why interdepartmental liaison could not take place between the Department of Communications and the part of government most appropriately placed to facilitate the MDA. The CDT idea could be incorporated into the MDA.

The need for a body that plans an approach to media diversity is clearly evident with respect to the spread of community radio stations around the country. The White Paper notes that stations tend to be urban based, and have not really begun to penetrate the most media-needy areas. This inequitable spread of media resources is unacceptable, particularly in respect of the community media sector whose focus is to address precisely these needs. One of the first tasks of the MDA should be to investigate ways of extending services to underserved and unserviced areas, and that the Agency work closely with the IBA to work out a roll-out plan for these areas. This task should be prioritised, and may also mean that the IBA needs to review its current four year licencing cycle in favour of a more flexible procedure (which does not operate on a first-come first-serve basis, but is driven by development and equity priorities).

However, we do not support the Bill’s formulation on this matter, if it prescribes the phasing out of community of interest stations. While we appreciate that this proposal is being made on the basis that community of interest stations tend to dominate this tier of broadcasting, and the station profiles largely reproduce the patterns of privilege inherited from apartheid, we do not believe that a sufficiently compelling case has been made for the phasing out of these stations. In this regard, we recommend that s. 29 (9) be amended to read, ‘The Authority will conduct a public enquiry to determine whether to phase out community of interest stations’. The amended formulation (‘community broadcasting service means a broadcasting service which is fully controlled by a non-profit entity and carried for non-profit purposes which meets any need of the community ((in terms of religion, language, cultural, demographics, etc.)) and services a particular geographic area’) is highly confusing, and seems to imply that only geographically-founded stations will be allowed by law. We therefore recommend that - rather than legislating on this matter at the moment - consideration should be given to all the arguments through an IBA enquiry.

Contrary to s. 29 (7), we believe that no limits should be placed on national advertising for community stations in the legislation, but that the IBA should decide on whether to place limits on such advertising. Therefore, s. 29 (7) should read, ‘Community broadcasters will have no limits on the revenues to be drawn from local advertising but may be subject to limits of national advertising as determined by the Authority’. We believe that this formulation will all the IBA to use its discretion on the matter, depending on the local peculiarities pertaining to stations.

No compelling case has been made out as to why community stations should be restricted to free-to-air services, and in this absence of such a compelling case, we recommend that no such restriction apply.

5. Privatisation of broadcasting enterprises.

In terms of amendment 13A (2) (g), the Minister will be granted the powers to determine all matters relating to the privatisation of broadcasting enterprises. If the above power is granted, it seems that the Minister will be able to make decisions about which state-owned broadcasting assets to privatise, powers that are unacceptably broad. These assets were established and sustained by public money - whether in South Africa or in the TBVC states - and hence the public should have a say in whether their assets are to be disposed of or not. This should not be a prerogative power of the Minister. There is also a danger that if the Minister were to be granted these powers, then this will pave the way for the privatisation of the commercial arm of the SABC, which - as noted earlier - will put paid to any hopes for cross-subsidisation of the public service arm.

We are not opposed to privatisation of public assets in principle: in fact, we have endorsed the privatisation of one of the SABC’s television stations on the grounds that it does not constitute a strategic asset. The extent to which state-owned broadcasting services should be considered as such, rests on to what extent they are central to delivering on the SABC’s public service mandate. Before any more privatisation of such assets takes place, consideration should be given to what constitutes the core of this function, and these services should be defined as strategic assets and placed out of the reach of privatisation advocates. Such a study should be conducted by the IBA, and should involve a review of the Triple Enquiry findings in the light of current realities.

END

Annexure 1

Response to the Broadcasting Bill of 1998.

Freedom of Expression Institute (FXI)

Introduction

The 1994 elections ushered in a new era in broadcasting. The seeds for this transformation had already been laid during Multi-Party negotiations prior to the elections: these negotiations led to a enabling Act to establish an Independent Broadcasting Authority (IBA) to regulate broadcasting independently of government and started the change of the-then state broadcaster, the South African Broadcasting Corporation (SABC) into a public broadcaster with a mandate to serve the interests of the whole country.

One of the first undertakings on the part of the IBA was to hold a Triple Enquiry involving public hearings into the protection and viability of the public broadcaster, cross-media control of broadcasting services and local content (including South African music). The IBA completed the Enquiry in 1995, and made a series of recommendations to Parliament on the basis of these hearings, including the need for Triennial funding for the SABC to allow it to fulfil public service obligations.1 After this enquiry, the IBA continued to make broadcasting policies and issue regulations to give effect to these policies in terms of the IBA Act.

Also in 1995, a Public Broadcasting Services Bill was drafted to amend the Broadcasting Act of 1976, which founded the SABC as a state broadcaster. The aim of the Bill was to overhaul the existing Act to establish the independence and impartiality of public broadcasters (including those inherited from the TBVC states), commit them to the expression of a diversity of opinion and ensure that the broadcasters are provided in stewardship for the benefit of the public.2

A task group set up by Deputy President Thabo Mbeki to investigate the state of government information services (called COMTASK) also made recommendations with regard to broadcasting, after an extensive series of public consultations. It reiterated the need for triennial funding to afford the SABC a stable funding base, and called for the establishment of a statutory Media Development Agency (MDA) to foster media diversity (and particularly to act as a subsidy system for community and independent media).3

Lurking behind a number of these proposals was an assumption that strong state interventions were needed in order to correct historical imbalances in the broadcasting environment, and to create an environment where freedom of expression could become a right practised by many, not by a few. These interventions would be made carefully to promote the independence of the sector, and would be complemented by an independent IBA which would phase in competition. This interventionist role of the state was supported by the government’s guiding policy, the Reconstruction and Development Programme (RDP), which mapped out a framework for transformation to a more equitable dispensation across all spheres of society.

Barely two years later, a broadcasting policy review is being undertaken by the government, spearheaded by the Ministry of Communications. The aim of the review is to overhaul broadcasting policy and legislation to bring it into line with the following aims:

Ø Universal access

Ø Diversity within a framework of national unity

Ø Democratisation of the airwaves

Ø Nation-building

Ø Education

Ø Strengthening the moral fibre of society.

To give effect to these aims, the Department of Communications has released a White Paper on Broadcasting, outlining key policies for the sector, and has drafted a Bill ostensibly to give effect to these policies (the Broadcasting Bill, 1998). The Bill will result in the repeal of the 1976 Act, and the amendment of the IBA Act.

There can be no doubt that the above aims should be endorsed to the fullest, with the possible exception of the last one as founding a broadcasting system on the basis of ‘morality’ may have unintended consequences for freedom of expression. What needs to be assessed is to what extent the methods proposed in the Bill will give effect to these aims.

The White Paper and Bill will set in motion some activities that seem to depart from past proposals: these departures need to be analysed and understood, as it would seem that the terrain in which broadcasting operates has shifted in the past four years (even in the past two). The differences relate mainly to the nature and extent of state intervention in broadcasting, how to promote and sustain the non-commercial broadcasting sectors (both community and public service), and the role that the commercial sector should play in this regard. On the one hand, the government clearly want to exert more control over the direction of the broadcasting sector, and on the other it proposes mechanisms to allow it to retreat from some basic support functions by commercialising them, in the words of one commentator, to ‘...lay the heavy hand of government on everything to remove the hand of government’.4 In doing so, it has drawn selectively on different models internationally as precedents for these moves. Why has this happened?

What has changed?

Broadcasting internationally has been in the most remarkable state of flux in the past decade. Dozens of countries have set about reforming their respective broadcasting sectors, which has led to a rash of new legislation being drafted. Many have also set up broadcasting regulators where previously they did not exist.

This recent flurry of activity relates to the shifting economic frameworks that govern the activities of many countries, the complexities of which cannot be dealt with here. Suffice to say that the globalisation of markets has led to increasing pressures on countries modelled on inward-focussing models of industrial development to de-regulate and liberalise their economies to facilitate ‘free trade’. Many sectors that in the past were defined as ‘national services’, and were characterised mainly by state monopolies (such as telecommunications and broadcasting) are either being ‘set free’ from government ownership or subject to increasing competition: in the process, tensions have developed between their new-found economic roles, and their social and cultural roles, with arguments being made in some instances that the former is being prioritised at the expense of the latter.5

South Africa has not been immune to these pressures. In 1996, the government implemented a macro-economic strategy entitled the Growth, Employment and Redistribution Programme (GEAR). GEAR seeks to achieve a competitive, job-creating, fast-growing economy where income and opportunities are re-distributed in favour of the poor, and where social services are made available to all.6 GEAR was established on the basis that the growth rate of 3% per annum at that stage was too slow to create sufficient numbers of jobs, and that a competitive outward-orientated economy taking advantage of the weakness of the Rand would result in greater levels of growth. It identifies a growth rate of 6% per annum and job creation of 400 000 per annum as targets.

In order to achieve the above targets, it advocates the following measures:

Ø accelerated growth of non-gold exports through an array of supply-side measures, especially the tradeable goods sector,

Ø a brisk expansion in private sector capital formation and domestic savings, involving the creation of a stable environment for foreign investment,

Ø restructuring the public sector to increase efficiency and accelerate investment,

Ø encouraging labour-intensive infrastructural development, investment and output growth, at the same time encouraging labour market flexibility and enhancing human resource development through the National Qualifications Framework.7

These measures are to be realised in concrete terms through relaxing exchange controls and introducing a variety of incentives for export-orientated businesses and foreign investors (such as tax holidays and lowering of tariffs). The state’s role as a commercial actor should be decreased by privatising its assets, thereby increasing foreign investment opportunities. Privatisation should proceed according to the National Framework Agreement, which commits the private sector, and foreign investors to meeting basic needs in the country in return for the above-mentioned incentives. This could be done through the wholesale privatisation of ‘non-strategic assets’ or the creation of public-private partnerships (in this regard, it identifies transport and telecommunications). GEAR also calls for the establishment of clear guidelines for the governance, regulation and financing of public corporations to enhance international competitiveness.8

In terms of GEAR, these growth strategies will not succeed without a speedier reduction of the deficit to counter inflation and long term-debt service obligations. This fiscal austerity measure involves cutting government spending to increase the amount available in the national budget to service the debt, and shifting much of the burden of social delivery onto the private sector. This debt has been carried over largely from the apartheid government, and has tripled in size from R90 billion in 1989 to R300 billion in 1997.9 Given GEAR’s commitment to reducing this debt, the repayment on the debt’s interest (not the debt itself) has increased by 5.7% from the previous financial year, making it the second highest line item in the national budget after education.10

Correspondingly, spending on many social services has decreased in real terms. For example, since the last financial year, education’s budget has decreased by 4.4%, health by 4.8%, transport by 19%, housing by 30%, water and sanitation by 26.7%, agriculture by 33%, public works programmes by 90% and public service commission by 21.5%.11 The Department of Communication’s budget was cut by 13%.12 These budget cuts, and their negative impact on the delivery of social services have fuelled growing opposition to GEAR on the basis that the policy is increasing rather than decreasing inequality, and has in fact replaced the RDP. The government has responded with an approach that states that, in the words of one commentator, ‘the country needs to tighten its belt before it loosens it’, and accuses especially the labour movement of short-sighted macro-economic populism.

In order for GEAR to succeed, its writers have noted that policy co-ordination is needed, as world competitiveness is also enhanced by comparative advantage in the public policy arena:

Government has a clear policy co-ordination role. There are trade-offs amongst policy options that competing claims by different interest groups which need to be nationally resolved. Whilst institutions have been developed to aid this process, and Government is committed to an open and consultative approach, the ultimate responsibilities for a credible and coherent policy framework lies with Government. As a first step in this process, Government calls for a clear commitment by both business and labour to the broad principles set out in this document.

Within Government, especially in the fields of monetary, fiscal, trade, industrial and labour policies, there is also a critical need for co-ordination. Inconsistent approaches in any of these areas have the potential to destabilise the credibility of the overall macroeconomic framework. Effective co-ordination of economic policy at Cabinet level has accordingly been given the highest priority of Government...13

GEAR has established a complex new macroeconomic environment in which all industries and sectors are under pressure to operate according to the government priorities of liberalisation and de-regulation, including broadcasting. In other words, government needs to ensure that sectors of the economy that could contribute to GEAR’s growth targets are grown in line with GEAR strategies, especially those that could generate exports, attract foreign investment, and cut back the state’s role in economic activities and the provision of social services.

Broadcasting, policy-making and regulation

State intervention in line with the above will not be possible in a sector if it is already managed by an independent regulator. Such is the case in broadcasting, where the IBA currently regulates and makes policy: according to the White Paper ‘...this structural organisation of the broadcasting system is not in accordance with the best international practice, obscures the different roles and responsibilities, and fundamentally undermines public accountability’.14 Hence the respective powers of the government and the regulator need to be re-defined so that government is better able to influence the direction of the sector.

To help define these powers, the White Paper makes reference to an International Telecommunications Union (ITU) recommendation that three roles should be identified for good governance in the communications sector: policy formulation, regulation and service operation.15 In terms of the GATS (General Agreement on Trade in Services), the ITU has recommended that a stable governance framework - where powers are clearly delineated - is essential to attract foreign investors.16 Under the power delegated to Parliament, it is also noted that ‘...The Minister will be responsible through the Parliamentary system for the formulation of policy and the development of the broadcasting sector as a whole’.17

Arguably, it is in any event easier to delineate where the powers of the regulator stop and the powers of the government start in telecommunications, as historically the sector has been concerned mainly with the roll-out of industrial infrastructure, and consequently has not evoked the same sensitivities as broadcasting. In fact, it is precisely the content-driven nature of broadcasting that has made it so difficult to define the precise relationship between the regulator and the government.

When assessing the division of powers in relation to European regulators, we learn that there is that there is no common approach to what constitutes ‘regulation’. Two broad approaches can be discerned in this regard, deriving from the Anglo Saxon and Continental legal traditions. In the former, the term ‘regulation’ could be defined as ‘the means of maintaining a balance and of ensuring the correct functioning of a complex system’, that is, the supervision and function of making rules.18

In the Continental tradition, the latter function is considered to be more correctly the domain of the government, although the precise legal status of the regulator has never been settled. Numerous court cases have attempted to define the powers of the regulator in relation to the legislature on the one hand and the executive on the other. In a decision passed down by the Supreme Court for administrative law in 1985 in France, the regulatory body was described as being administrative in nature. Another judgement passed down in 1989, this time by the French Constitutional Court, stated that the legislature may make an authority other than the Prime Minister responsible for laying down criteria for putting a law into practice, but such a delegation of powers must take place ‘within a predetermined sphere and within a framework defined by laws and regulations.’19

Given the sensitivities around the independence of broadcasting, a study of European regulators concludes that ‘regulation’ should ideally involve the drawing up of rules and their enforcement.20 However, it also notes that the precise separation of powers between the legislature, executive and regulator can at the end of the day only be settled in relation to a particular country’s legal and political history.21

Given these few observations about regulation in Europe, it is not clear which international practices the White Paper is modelled on, as it would seem from the few observations made above that the proposed separation of powers in broadcasting is not nearly as clear-cut as it asserts.

Policy directives

The main opportunity that governments have to implement changes in broadcasting policy is by reviewing existing legislation, or proposing new legislation. However, there may be instances where the government would like to influence the direction of the regulator without resorting to changing legislation. A provision has been made in some international statutes for the Minister concerned to issue policy directives. The South African Minister of Communications is presently seeking a similar power.

The White Paper states that ‘The Government should have the right to issue policy directives to the IBA on policy matters’. It notes that the policy directives should not be retroactive, and should be of a broad policy nature. The IBA should then ‘enjoy the independence to implement these broad policy directives in its regulatory activities in accordance with a public process’. A formula is laid down for the issuing of these directives, which involves the Minister canvassing the opinion of the IBA, publishing them in a government gazette, and informing Parliament of the policy changes and directives.22

The Broadcasting Bill gives effect to these powers in an amendment to s. 13A of the IBA Act, provided that the policy directives are consistent with the objectives in s.2 of the Bill. In addition to the above procedures, the Minister should canvass opinion on the directive through the Gazette within a 30 day period, and is not obliged to re-submit the amended directive for further comment, providing the amendments are a result of the comments received.

In addition, the Bill gives the Minister powers to issue regulations required to give effect to the objects of the Bill (contained in s.2). These regulations may identify offences and penalties for committing these offences. While the IBA may make recommendations to the Minister with respect to these regulations, the Minister is not obliged in terms of the Bill to accept these recommendations.

Yet in a further amendment to the IBA Act, the Bill grants the Authority the powers to issue regulations consistent with s. 2, in respect of the following (listed in s.78 of the Act):

Ø Any technical matter necessary or expedient for the regulation of broadcasting activities and equipment such as transmitters.

Ø Prescribing licence fees.

Ø Giving additional powers to authorised people.

Ø Prescribing fees to cover expenses incurred in providing information.

Ø Any matter which in terms of the IBA Act shall or may be prescribed or governed or determined by regulation.

Ø Any matter of procedure or form to achieve the purposes of the Act.

Ø A fine not exceeding R10 000 can be charged for contravening regulations in respect of the above.

If the IBA would like to issue regulations not covered by the above, it needs to follow a public process outlined in s. 28.

How do these powers measure up to statutes in other countries?

A brief look at Canada, Australia and New Zealand.

In Canada, the Canadian Broadcasting Industry is regulated by the Canadian Radio-Television and Telecommunications Commission, which was established in 1958. The Canadian Broadcasting Act of 1968 was re-drafted in 1991 after a lengthy public review of the industry. The review was precipitated by the coming to power of Brian Mulroney’s conservative government in 1984. The next year, the government established a task force to develop ‘an industrial and cultural strategy to govern the future evolution of the Canadian broadcasting system through the remainder of this century’. One of the task forces key mandate was to take account of ‘the need for fiscal restraint’ in line with the government’s policy of public sector rollback.23

At the same time, the Minister of Communications tabled an amendment to the Broadcasting Act in Parliament, proposing that the government through the Governor in Council be given the powers to issue policy directives to the CRTC. The amendment did not succeed.24 However, the matter was about to die, as the task force in its final report in 1986 recommended that the Governor be given these powers.25 In doing so, it recommended that if the government were to be allowed to intervene in this way, it should either be able to set aside or refer back decisions, or issue policy directives, but it should not have both powers. This approach was endorsed by the CRTC, but in spite of this the Governor was still awarded these powers.26

However, in doing so, Parliament saw fit to limit the Governor’s powers with respect to policy directives so that they should be of a broad and general nature, in spite of attempts on the part of the Ministry to secure an unfettered right.27

According to the 1991 Act, the CRTC has the powers to make policy, and issue policy guidelines and statements with respect to any matter in the Act. However, these guidelines are not binding on the Commission.28 It also empowers the Governor to issue directives of general application on broad policy matters to the Commission.29 These matters must conform to the overall and regulatory policies itemised in the Act. However, these powers cannot be used in respect of the issuance, amendment, renewal, suspension or revocation of a licence, or to a pending licence matter.30 These directives are binding on the Commission.31

Procedures are laid down for the issuing of such a directive, which involves the Governor consulting with the Commission beforehand. The directive is then gazetted and comments are invited. The directive is also referred to the relevant committee in Parliament. The directive can only be implemented once 40 sitting days of Parliament have lapsed - even if it has been amended as a result of the consultation process - and once the Commission has been informed again.32

In addition, in terms of s. 26, the Governor has the powers to issue directions on specific matters. For example, the CRTC could be compelled to direct licensees to carry a programme deemed ‘...to be of urgent importance to Canadians’.33 Directions can also be issued to give effect to the Canada-United States Free Trade Agreement Implementation Act.34 Also, the Governor has the powers to set aside a licencing decision or refer it back to the CRTC for further consideration (not in terms of s.26, that is not on the basis of a policy direction).35 Strict procedures are laid down with respect to this power.

Since it was introduced, the power to issue policy directives has been used on very few occasions. In 1995, the CRTC was directed to initiate licencing procedures for Direct-to-Home (DTH) Services, which would make hundreds of channels available to subscribers. This directive overturned an exemption from licencing procedures that the CRTC had granted to a new all-Canadian DTH consortium, Expressvu Inc., while it prepared itself to commence broadcasting: the exemption was granted on the grounds that the company would use Canadian satellites and planned to provide sufficient Canadian programming.36 The move led to controversy as it opened the way for an established DTH service, PowerTV Direct to apply for a licence, in spite of the fact that much of its programming comes from the United States via a satellite owned by the Hughes Corporation. As a result, Prime Minister Jean Chretien was accused in Parliament of pandering to an American multinational while holding back a made-in-Canada satellite service: the fact that one of the partners in PowerTV is headed by Chretien’s son-in-law did not help.37 Ironically enough, Expressvu has suspended operations, and PowerTV has been granted a licence.38 In 1997, a direction was issued preventing non-Canadians from holding broadcasting licences.39

In May 1998, a directive was issued reserving frequencies allocated to the Canadian Broadcasting Corporation for the use of radio services in Toronto, after requests from groups interested in starting up a radio station. In return, the CBC was given an FM frequency that it had repeatedly requested.40

In Australia, under s. 162 of the Australian Broadcasting Services Act (BSA) of 1992, the Minister may give written directions to the ABA as to performance of its functions, but unless as otherwise specified in the Act41, directions should only be of a general nature. Although its predecessor, the Broadcasting Act of 1942, gave the Minister the powers to issue specific directives in relation to what was then the Australian Broadcasting Tribunal, the power to issue general policy directives surfaced only in the 1992 Act.42

S. 163 provides for the fact that the ABA is not otherwise subject to direction. Section 171 provides for the Minister to direct the ABA to conduct an investigation into any matter with respect to which the Parliament is given power to make laws by paragraph 51 (v) of the Commonwealth Constitution.

Up to this point, these powers have been used six times.

Ø In 1992, after much discussion both inside and outside government, the Minister directed the ABA to reserve the last available high power television channel for non-commercial use (that is, for national or community broadcasting use).

Ø In 1994, the Minister directed the ABA to conduct an investigation into events that should be televised on a free-to-air basis. On the basis of the ABA’s findings, the Minister subsequently specified those events in a notice he issued later on in the year.

Ø Also in 1994, the Minister directed the ABA to monitor the above, and report to him at six monthly intervals.

Ø In 1995, the Minister directed the ABA to investigate the content of on-line information and entertainment services, including services on the Internet, with a view to examining the appropriateness of the development of codes of practice for these services. The investigation also involved assessing to what extent the BSA covered such ‘broadcasting’ services. The ABA completed the investigation and recommended a regulatory framework

Ø In 1996, the Minister directed the ABA to conduct an investigation into certain matters relating to Australian content on pay-TV, especially the feasibility of increasing the quota from 10% to 20%. On the basis of this investigation, the Minister concluded that raising the quota to 20% will result in financial problems for these channels.

Ø Also in 1996, the Minister revisited the question of the sixth channel use by directing the ABA to conduct a public enquiry into its future use. In view of the financial problems that community television organisations were experiencing in setting up a viable service, it was decided to hold the sixth channel in abeyance until a later date. The government has extended a trial period granted to community television to the year 2000, and has yet to make a final decision with respect to the permanent use of the channel.43

This year, a draft directive was issued to extend access rights to Intelsat and Inmarsat. Currently, Telstra and Optus are the only eligible Australian signatories in terms of a 1994 Directive, and therefore only they have direct access to Intelsat and Inmarsat. The outcomes of this draft directive are pending.44

In New Zealand, in terms of the Broadcasting Act of 1989, the Broadcasting Commission has to act with regard to general government broadcasting policy. The Minister has the responsibility of informing the Commission of any policies, and shall comply with any written directions given by the Minister pursuant to those policies. Procedures are laid down for the issuing of such a directive. However, the Minister is forbidden from issuing directions in respect of the following:

Ø A particular programme or allegation or complaint

Ø News gathering and presentation and current affairs programmes

Ø The responsibility of the Company for programme standards.45

The Radio New Zealand Act of 1995 expressly disallows the Minister from issuing directives in respect of the above issues to public radios. In addition, while the shareholding Ministers may recommend the appointment of the Board of Governors to the Governor-General, none of the Directors may be removed for reasons relating to the above.46Unfortunately, no information has been obtained about how these powers have been used.

This power existed in the Broadcasting Act of 1977, which, according to Michael Tracy, represented the government’s attempt to assert greater control over broadcasting, to ensure greater accountability and responsibility with respect to ‘..what constituted acceptable public expression’.47 The power was used by the Minister in 1987 to direct what was then the Broadcasting Tribunal to complete public hearings to licence the first private television network, TV3, thereby breaking the monopoly of the Broadcasting Corporation of New Zealand (BCNZ) on television,48 and ushering in the era of liberalisation.

Assessment

It should be evident from the statutes that have been reviewed that they all recognise the right of the Minister or delegated official to issue policy directives. Therefore, there are precedents for the inclusion of a similar power in South African legislation. It is also evident from a brief review of the above jurisdictions, that they are invoked by Ministers mainly to steer the direction and pace of liberalisation of broadcasting (including the introduction of new technology) if s/he feels that the regulator is in need of direction: it should therefore hardly be surprising that these powers have been written into statutes only fairly recently. In Australia, a convention seems to have been established whereby the Minister directs an investigation into a matter, and then on considering the resulting report, issues a policy directive on a matter. The weight of international convention, coupled with constitutional guarantees around freedom of expression, may act as a powerful deterrent for a Minister wishing to use these powers to curtail a broadcaster’s freedom of expression. However, as an additional safeguard, it is important to ensure that these powers are framed as clearly as possible to minimise the possibility of ambiguity.

It is clear from the above that the powers to be granted to the Minister in terms of the Bill are far greater than in any of the above statutes, especially taking into account the cumulative effect of the proposed amendments to the IBA Act and the powers in the Bill (in other words, the Minister will have the power in terms of the IBA Act to issue policy directives, and also have powers in terms of the Bill to issue regulations).

With regard to the former amendment, the framing of the power around policy directives is inconsistent. All the above acts qualify this power: policy directives must be ‘of general application’ and ‘on broad policy matters’ (Canada), or ‘of a general nature’ and should relate to the performance of the regulator’s functions (Australia). Directives may not be issued with respect to licencing procedures (Canada) and programming (New Zealand). None of these qualifications exist in the proposed amendment to the IBA Act. This is a serious flaw that needs attention.

It would also seem that there is no precedent in the above statutes for the Minister being allowed to issue regulations in the manner described in the Bill: where provisions are made for the issuing of directives that could be specific enough to qualify as ‘regulations’, the circumstances in which this may be done are specified. Also, the inclusion of this power opens the door for conflict between the IBA and the Minister in terms of who has the right to issue regulations, and in respect of what issues; such conflict may well result in costly and time-consuming litigation. One would think that this matter would be cleared by reference to s.78, but it is not. While a number of the regulatory powers given to the IBA are clear, others are less so. What constitutes a ‘technical matter’, or a ‘matter of procedure or form’ is a matter of interpretation; even more so are the powers in respect of s. 78 (v).

In aiming to describe more clearly the powers of the different actors in broadcasting, it would seem that the above scenario in fact further muddies the waters. More specifically, the Bill fails to draw the line the White Paper claims it wants it to draw between macro- and micro (or regulatory) policy. The following is therefore suggested in the interests of clarity:

Ø The power to issue regulations in terms of s.37 should be scrapped in its entirety.

Ø In its place, the power to issue policy directions consistent with s.2 of the Bill should be inserted (the clause proposed as amendment 13A (2) (j) to the IBA Act). However, this clause should be re-drafted to ensure that directions are ‘of a general nature’ and are on ‘broad policy matters’.

Ø Directives may not be issued with respect to licencing matters, as specified in the Canadian Act, or programming matters, as specified in the New Zealand Act.

The three tiers of broadcasting

The White Paper places a welcome emphasis on the needs for a diversity of broadcasting services, however, one component of diversity it does not identify involves the protection and promotion of the three tiers of broadcasting - namely public service, commercial and community - as they have different and distinct roles to play in society.

Both the first and the second tend to operate on a non-commercial basis, in recognition of the fact that if broadcasting were dictated simply by economic status, whole communities would not feature on the broadcasting landscape. This is particularly so in a country like South Africa, which is still characterised by huge disparities in access to resources.

None of these tiers of broadcasting are inherently ‘good’ or ‘bad’: they have different social and economic roles to play and if regulated carefully, they should complement one another and ‘cover’ the totality of broadcasting needs in society. However, policy needs to ensure that it appreciates the different roles of these tiers: if it does not, the interests of some constituencies may override others. In the White Paper, there is a ‘fudging’ of the commercial and public service tiers of broadcasting, the implications of which need to be assessed.

Public broadcasting services: the role of the South African Broadcasting Corporation (SABC)

The ‘fudging’ of commercial and public broadcasting is not unique to South Africa: it is happening in many countries with public broadcasters. The reasons are multifold. The general downsizing of governments has led to pressures for them to retreat from providing a host of social services, including public broadcasting. In fact it has been in the interests of different government to shrink the size of their monopoly broadcasters to encourage the development of commercial broadcasting. Technological developments spurred on by digitisation have made it more possible to challenge the inherent limitations presented by free-to-air broadcasting, and have also lent themselves - through pay-per view and subscriber-based services - to an erosion of a key principle of PBS, namely universal service.49These developments have unsettled the balance between public and private in broadcasting, with pressures on the former to conform to the logic of the latter.

Public broadcasters that survive off state funding - like the Australian and Canada - have had to endure funding cuts.50 In addition, a number of services in different broadcasters have been commercialised, and even privatised: the experience of the BBC under Margaret Thatcher’s government exemplified this trend.51 Commercialisation has also involved the separation of functions traditionally undertaken under the roof of the broadcaster, and an outsourcing of the ‘non-essential’ functions to the private sector: a trend that has been termed ‘vertical disintegration’. For example, with respect to the BBC, signal distribution was removed from its corpus of activities, and a decision was taken to sell the transmitter network to a Texan-based company.52

More public broadcasters are also commissioning programmes from private producers, instead of producing them in-house, as a cost-cutting measure. Whether this approach actually results in savings in real terms is the subject of some debate53. Questions have also been raised about the implication of relying on the private sector to produce public service programming, with arguments being made that this approach results in the broadcaster gradually losing control over this vital function, making it more difficult to achieve a well-planned, coherent, integrated service. This is especially so given that private production companies have to turn a profit to survive: in the words of one commentator, ‘It may become a problem for public television to do business with private producers whose sole objective once again is the profitability of their activities, and this is particularly the case with enterprises which aim to develop products whose costs they hope to amortise on external markets’.54

South Africa in the international public broadcasting picture

On the basis of the above fleeting observations, it would seem that South Africa is attempting to establish a viable public service broadcaster in an international context where such services are in a great deal of flux. The current proposals for the restructuring of the SABC, contained in the Bill, are reportedly derived from international models, and should be benchmarked against these models.55 The intention is to do just that, taking into account critical overviews of the ‘models’ the SABC is being benchmarked against. Before doing so, though, the proposals themselves should be outlined, and should be ‘benchmarked’ against earlier proposals on the structure of the SABC.

In terms of the Bill, the SABC will be corporatised and - unless otherwise stated - be subjected to the provisions of the Companies Act. It will also be subject to the provisions of the King Code on Corporate Governance:56 developed in 1994, it seeks to establish internationally recognised corporate governance principles to promote transparency and accountability in South African corporations, and hence foster investor confidence.57

The SABC will therefore operate on a share structure, with the State as sole shareholder. The Minister of Communications will act as the custodian of the shares. The application for incorporation will be accompanied by a Memorandum and Articles of Association, signed by the Minister on behalf of the State (these documents are not yet available). This proposed structure was also contained in the Broadcasting Amendment Bill, which was tabled in Parliament in November 1997, but was withdrawn after controversy.58

The Bill also divides the SABC into two arms: the public service and commercial arms. According to the White Paper, one television channel and four radio stations will be moved into the commercial arm, and the remaining services will stay in the public service arm. It is still unclear as to which stations these will be. The commercial service will then indirectly cross-subsidise the public service arm: the dividends from the latter will be paid into the fiscus, and the Minister will then decide on how much money to allocate back to the public service arm. It is also possible that the commercial arm may be partially or fully privatised, depending on the outcomes of a study of the impact on the market of the new private television station, Midi-TV.

The Bill also contains a statutory Charter, which outlines the objectives of the public service arm: according to the White Paper, the Charter applies only to this service and not to the commercial stations.

The first benchmark: the Public Broadcasting Services Bill of 1996

This Bill was withdrawn as it was drafted on the basis of the Interim Constitution, which gave the provinces the powers to set up their own provincial media. In the light of the reincorporation of the former ‘homelands’ and all their assets (including their broadcasters), it was felt that it was important to set standards for all public broadcasters. However, before the Bill was tabled, the final constitution was drafted which removed the rights of the provinces to set up their own public media, so those aspects of the Bill that dealt with the setting up of provincial media were invalidated. Yet there is much in the 1996 Bill that still provides a useful benchmark for the purposes of this discussion.

Overview of the Bill

The 1996 Bill would have established the SABC and other public broadcasters as independent legal entities accountable to Parliament. It expressly guarantees the independence of the SABC in s. 3, without derogating from its responsibilities to be accountable. It lists the broadcaster’s obligations, stressing the need to be independent from government and commercial influences, and enjoining it to provide services that are in the public interest and are distinctly South African, and that inform, educate and entertain. Appointment procedures for the Board are spelt out in detail, as are the criteria for qualification as a Board member. These provisions merit some attention.

The 1996 Bill proposes that the following procedure be followed:

Ø The relevant government department issues a notice in the Government Gazette calling for nominations for a panel to select board members.

Ø Once nominations are received, the relevant Committee in Parliament shortlists the candidates, and holds public hearings for them. The Committee then appoints the panel.

Ø The panel then Gazettes a notice calling for nominations for the Board, and shortlists according to the criteria outlined in the Bill, and public hearings are held for the shortlisted candidates.

Ø The panel selects the Board and makes its recommendations in this regard to Parliament

Ø Parliament then appoints the Board members. If recommendations are turned back by Parliament, then the panel may make further recommendations or invite more nominations.

Ø Once the Board has been constituted, the President appoints the Chairperson and Deputy Chairperson.

These appointment procedures reflect in the main consensus arrived at in the Campaign for Independent Broadcasting (CIB), a broad alliance of civil society organisations (including the predecessor organisations of the FXI) which campaigned for the removal of broadcasting from state control in the period leading up to the democratic elections. However, one area of difference concerned the appointment of the Chairperson and Deputy Chairperson, which the CIB believed should be a process conducted by the Board itself (not the President, as stated in the 1996 Bill).

The criteria for qualification as a Board member also merit some attention. Board members should be committed to fairness, freedom of expression, the public’s right to be informed, openness and accountability and the objects of the Bill and the IBA Act. They should, when viewed collectively, represent a cross-section of the South African population, and due regard will be given to the skills of particular members. Potential candidates may be disqualified from becoming a Board member on a number of grounds, including whether s/he has been member of government or office bearer of a political party within 12 months of the nomination. Candidates who have a direct or indirect financial interest in the media industry are also disqualified, so too are non-citizens, criminals, unrehabilitated insolvents and the mentally ill. A particular conduct is required of a Board member, who is also compelled to disclose conflicting interests.

In spite of the above, there are two important omissions in the 1996 Bill. It does not compel Board members who have meetings with representatives of political parties either officially or informally to issue public statements recording that such meetings took place and the contents of the discussions. Also, there are also no procedures outlined in the Bill to encourage public access to the Board. Ideally, by law the Board of the SABC be compelled to hold four quarterly report-back meetings to the public every year and that in addition it releases publicly minutes of all its meetings. The public report-back meetings must be of sufficient format and duration to enable members of the public to comment and make proposals. Further, there should be provision for specific groups to meet with the SABC Board or its sub-committees to voice their views.

How does the 1998 Bill measure up?

The 1998 Bill should be benchmarked both against the 1997 Broadcasting Amendment Bill and the above mentioned Public Broadcasting Services Bill.

The 1998 Bill differs in relation to the 1997 Broadcasting Amendment Bill in that the appointment procedures of the SABC Board are contained in the Bill itself. The procedures were to be included in the articles of association in terms of the earlier Bill, which the FXI objected to on the basis that in terms of the Companies Act, the articles would be subordinate to the legislation. The implication of this were that the Minister as the shareholder could legally change the contents of the Articles at will.59 The fact that the drafters have seen fit to include the appointment procedures in the body of the Bill this time is a significant advance. What is also most welcome is that a Charter has been included to give direction to the SABC, and that it has been given the status of legislation.

However, there are provisions in the appointment procedures that are inconsistent with the SABC’s status as a public institution independent from government control. Also, a number of the provisions are too broad, and could be open to varying interpretations, such as ‘participation by the public in the nomination process’. Given the political sensitivities around the appointment of the Board, it is highly advisable to spell out the appointment procedures in some detail in the statute, so that there is no room for doubt or interpretation concerning the procedures to be followed. In this regard, it is suggested that the appointment procedures outlined in the Public Broadcasting Services Bill be included, and with the recommended amendments affected.

The principles according to which nominees should be considered for the Board are insufficient, in that they do not list the circumstances under which someone would not be eligible appointment. The Public Broadcasting Services Bill spells out a number of these circumstances, the most important being those concerning the disqualification of candidates that held political or government office in the past 12 months and who have direct or indirect financial interests in the media industry. It is recommended that these be included. It is also recommended that the above mentioned proposals around increasing the accountability of the Board to the public be included as well.

Apart from the above recommendations around enshrining the independence and accountability of the SABC in the statute, attention should be paid to the guarantees of transparency which, according to Departmental statements, will be enhanced by the application of the King Code on Corporate Governance. Significantly, when the Code was drafted in 1994, the Congress of South African Trade Union’s (COSATU) representative refused to endorse the final version on a number of grounds, one of those being that it did not provide for enough corporate disclosure.60 There have also been problems in ensuring that corporations enforce the Code, as this is done on a voluntary basis.61 Given the fact that in terms of the constitution, private companies have less of an onus to disclose than public ones, it is prudent to aim for a regime that enforces maximum transparency: the proposals around the King Code are not sufficient. The SABC should be subject to the provisions of the Open Democracy Bill as a statutory institution, which - together with the transparency provisions recommended above - will compel it to be transparent on a far wider range of issues than the King Code, by law.

In fact, the reporting obligations to be placed on the SABC in terms of s. 25 are inadequate, as they reduce the accountability of the SABC to the public through Parliament to accountability in respect of financial matters. There is no obligation on the SABC to report on its progress in delivering on its public service mandate. This omission is unacceptable, and needs to be corrected to compel the SABC to report on the actual content of its work, namely to deliver a national public broadcasting service. It is this sort of omission that can leave one with the uncomfortable impression that the SABC could be used by government as a cash-cow for generating revenue.

The second benchmark: public service broadcasters in other countries

One of the reasons being given by the Ministry of Communications for the corporatisation proposal is that other broadcasters are structured in this way. A benchmarking exercise should establish the extent to which this is so.62

In conducting this exercise, due care needs to be taken to benchmark the SABC against public broadcasters with similar profiles. Research conducted by Article 19 for the FXI on the organisation and funding of public broadcasting (Appendix 1) reveals that out of five jurisdictions studied (Canada, New Zealand, France, Great Britain, and Australia), the only two public broadcasters that operate as corporations with share structures similar to the SABC proposal are found in New Zealand and France although in respect of the latter this is a mere legal formality as its public broadcaster does not operate along commercial lines. So while all of the above broadcasters are called corporations, in fact, all but one are corporations in a formal sense in that they do not return a dividend to the shareholding Minister: in this regard, Article 19 notes with respect to New Zealand, ‘In such cases, the corporate structure is clearly not just a formality but actually affects the substantive activities and approach of the broadcaster’.63

The SABC receives 76% of its income from advertising, 17% from licence fees, and the remaining 7% from other sources.64 The only public broadcaster than compares to the SABC with respect to funding sources is New Zealand Television (TVNZ), which in 1991 received 76% of its income from advertising. France receives 70% of its total revenues from licences fees, and the remainder from advertising and sponsorship.65 Australia’s and Canada’s public broadcasters receive 88% and 73% respectively of their funding directly from the government. The BBC receives 95% of its funding from licence fees.66

It would appear then, that New Zealand’s broadcasting service aligns most closely with the SABC’s funding profile and organisational structure. Therefore, the benchmarking exercise will take place on two levels. The provisions of the different charters will be compared and contrasted with the proposed South African charter, to determine how the different mandates measure up. Then the proposed organisational structure of the SABC, specifically the corporatisation proposal, will be benchmarked only against New Zealands’ public broadcaster for the reasons given above.

The Charter

Clearly the South African Charter has been heavily influenced by the BBC Charter, so the main focus of attention will be on comparing and contrasting the two.

Britain

The BBC has been governed by successive Royal Charters since 1926. The current Charter was granted in May 1996 for a ten year term after a lengthy process of public consultation and debate (termed the Charter Renewal Process). In fact the Renewal Process took four years, and began when the Secretary of State for National Heritage published ‘The Future of the BBC: A Consultation Document’. The British Film Institute then produced a series of monographs over a two year period raising issues for debate around the Charter. The Government then released White Paper in 1994, which dealt with the future of the BBC, and only in 1995 was a draft agreement and Charter published.67

It is important to take note of this process, as it highlights the inadequacy of the process being followed currently around the development of the SABC’s Charter. It is in the interests of public broadcasting to develop the Charter through a transparent process of public debate, as it engages the SABC’s viewers in a practical discussion about what the SABC’s mandate should be. It is proposed the Charter is passed only once more extensive public participation has taken place, and that a time frame is set for its development.

The Charter has the status of secondary legislation or regulations: it is therefore less secure than a statutory mandate. As it is technically a contract between the Governors of the BBC and the Minister, any breach of its provisions would be dealt with in terms of contract law. The Charter outlines the BBC’s purpose and defines its constitution. It is accompanied by two other documents: an agreement between the BBC and the Secretary of State for Culture, Media and Sport, which describes the services and standards expected of the BBC, and the BBC’s Statement of Promises to Viewers and Listeners, which is required in terms of the Charter and Agreement.68

The Corporation operates according to the public mandate contained in the Charter: in this sense, while it is self-regulatory, the trade-off that the government has made with the Corporation is that it should regulate itself according to the above documents.69 While the BBC is supposed to enjoy full management and editorial independence, subject to complying with all legal requirements, neither the Charter or the Agreement make explicit reference to this. In fact, the principle of independence is historically more a matter of convention than law, and the government has from time to time invoked legal powers to censor BBC programmes.70

The BBC is divided into two sets of services: public services which are financed through licence fees, and commercial operations, which are self-financing. When the Charter was renewed in 1996, this distinction was written in, and both sets of operations were made subject to its provisions.71 The Agreement covers the services and standards as they apply to the public services in return for the licence fee.72

The form that the Charter takes in the South African Bill is different in a number of respects. Firstly, the effect of including it in the primary legislation is that it enjoys the same status in law as such legislation, which is a greater guarantee of stability for the SABC than the BBC example. This should be welcomed.

Secondly, the Charter applies only to the PBS arm, and not to the commercial arm: the implications of this omission need to be considered. The Charter manages the relationship between the commercial and public service arms; while it calls for the two arms to be managed separately, they should both contribute to the overall objectives of the SABC as outlined in the Charter. Coherence will be even more difficult to achieve in terms of the South African Bill, where different objectives are outlined for the two arms. One could anticipate that there will be a great deal of tension between the few objectives that are outlined, particularly between 11 (1) in the 1998 Bill, which states that the commercial arm must be ‘subject to the same policy and regulatory structures as outlined in s. 23 for commercial broadcasting services’ and 11 (2) in the 1998 Bill, which commits the commercial arm to ‘comply with the values of the public broadcasting services in the provision of programmes and service’. If the commercial arm is to contribute to the sustainability of PBS, then its profit-making ventures need to be subjected to the overall vision of the Charter, as has been done in respect of the British Charter. It is possible that this has not been done as the commercial arm will be easier to privatise if it not subjected to the Charter.

In terms of the actual content of the SABC Charter, ten of the sixteen clauses listed under the objectives are taken virtually verbatim from the BBC Charter.73 The substantive omissions are instructive, and relate mainly to differences in the degree of financial independence of the SABC compared to the BBC. For instance, the BBC is able to acquire land without further permission, provided it does so to further the objectives of Corporation74, whereas the SABC has to ask for permission from the Minister before doing so, and permission may be granted only in respect of transmission and reception facilities.75 Also, the BBC has limited powers to enter into partnerships and contracts76, and conduct financial transactions such as borrowing or raising money or securing payments: in fact, a borrowing ceiling is stipulated beyond which the Corporation needs permission from the Minister.77 The BBC may also invest any money not immediately required for its activities, and draw on it as a reserve.78 In terms of the South African Bill, the SABC may not borrow any money without the prior written approval of the Minister and the Minister of Finance.79 In addition, it has to declare a portion of its profits as dividends to be paid over to the shareholder (the State).80

It should be clear from this comparison that the SABC in terms of the Bill will not enjoy the same level of operational, especially financial, independence as the BBC does under its Charter: this is intriguing given that the BBC is not even founded under a share structure, so technically the SABC should in terms of the corporatisation proposal be given more rather than less independence than the BBC. Far from increasing its independence, the Charter - through important omissions - ties the SABC to the government, and especially the Minister, in crucial ways. In this sense, one could argue that the SABC will be nominally independent, but not substantially so.

What is worrying is that the Charter makes no explicit reference to the independence of the SABC, in spite of the assurances to the contrary. This is a major omission, and such an omission cannot be justified in terms of the BBC Charter not containing such as clause, as the BBC regulates itself. To rectify it, the formulation provided for in s.3 of the Broadcasting Services Bill, entitled ‘independence of public broadcasters from government’ could be considered. Furthermore, the Board should be committed to protect and promote the independence of the SABC.

This is not to say that South Africa should be concerned with importing wholesale models from other, especially Northern, countries, but the above comparison appears to be relevant merely by virtue of the fact that the Bill leans so heavily on the BBC Charter for inspiration.

Australia

The public broadcasting services in Australia - namely the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Corporation (SBS) - are also governed in accordance with their respective Charters. The Charter of the Australian Broadcasting Corporation (ABC) was established by the 1983 Act, and is contained in the statute. Therefore, unlike the BBC Charter, it has the full force of primary legislation. It is far shorter than the BBC Charter - in fact taking up slightly more than a page of the ABC Act - and outlines the functions of the Corporation.

It commits the ABC to providing an innovative and comprehensive service, to contribute to a sense of national identity, while underscoring the diversity of its culture. It also highlights the need for the ABC to educate, inform and entertain, and encourages the promotion of the arts. In realising the above, the ABC also has to take account of the service provided by the commercial and community sectors, standards set by the regulator, the Australian Broadcasting Authority (ABA) and the multicultural nature of Australian society. In doing so, it has to strike a balance between its responsibility to provide a balance between programmes of a wide appeal and special interest programmes.81

One provision that in the ABC Charter that could be of particular relevance to the South African Charter concerns the relationship between the three tiers of broadcasting. In taking account of the other tiers, the Charter seems to be obliging the ABC to complement rather than contradict or duplicate their activities. In fact, the community broadcasting sector in particular has been identified by the former Chief Executive Officer of the SABC, Zwelakhe Sisulu, as a ‘natural partner’. It would be advantageous for both sectors to have this partnership reflected in the SABC’s Charter. In addition, like the ABC Charter, the South African Charter could incorporate the hoary old standard of public broadcasting, to ‘inform, educate and entertain’.

In comparing these provisions with the provisions of the South African Charter, it may be useful to take into account a 1996 critique of the Charter and other aspect of the ABC, written by Bob Mansfield. In the critique entitled ‘The Challenge of a Better ABC’ commissioned by the Minister for Communications and the Arts, Mansfield reviewed the provisions of the Charter and found it too general and did not prioritise defining features of the ABC.82 The SABC Charter does just that, and in this sense it is much better than the Australian one: in fact, it identifies use of all official languages83, educational and cultural programming84, news and public affairs programming85, sports (including developmental and minority sports)86 and services especially for children, women, the youth and the disabled.87 The Charter could be strengthened, though, by adopting one of Mansfield’s suggestions, and elaborating on its aim to make the public services available throughout the Republic88: in fact, the primary function of the SABC should be defined as a domestic broadcaster for general reception on a free-to-air basis. While international broadcasting and more delivery platforms may be features of the future, domestic free-to-air will remain the most accessible form of broadcasting for years to come.

Another observation Mansfield made with respect to the ABC, that may prove useful in relation to the SABC, is that in separating out the public service and commercial operations, it should be made clear that the latter should not operate at the expense of the former. For example, he notes that the Board and management time should not be overwhelmed by the concerns of the commercial arm: to that end, he recommended that the ABC Act should be amended to ensure that the PBS operations are not swamped by the concerns of the commercial operations.89

Canada

The Canadian Broadcasting Act of 1991 is a comprehensive statute that establishes the Canadian Radio-Television and Telecommunications Commission (CRTC) as the regulator, and the Canadian Broadcasting Corporation (CBC) as the public broadcaster. The Act does not contain a Charter as such, but list objectives for the CBC similar to those found in the above Charters.

New Zealand

The New Zealand Radio Charter - included in the Radio New Zealand Act 1995 - bears some superficial resemblance to the statements of objects in the Australian Act, but it provides a more specific programming mandate to public radio. Unlike the Australian Charter, it also calls for the services to be independent, and commits it to commission research into whether it is meeting audience expectations. The South African Charter contains a much better clause in this regard, in that it commits the SABC to a broader obligation, that being ‘..to be responsive to audience needs and account on how to meet these needs’.

Corporatisation - the case of New Zealand

In 1988, the public broadcaster, the Broadcasting Corporation of New Zealand (BCNZ) was dissolved, and replaced by two state-owned enterprises (SOE’s, equivalent to corporatisation in South African terms), Radio New Zealand (RNZ) and Television New Zealand Limited (TVNZ). A broadcast production fund, New Zealand on Air was also established: its role is to collect licence fees and channel them back into the TVNZ, and to fund local productions. Both were required to operate on a commercial footing with commercial objectives to encourage efficiency. In 1995, an Act was passed to separate the commercial and public service operations of Radio New Zealand90, and the next year the former was privatised after a lengthy campaign by commercial broadcasters on the grounds that the state had no business using its funds to subsidise commercial services. The latter, as a corporatised entity, remains accountable to the shareholding Minister, as custodian of the state’s shares.91 Numerous TVNZ subsidiaries have been privatised, a process which is still continuing. In addition, it has outsourced all of its productions to private production agencies.92 Presently, over 70% of TVNZ’s funding comes from advertising, with less than 5% coming from licence fees collected by New Zealand on Air.93 TVNZ operates on a ‘purchaser-provider’ model.

It may be instructive to consider some of the consequences of these changes for the delivery of public broadcasting. One of the most striking has been that radio has gradually been starved of funding, and consequently has had to fight for survival. In fact, one commentator has noted that RNZ ‘...has been the most difficult SOE for the government to manage and the only one chronically unable to return a profit.’94 The speedy liberalisation of the industry has much to do with this, as advertising share was drawn away from RNZ. In addition, the separation of public service and commercial operations, coupled with the need for RNZ to return a dividend, ironically disturbed the cross-subsidisation arrangement already in existence (whereby the bigger stations helped support the smaller ones), and threatened the existence of a number of the smaller stations. Before a full financial recovery was possible, the government took a decision to sell off the commercial operations. The remaining non-commercial operations are funded by the licence fee through New Zealand on Air.

These developments have not been without their opponents. When the Broadcasting Act was passed in 1988, the New Zealand Maori Council commenced litigation in an attempt to stop the transfer of television and radio assets to state-owned enterprises, raising serious concern about the government’s ability to meet its obligation to protect the Maori language if this transfer went through.95 This resulted in a case which the Council lost in 1992.96 In 1996, the Council brought another case again against the government to prevent the sale of the commercial services of RNZ until further steps has been taken to protect Maori language in radio broadcasting.97 The case went on appeal, but the appeal failed on the basis that the sale was legal, and relief could be sought from private radio stations.98 In spite of these failures, the government responded to a request from representatives from national Maori organisations to establish a joint Maori/ Crown working group to negotiate solutions to the ongoing Maori discontent around the direction of New Zealand broadcasting policy.99 Since then, two reports have been produced, as well as a Maori television policy document, which proposes the establishment of a separate Maori television station.100

The Friends of Public Broadcasting (FOPB), set up in New Zealand to promote the ideals of public broadcasting, have also expressed consternation at the erosion of the social objectives of broadcasting by the government’s commercialisation plan. It notes that Radio New Zealand has suffered the most from corporatisation, and describes it as ‘vastly underfunded’.101 The Friends are lobbying for the establishment of a non-commercial television station, in spite of the fact that the government has repeatedly argued that it cannot afford to fund one. It has noted that corporatisation has had a number of disturbing effects.

For instance, TVNZ, as a commercially-driven operation, has gravitated towards showing popular programmes, many bought from overseas, in prime time. This has resulted in the inexorable marginalisation of minority and special interest programming, as fewer production houses approach New Zealand on Air for funding for such projects, and most funding goes to private sector rather than public service productions in any event. As a result, local content levels on TVNZ are falling.102 The existence of the fund has also resulted in the artificial inflation of the cost of local content productions, in that its establishment led to the proliferation of television production companies which include their operating overheads in their funding proposals. The FOPB also note that the operating costs of New Zealand on Air gobble up a significant portion of the licence fee, and recommend that it be disbanded, and the licence fee be used exclusively to fund public broadcasting. They also oppose the privatisation of either of TVNZ’s two channels, arguing that the commercial operations should directly cross-subsidise the proposed public service channel. They have also called for the reversal of its status as a state-owned enterprise on the grounds that TVNZ’s requirement to return a dividend to the government is hampering its ability to deliver on its public service mandate. 103

A number of public statements made recently from different sources bear out the above fears. During a recent visit to New Zealand recently, Robert McChesney, associate professor of journalism and mass communications at Wisconsin University expressed horror at the amount of advertising carried by TVNZ, and described the service as the worst he had ever seen.104 In responding in July 1996 to government proposals to restructure the ABC along the lines of TVNZ, Managing Director Brian Jones argued that TVNZ’s purchaser-provider model was flawed in that it had led to the service carrying only 23% local content, with more than 25% of TVNZ prime time being devoted to advertising. He cited the comment of Radio New Zealand Board member Dr. Dennis Dutton who had told ABC Radio the week before that New Zealand had the most degraded television in the English-speaking world.105 In his study entitled ‘The Decline and Fall of Public Service Broadcasting, released earlier this year, Michael Tracy cites developments in New Zealand broadcasting, and at TVNZ in particular as a ‘capsule statement’ about the worldwide decline of social values in broadcasting. He notes that when TVNZ’s monopoly ended with the creation of the first private television channel, TV3, the-then Director General, Julian Mounter, argued for the repositioning of the service thus:

‘We have geared up and radically changed the company in an effort to have something that is aggressively commercial and will deal with [TV3]...We are going to attack and we are going to be like them. The difference [will be] that if we are doing a drama, we know it’s got to rate, and it’s got to sell. What’s wrong with that? Our whole philosophy is that it’s no good for a public service organisation, as deregulation comes along, to be elitist. You have to stop saying we are making the best, and start asking ‘what is it they [the public] want? We’ll make it! That’s what we’ve done, and I think it helped.’

Mounter argues on the basis of the above that TVNZ voluntarily gave up its public service values ostensibly to reposition itself from competition with TV3. Ironically enough, TV3 went into receivership.106 This montage of comments, however superficial are revealing, as they give some indication of the mounting crisis of credibility of New Zealand broadcasting. Corporatisation seemed to set New Zealand broadcasting off in a direction where more and more commercial activities and principles are entrenched: this is understandable, given that it is a legal structure designed to structure organisations to operate self-sufficiently, and to generate revenue.

Assessment

It would seem that if the proposals contained in the Bill are implemented, the relationship between the three tiers of broadcasting may be unsettled. There is a tendency demonstrated in the Bill to downsize public broadcasting through an incremental introduction of commercial principles and activities, such as a corporate shareholding management structure and an increasingly private sector-reliant programming policy. These tendencies are already apparent in the SABC, where its operations have been operating as separate business units for a number of years already, and where a tendency to outsource programme production has been growing.

Corporate management may be reluctant to take risks on the grounds that they need to maximise their revenues in the commercial arm to increase the chances that the PBS arm will gain. In fact, the above proposals may well result in an SABC with a fragile, unstable quasi-commercial arm and a fully commercial arm which will be a target for accusations that it is using state infrastructure to gain a competitive edge. In spite of the fact that the proposals are being made with a view to defining the SABC public broadcasting functions more clearly, the separation could be considered a nominal gesture in reality that will not fundamentally alter the identity of the public broadcasting functions: in fact, its identity will remain quasi-commercial for as long as it is compelled through policy to carry advertising. The principle of public sector roll-back is also not in the interests of community broadcasters, in that it may well damage chances of establishing a viable ‘natural partnership’ with the SABC.

In assessing the corporatisation proposal, it would seem that the starting point for the debate should not be which legal form is best suited to the SABC, but what its ideal funding base should be. If this is defined clearly, then questions of organisational form will virtually answer themselves. In other words, if one has a funding base provided by the public - either through direct government grants or licence fees - then it is logical to found the broadcaster as a legal entity which operates solely according to the provisions in its founding statute. However, if the broadcaster is to generate its own funding, then it needs an organisational form that forces it to operate self-sufficiently and commercially according to company law: corporatisation does just that. In our assessment, out of the international models considered both by ourselves and Article 19, the proposals contained in the Bill appear to be most closely aligned to New Zealand, and a quick evaluation of its public broadcasting services has not yielded very rosy results. What we have also concluded based on the Article 19 research is that the proposed structure for the SABC does not enjoy wide popularity with established public broadcasters.

If one is to have a true public broadcaster empowered to deliver on the reconstruction and development aim of delivering a national service to all irrespective of income bracket, then this mandate presupposes public funding: the FXI has made numerous detailed proposals around how such funding could be levied (see for example, IBA Triple Enquiry submission, Appendix 3). If such funding is provided, then the need to corporatise falls away.

This is not to say that some cross-subsidisation activities would not be possible in terms of the above proposal: in fact, they would be a welcome source of revenue to supplement public funding. Certain services could be delineated as commercial, and others as public services: this would need to be done once a thorough enquiry has been conducted by the IBA into which services would fall into these categories. Cross-subsidisation does not require a corporate structure: in fact, the New Zealand Radio example points to the fact that combined effect of the separation of commercial and public services and corporatisation has the effect of killing off cross-subsidisation in that the former service has to return dividends to the state that it may otherwise have used to cross-subsidise the latter.

The fact that the share structure involved in corporatising state enterprises is the subject of considerable debate in other circles is based on a similar logic: namely, that it prevents them from using profits to subside roll-outs to needy areas. Small wonder that COSATU has declared a dispute with government over its plans to corporatise Eskom, South Africa’s electricity provider, partly on the grounds that its having to pay taxes and dividends will prevent it from rolling out new services, and providing cheap services to existing users.107

However, what is most confusing about the SABC proposal is that it is not even consistent with the principles of company law and the practices of corporatised entities. As noted already, the SABC will not enjoy the kind of financial independence a corporatised entity should. Furthermore, it is a recognised principle that there should be a clear separation between ownership and control, where management keeps shareholders at arms length: this will clearly not be the case with the SABC, should it be corporatised in the suggested manner. It will be both free and not free from the Minister’s control at the same time.

There is no in-principle reason why cross-subsidisation cannot happen internally in the SABC: a role model in this regard is the BBC itself. According to Article 19, the BBC Home Services Group, which includes the Home Services and its worldwide commercial activities, and the World Service are accounted separately (the bulk of the income for the commercial services comes from the sales of television programmes and publishing activities). The licence fee revenue may not be merged with the revenue derived from the commercial services: therefore, there is no possibility of affording these services an unfair advantage over their strictly commercial competitors by using public funds to subsidise them (an argument raised by private broadcasters in New Zealand with regards to public services in that country).108

However, care would need to be taken that the commercial services constitute a clear minority of services in the SABC, and that these services be administered separately and transparently. If the commercial services were brought under the wing of the Charter, then their expansion should be checked anyway by the overall public service mandate of the SABC. Commercial services should not involve radio of television stations: no station should be deemed ‘commercial’. Rather certain services like the ones mentioned above with respect to the BBC, should constitute the commercial arm.

The cross-subsidisation proposal in the Bill (namely that the commercial arm declare a dividend to the fiscus, and the Minister then allocate funds back to the public service arm) is a recipe for disaster. We cannot emphasise strongly enough how opposed we are to this proposal, as we believe that it will render the SABC even more financially unstable than it is. There are no guarantees that the dividends paid into the fiscus will ever find their way back into the public service arm (in fact, given the GEAR environment, they may well not), and the reallocation of these funds will ride on Ministerial whim. Also, the possibilities of internal cross-subsidisation are ruled out as the commercial arm will not be able to retain a portion of its profits on the basis that it would like to reallocate them to the public service arm. To add to this recipe for disaster - as mentioned earlier - the government may decide to privatise the commercial arm, which will lay to rest any possibility of cross-subsidisation once and for all. It would appear that if this does happen, then the public service arm stands to lose at least one language-based station, resulting in its being able to service only ten of the eleven official languages. The proposals amount to government abdicating its responsibility to provide a stable funding base for public broadcasting activities: in the words of Article 19, in concluding their research on public broadcasters, ‘...it remains our view that adequate public funding should remain the rule for public broadcasting’.109

Furthermore, the Media Institute of Southern Africa (MISA), of which the FXI is a member has concluded that, ‘In most Southern African countries, only the state has the resources to adequately fund public service broadcasting. In these countries, public radio and television must be funded by the state, at least in substantial part and for the foreseeable future.’110

Given the structure of state spending under GEAR, it is clear that the absence of such funding is more a matter of a lack of political will than a genuine lack of funds. It is difficult not to take note of a growing civic movement, both internationally and locally, against the size of defence budgets, and the cycles of poverty that many Southern countries continue to be trapped in due to debt repayment obligations: the latter has been highlighted yet again at the Non-Aligned Movement Conference in Durban.111 In the light of these developments in civil society, it is not an unrealistic approach to continue to call for state funding of public broadcasting: in fact, it is in keeping with growing support for governments to be freed from the financial burdens that drain state budgets, so that they can unlock resources for the delivery of social services.

Once state funding is secured, we would like to see the implementation of the IBA Triple Enquiry recommendation to sell off the third channel: in our submission on the Green Paper on broadcasting we in fact recommended that this channel be sold off incrementally to community television consortia in the interests of media diversity (also bearing in mind the tremendous overheads involved in setting up such a television station ‘from scratch’). In addition, the SABC should phase out advertising: in this respect, an interesting approach was adopted by the Estonian public broadcaster, Eesti TV, where advertising was sold off to private stations. This meant that there was not even a phasing out period for the removal of advertising, and the commercial broadcasters gained through the cash injection involved in the deal.112

Community broadcasting

Public sector roll-back policies have led to a hostile environment for subsidy mechanisms and incentive schemes that are not focussed on making the country internationally competitive. The fact that a statutory Media Development Agency (MDA) has still not been established in spite of repeated calls to this effect, may be attributed to these policies. The MDA would be a statutory structure, charged with the task of promoting and protecting media diversity. The beneficiaries of such an Agency should include the following:

· Community media and independent media

· Small venture commercial media

· Community and public service broadcasting in particular

The MDA should be involved in the following areas:

· Human resource development, to facilitate, if not co-ordinate training for the sector

· Grant-funder

· Infrastructure - equipment, studios, and networks for multi-purpose agencies, radio stations, news agencies and production houses

· Audience research specifically for the community media sector

It would derive its sources of funding from government grants, levies on commercial broadcasters and advertisers, grants from corporates, foreign funders and local foundations and subsidies in the form of tax exemptions, tariff reductions or exemptions, or in the areas of posts, telecommunications and electricity.

The Danish Government, through the Kgaso Fund, and the South African government have provided welcome relief in the form of funding and infrastructure for eighteen community radio stations (two per province). The White Paper also proposes the establishment of a subsidy mechanism for community media, where ‘government will act as a catalyst and inject at least some modest capital by way of an independently administered Community Development Trust to assist particularly the undeserved, needy communities’.113 The fact that the government has committed itself to some form of subsidy mechanism should be welcomed: what needs to be taken up is the form the subsidy will take, and how it will be administered.

It would seem that the CDT is a severely reduced version of the MDA: the former will not be a statutory structure, will focus on broadcasting (not print as well), and will act as a conduit for ‘modest’ capital injections. However, the latter will not be founded by statute, and there is no clear commitment from the government that it will find this body on an ongoing basis. While it is understood that this proposal issues from the broadcasting policy document, there is no reason why interdepartmental liaison could not take place between the Department of Communications and the part of government most appropriately placed to facilitate the MDA. The CDT idea could be incorporated into the establishment of the MDA.

The need for a body that plans an approach to media diversity is clearly evident with respect to the spread of community radio stations around the country. The White Paper notes that stations tend to be urban based, and have not really begun to penetrate the most media-needy areas.114This inequitable spread of media resources is unacceptable, particularly in respect of the community media sector whose focus is to address precisely these needs.

In this light it has been suggested in the White Paper and the Bill that the category of licences known as ‘community of interest’ should be phased out, and the IBA should conduct an enquiry into how this should be done (community station licences are awarded on the basis of two categories: geographic communities and communities of interest, which may be defined in terms of language, ‘ethnicity’, religion or other criteria). This proposal is being made on the basis that community of interest stations tend to dominate this tier of broadcasting, and the station profiles largely reproduce the patterns of privilege inherited from apartheid.

This proposal raises a complex dilemma where the freedom of expression rights of existing community of interest stations need to be balanced against the rights to the airwaves of undeserved communities. What needs to be assessed in weighing up these competing claims is whether the government’s proposal will have the intended effect of facilitating greater access.

One of the arguments that is made in favour of phasing out community of interest stations is that they make use of scarce frequencies, which could otherwise be turned over to undeserved communities.115 What is not clear is that if communities are indeed undeserved, how could there be a scarcity of frequencies in those areas? A fuller assessment needs to be made of precisely which frequencies are being taken up by community of interest stations in such a manner that undeserved communities are shut out.

What is also not clear is why the category of ‘community of interest’ in itself is the problem. This category of licence is recognised in several countries116, and although there may complications in defining what constitutes a ‘community of interest’, a compelling argument still has to be made as to why this problem is insurmountable. Also, if more financially advantaged constituencies have made use of this category of licence, it does not automatically follow that the category itself is flawed; rather the problem lies with how the category has been taken up and used by these constituencies. In this sense the argument in favour of abolishing community of interest licences rests on a confusion of form and content. What seems to be the key challenge facing the sector is to find ways of empowering less financially advantaged communities of interest to make use of this category. It is perfectly conceivable, for example that what have become known as African Independent Churches - many of which represent the poorest of the poor - may want to start a community of interest station, or a womens’ group advancing gender equality. The fact that such stations do not exist at present does not invalidate the category of licence: on the contrary, it makes the case for its continued existence.

If the proposal in the Bill is upheld, it will no doubt lead to the severe disruption of existing community of interest stations, even if they are to be phased out gradually. The very fact that they will face certain closure at some stage in the future will have a whole range of negative implications for their immediate existence: for example, on what basis will these stations be able to secure loans? So the smooth transition envisaged in the Bill may well not happen in reality, and may in fact lead to the premature closure of these stations in any event. In this sense, we may find ourselves using what would effectively amount to a censorship solution to solve essentially a development problem which itself is premised on the realities of economic censorship. One cannot fight censorship with censorship.

While it is important to endorse the principle behind the above proposal - namely the promotion of access of undeserved communities - the proposal itself still has to be further motivated. In doing so, we need to clear a number of conceptual and factual hurdles before such a decision should be taken, and in the absence of having done so, adopting the proposal will be premature. It is therefore suggested that policy calls for an investigation to be conducted by the IBA into whether community of interest stations should be phased out, not how they should be phased out.

Also, the initiative to set up the MDA must be fast-tracked. The IBA is a regulator: it is not empowered to initiate the development of new stations. This is a role to be played by communities with little or no access to media, supported by the MDA. Such MDA-supported projects will then apply to the IBA for a licence. If a circumstance arises where there are competing claims for a frequency, the IBA should in terms of existing policy prioritise the application that will contribute to the diversification of the airwaves, and the empowerment of undeserved communities. This approach will need for ward planning to establish where projects are being developed, so that such conflicts could be anticipated: a departure from a simple first-come, first-serve basis for frequency allocation. IBA licencing cycles also need to be reviewed, as they prevent new projects from coming into being if they fall outside the current four year licencing cycle. In addition, a frequency plan detailing where frequencies are likely to ‘dry up’ could be developed, coupled with ongoing planning and monitoring by the MDA. These measures should help to circumvent circumstances where communities are turned away on the basis of the non-availability of frequencies.

It would seem that a key to fostering equitable distribution of the airwaves is the establishment of the MDA. In the absence of such a structure, and given the shaky nature of the CDT proposal, it would be foolish to restrict sources of revenue for community stations under the guise of protecting the identity of the sector. On this basis, no limitations should be placed on national advertising for this sector. Such a limitation would also lead to a torturous debate about what constitutes ‘national advertising’, which will waste valuable time and resources. Also, a community station that builds up a large listenership may well be attractive to national and local advertisers, and it does not seem correct to deny the advertiser that vehicle or the station the income.

Another proposal to restrict the community sector to free-to-air is also problematic, and the sector should have the freedom to decide which distribution technology to use to best achieve their objectives: already a satellite distribution network has been established, and there are also possibilities of distributing programmes through the Internet. If these distribution methods are viable, and they promote rather than alter the nature of community broadcasting, then why not make use of them? These proposals constitute weak attempts to preserve the identity of community media: proposals which - like the proposals around public broadcasting - may well in certain respects threaten rather than promote the sustainability of the sector.

The Minister’s powers and privatisation

The principle of private sector roll-back is again reiterated in a proposed amendment to the IBA Act, which reads, ‘....’. The Ministry of Communications is clearly committed to this principle in terms of a number of the priority projects it has set itself for the remainder of the year: listed in its mid-year review for 1998, these are as follows:

Ø SABC Corporatisation

Ø SABC Separation of Public and Commercial Arms

Ø Commercialisation of Bop TV

Ø Commercialisation of Bop Radio

Ø Commercialisation of Bop Rhino Recording Studios

Ø Sentech further restructuring and entering of new markets

Ø Privatisation of Ciskei Broadcasting Corporation

Ø Privatisation of Capital Radio.117

If the above power is granted, it seems that the Minister will be able to make decisions about which state-owned broadcasting assets to privatise, a power that is unacceptably broad. These assets were established and sustained by public money - whether in South Africa or in the TBVC states - and hence the public should have a say in whether their assets are to be disposed of or not. This should not be a prerogative power of the Minister. Given the impact of the Asian crisis on the South African economy, it will be tempting for any government ahead of election time to demonstrate that it can achieve ‘growth’ in trying circumstances: a ‘quick-fix’ solution could be to privatise as much as possible as quickly as possible to achieve an inflow of money to the fiscus. What needs to be assessed in the rush to sell is what impact this will have on the country’s long term growth patterns, and its ability to correct the skewed distribution of resources if it surrenders control of its assets to the private sector.

There is also a danger that if the Minister were to be granted this power, then it will pave the way for the privatisation of the commercial arm of the SABC, which - as noted earlier - will put paid to any hopes for cross-subsidisation of the public service arm.

We are not opposed to privatisation of public assets in principle: in fact, we have endorsed the privatisation of one of the SABC’s television stations on the grounds that it does not constitute a strategic asset. The extent to which state-owned broadcasting services should be considered as such rests of to what extent they are central to delivering on their public service mandate. Before any more privatisation of such assets takes place, consideration should be given to what constitutes the core of this function, and these services should be defined as strategic assets and placed out of the reach of privatisation advocates. Such a study should be conducted by the IBA, and should involve a review of the Triple Enquiry findings in the light of current realities.

Conclusion: whither South African broadcasting?

As mentioned earlier, it is clear from the Bill that one of its intentions is to increase the ability of the government to influence the direction of broadcasting. This is in and of itself neither a good or a bad thing. The principle question for freedom of expression is the nature of the interventions that are made by government in asserting this control.

There are, for example, forms of state intervention that we support: state funding of the SABC and the formation of a statutory MDA could be considered state interventions, but they are interventions that will facilitate diversity and access. Numerous safeguards are put in place to ensure that these interventions cannot be manipulated by government once it has set them in place. It would appear that a number of the interventions the Ministry of Communications are proposing are qualitatively different from these.

On the basis of the above mentioned ‘benchmarking’ exercises, one lands up concluding that they may well result in too much power being given to the Minister, coupled with insufficient protection for non-commercial forms of broadcasting. While we fully endorse the sentiment in the White Paper and the Bill that commercial services be required to fulfil public service obligations, the precise nature of these obligations need to be more fully debated, as there is a danger that this point is being emphasised to assist the government in downscaling its role in supporting non-commercial broadcasting in line with GEAR objectives. For example, there are inherent dangers in placing public service obligations on the private sector in the form of programming, in that one could encourage the development of a ‘public interest’ industry driven by the need to deliver audiences to advertisers: to pretend that this industry would have the same character if it were grown by publicly funded organisations would be an exercise in self-deception. For this reason, it has been suggested that a ‘cleaner’ way of imposing public service obligations on private broadcaster is through a financial levy rather than through onerous programming obligations.118

In the current context, ‘independence’ is a very hazy concept; in this regard, many ambiguities are built into broadcasting law as a matter of course, for example, a regulator may be called independent from government and yet is subject to policy directives. A public broadcaster as a public institution may be declared independent, yet like any other government institution is required to account to the government.119 While clearly there are also ambiguities in respect of the above jurisdictions, and in fact some (like Canada) seem to grant the Minister a great deal of power, these countries have established conventions and even case law that entrench the principle of non-interference. Given that South Africa is still establishing democratic conventions and case law, which implies that at a certain stage we need to close the books we are reading about foreign jurisdictions and determine what we need to develop democracy: while drawing on international experience, we should not be slaves to it. A number of the above mentioned ambiguities seem to come with the broadcasting terrain, so perhaps the aim should be to minimise the scope for ambiguity rather than to hope to eschew it altogether.

One of the consequences of greater state intervention in broadcasting is that the sector stands to be influenced far more heavily by general government policy. This influence would have been very much more difficult to effect in a regime where the IBA made policy, as its principle frame of reference in policy-formulation would be broadcasting. What this means is that broadcasting stakeholders will have to interact far more closely with general government policy, as government is committed to co-ordinating policies at all levels to bring them into line with the overall policy framework. In this respect, perhaps we need to ask the questions that more and more people are asking about government’s current macro-economic policy: will the means realise the stated ends?

Further submission to the Parliamentary Portfolio Committee on Communications on S. 37 (Regulations) and amendment 13A (2) to IBA Act

Freedom of Expression Institute (FXI)

On the basis of further consideration of the above powers afforded to the Minister of Communications, we would like to recommend the following amendments:

1. S. 37 should be scrapped in its entirety, and replaced by the following:

"37. In the event of a conflict between the provisions of this Act and those of the IBA Act 153 of 1993, the provisions of the IBA Act shall apply."

2. Amendment 13 A (2) to the IBA Act should read as follows:

"13A (2) The Minister may from time to time by Notice in the Government Gazette issue to the Authority policy directions of broad and general application with respect to:

(g) determining all matters relating to privatising of government broadcasting enterprises;

(h) undertaking special investigations and enquiries in respect of (g) and any other matter consistent with s. 2 of the Broadcasting Act of 1998, and implementing measures pursuant thereto;

(I) in the exercise of his or her powers in terms of (g) and (h), the Minister shall be obliged to consider the recommendations of the Authority and shall not be obliged to accept such recommendations.

(j) reporting on any matter within the Authority’s jurisdiction."

(3) the Minister shall, before a policy direction contemplated in paragraph (2) is issued;

(I) consult the authority, etc, etc, (paragraphs k (I-iii) and l to o should follow).

(4) No order may be made under (2) in respect of the following:

(a) the issuance of a licence to a particular person or in respect of the amendment, renewal, suspension or revocation of a particular licence

(b) A particular programme or a particular allegation or a particular complaint in relation to a programme;

(c) The gathering or presentation of news or the preparation or presentation of a current affairs programme; or

(d) Programme standards

Notes

• S. 37 gives the Minister powers of an unacceptably wide scope, and is not clear on exactly what prescriptions are required.

• The issuing of regulations should be left to the body that is charged with the task of regulation, namely the IBA: it should not be at the instance of the Minister to issue regulations, as these directives cease to be of a broad and general nature.

• The power given to the Minister in terms of s. 37 (1) to penalise those who offend regulations issued by him/ her is unacceptable as there is no recourse in terms of the law once these penalties have been issued. This power could well encroach on civil liberties, as penalties may be issued that conflict with other legal provisions.

• The formulation proposed in 2. above binds the Minister to a public investigative process managed by the IBA (although it does not bind him/ her to accept the IBA’s recommendations flowing from these investigations). Once the Minister has considered the recommendations of the Authority, the directives that are issued pursuant to these investigations will still be broad enough to qualify as policy directives (in other words they would not be specific enough to qualify as regulations) and would therefore be issued in terms of s. 13 A (2) of the IBA Act.

• The provisions contained in (4) are in line with the Radio New Zealand Act 1995 and Canadian Broadcasting Act 1991, and are additional safeguards with respect to the independence of the regulator and editorial independence of broadcasters.

END

Appendix 3: Multichoice

MULTICHOICE SUBMISSION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATION.

THE BROADCASTING BILL OF 1998

TABLE OF CONTENTS

INTRODUCTION

A. Only broadcasters and signal distributors should be licensed

B. It is unnecessary to impose full licence conditions on individual broadcasters whose services are carried on a multi-channel system

C. The regulatory threat posed to MultiChoice is real

D Subscriber fees should not be regulated

E. What does the Bill do?

F. MultiChoice’s proposal on the draft Bill

G. Conclusion

MULTICHOICE SUBMISSION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON COMMUNICATION.

THE BROADCASTING BILL OF 1998

INTRODUCTION

MultiChoice is pleased to submit its views on the Broadcasting Bill 1998. We are not a broadcaster, but we make an important contribution to the broadcasting industry and we have submitted responses to both the Green Paper and the White Paper on Broadcasting Policy. We welcome this opportunity to present our views on this important new legislation.

We believe there are many good provisions in the bill. It is important to create a sound structure for the broadcasting industry, so it can create jobs, support our culture and educate our people. We are concerned, however, that this bill in certain key places is unclear and could create too many regulatory obligations for the industry. We need streamlined, light touch regulatory systems that are aimed at bringing the benefits of broadcasting to our people. To do that, as we will emphasize again and again, Government should encourage and support this industry, not try to regulate it at every turn.

We will not comment on all parts of the bill, especially since many parts are best addressed by the broadcasters themselves. We will mainly comment in detail on the issue of who should be licensed.

WHO SHOULD BE LICENSED UNDER THE BILL?

We find that the definitions in the bill are confusing. It is not clear who has to get a license for broadcasting activities and it seems that the bill spreads too wide a net in its licensing requirements.

A. Only Broadcasters and Signal Distributors should be licensed

We have prepared a graphic representation of the relation between broadcasters, signal distributors and subscriber management service (SMS) providers. This chart puts in context the roles that MultiChoice plays in the industry. It clearly indicates that MultiChoice is not a broadcaster or a signal distributor. Perhaps the best analogy could be to cellular telephone service providers. Just like MultiChoice, these service providers are not licensed under South African regulatory structures since they do not control the underlying facilities used to provide the service.

[Ed. note: diagram not included]

In terms of who should be licenced, we believe that the simplest approach is the best. Regulation should focus on the broadcasters who prepare content and on the signal distributors. By regulating the broadcaster and the signal distributor, the Government will always have adequate oversight over both the content of the signal and the way in which it is delivered if scarce resources are used.

Our affiliated company, Orbicom, distributes signals, provides the technical expertise and controls the conditional access (CA) signals that enable subscribers to receive programming. Thus, its activities fall in the regulated category.

By contrast, MultiChoice is neither a distributor nor a broadcaster of any kind.

A short description of our activities should make clear why we are not a broadcaster or a distributor, and why there should be no need for MultiChoice to be regulated.

MultiChoice:

Undertakes strategic marketing, including market research, the packaging and

promotion of the service

Contracts channels from various broadcasters and sells these to the public

Provides programme guides (both printed and electronic) to subscribers

Operates a call centre for subscriber care

Administers contracts with subscribers

Receives payments from those subscribers

Co-ordinates the provision of a decoder (called a "box") to each subscriber.

Signals pass through these boxes before they are displayed on subscribers’ television sets. When the subscriber has paid the viewing fees, we advise our affiliated company Orbicom to activate the decryption function in the box, which "enables" the subscriber to view the signal. If the subscriber defaults on payment, we request Orbicom to "disable" the decryption in the box so that the subscriber can no longer view the signal.

Multichoice does not:

Own or compile the channels on DStv

Originate the programming

Exercise editorial control over any channel

Instead, we provide administrative services for those channels, such as the BBC or Turner Network. MultiChoice is not involved in broadcasting activities. It is involved in a pure administrative function which by way of example any credit card company could administer.

On the international level, there is no model for regulating the subscription management service that we provide as a broadcasting activity. We have looked at regulations in the US, Australia, Canada, UK and across Europe. None of these countries have created multiple layers of broadcasting licensing that reaches to subscriber management services.

B. It is unnecessary to impose Full Licence Conditions on Individual Broadcasters whose services are carried on a Multi-Channel System

We do not think there is any reason to licence each channel that is carried on a multi-channel platform. To licence each and every channel would set an impossible bureaucratic burden for the regulator and the industry alike. The regulator can have effective oversight and protect the public interest by registering channels that are carried on multi-channel distribution networks, without having to issue licences for each channel.

Since satellite coverage knows no territorial boundaries, an ethnic state channel such as RAI (Italian Channel) serviced by MultiChoice in South Africa carries programming of Italian origin aimed at Italian speaking viewers within the satellite footprint. It is difficult to see how such a channel can be regulated via a licence in South Africa.

On the international side:

Who is licensed? Rest of Africa UK USA Australia Canada

Signal distribution Yes Yes Yes Yes Yes

Subscription

Management No Partially No No No

Separate channels No Yes No No Domestic only

UK Independent Television Commission "licensing" for individual channels resembles a registration system – the ITC recently stated that licences are available virtually on demand.

Canada licences domestic programming channels, but not foreign channels, which are instead put on an eligibility list for distributors to carry.

Neither the USA nor Australia licences separate satellite delivered channels.

The UK "light touch" approach recognises that it does not make sense for the regulator to be kept constantly busy with channel licensing proceedings when the future multi-channel operators will be distributing hundreds of services. We think this is a good policy for South Africa.

In summary, there should not be multiple licensing of all subsidiary activities connected or "associated" with the broadcasting service. This is not necessary in order for Government to achieve its social goals and would instead be intrusive and inefficient.

C. The regulatory threat posed to MultiChoice is real

[Ed. note: the map has not been included]

Today we provide an international service in 44 countries in Africa. The channel content carried in South Africa is identical in every respect to that received in the rest of Africa. If South Africa would regulate the channels on the satellite service based on national issues, policies, levies and special unique taxes, each sizeable country in Africa will take a similar approach. Satellite has no territorial boundaries. Let us assume that South Africa imposes regulation on a service received in South Africa, and at the same time, Nigeria imposes a different set of regulatory measures for exactly the same service. Such a situation would be untenable. That will be the end of the service as we currently provide it across the African continent.

D. Subscriber fees should not be regulated

The nature of a subscription service is that of an agreement between willing seller / willing buyer. Subscription prices are set with due regard to the market, and are self-balancing in that people will disconnect from the service if they do not receive value for money.

The Bill (Section 33(1)c) vaguely implies that subscription fees could be regulated. This is clearly impractical and undesirable:-

Every time we put through a price increase it would require regulatory approval. This would entail detailed discussions on our price structures, staffing levels, marketing budget, etc.

The regulator would need to employ extra staff to analyse and understand our business.

The rest of Africa (who often take their cue from South Africa) would no doubt follow suit, and our African business would become non-viable.

In the fast-moving world of converging media, the red-tape of fees regulation would hamper quick decisions and strangle the business, leaving SA and Africa to fall prey to large global players from offshore.

We have conducted international research across the globe which shows that subscriber management services and subscription fees are not regulated. (See above table.) We have looked at regulations in the US, Australia, Canada, UK and across Europe. None of these countries has created multiple layers of broadcasting licensing that reaches to subscription management activities.

There is no reason for South Africa to go against international trends.

E. What does the Bill do?

The bill is confusing in section 4 and we believe it should be clarified. Section 4(1) says that any person who provides a broadcast service shall obtain a licence. Section 4(2) then offers a definition of a broadcast service that is far too wide:

It seems to imply that anyone who acquires programme rights for South Africa is providing a broadcasting service -- but that cannot be right, since simply acquiring rights is not providing a service or a signal.

It also seems to say that soliciting subscribers or activating decoders is a broadcast service -- that also cannot be right, since it could apply to newspaper ads, call centres or administration activities.

Section 4 extends too wide a net. It could require a group of business enterprises to obtain 2, 3 or more licences, even though there is only a single service reaching the customer. Then section 26 of the bill would also call for licences for each service (without defining the term "service"). A multi-channel operation could end up having to obtain many, many licences -- which is not a good result for our industry or the regulator.

The bill as a whole appears to require multiple layers of licensing and bureaucratic IBA approvals. This is not efficient. It puts a burden on both the regulator and the industry. The better approach is to minimise the number of licences that are required, so that the market can operate efficiently and continue to create jobs and spread South African culture. We think only a registration should be necessary for channels that are carried on multi-channel systems, and only the signal distributors need to be regulated for those services.

The Bill (Section 33(1)c) vaguely implies that subscription fees could be regulated. This is clearly impractical and undesirable.

F. MultiChoice’s proposal on the draft Bill

We propose the following alteration to the Bill:-

Chapter III on "Classification of Broadcasting Services, under the section 4 (2)

.......a broadcast service means any activity which provides

a service which:-

delete the words:

a) ".....or packages of signals....."

AND

c) "solicits subscribers", and "activities and deactivates the

decoders of South Africa subscribers".

Chapter V Part 1 : License Requirements and Objectives

In section 26 (1) add the words:

"The regulator may consider a registration system in line with international practice to cater for multiple international channels carried by multi-channel distributors."

Chapter VII Part 2 : Multi-Channel Distribution

In section 33 (1) (c) delete the words:

"packaging and retailing"

And substitute the word:

"carriage"

Or ALTERNATIVELY add the words:

"For the avoidance of doubt, this provision is not intended to introduce regulation of subscription fees charged by a licensed subscription TV broadcaster"

G. Conclusion

MultiChoice believes that the above changes are vital if the Bill is going to meet its objectives of creating the regulatory certainty necessary for the sector to grow.

The Pay TV industry has been shown to be a significant contributor (both directly and indirectly to the South African economy. 1

It would be wrong to target this sector (and in particular MultiChoice) for unnecessary regulation that does not line up with international best practice, and which is not based upon a sound strategy for the sector as a whole.

To regulate or license MultiChoice as a broadcaster would be as incongruous as to require regulation of service providers in the cellphone industry.

We believe that Government will have sufficient oversight over programme content and delivery by licensing the broadcaster and the signal distributor.

There is no justifiable need for regulating the bodies such as MultiChoice which fulfill associated administrative function.

21 September 1998

The Chairperson

Parliamentary Portfolio Committee on Communications

Dear Sir

RE: PROPOSED AMENDMENTS TO SECTION 4(2)

Further to you request for providing written proposals on the drafting of certain

clauses, MultiChoice would like to table our revised amendment to section 4(2) of the Broadcasting Bill for you consideration.

We suggest the following:

Replace the existing section 4(2):

"4 (2) A satellite broadcasting service which aquires programme rights

for South Africa, shall register such service with the Authority

before such service is distributed by a multi-channel distributor."

We hope that this amendment will receive your favourable consideration. This amendment is proposed after much consultation with the Department of Communications and we hope that it will meet their requirements.

Jim Volkwyn

CEO MultiChoice-Africa