Broadcasting Bill: public hearings

Meeting report

BROADCASTING PORTFOLIO COMMITTEE
14 September 1998
BROADCASTING BILL [B94-98]: HEARINGS
 

Documents handed out
SABC submission (Appendix 1)
Association of Marketeers submission (Appendix 2)
MNET submission (Appendix 3)
Midi TV (Appendix 4)

SUMMARY
The SABC, represented by Group Chief Executive, Rev Hawa Mbatha, and Audience Services Head, Mr Enoch Sithole, presented a video presentation of their submission and answered questions put to them by the committee.

The rest of today's hearings were not monitored.

DETAILED MINUTES
The SABC welcomed the Bill but raised some concerns. These concerns are raised in their submission.

Appendix 1: SABC

South African Broadcasting Corporation (SABC)

SOUTH AFRICAN BROADCASTING CORPORATION

SUBMISSION ON THE BROADCASTING BILL [B94-98]

1. PREAMBLE

The SABC welcomes the process of writing new legislation for the broadcasting industry.

The Corporation, indeed, believes that this development will strengthen broadcasting in the country and consequently benefit all stakeholders, as well as the viewing and listening public.

The SABC agrees with most of the provisions of the Broadcasting Bill and does not deem it necessary to indicate here those areas with which it is in agreement. In this document we have indicated those areas that the Corporation does not agree with, or that it feels further discussions with the drafters and other stakeholders are necessary.

The Corporation's comments and concerns raised in this document are based on the belief that the independence, editorial and otherwise, of the Public Broadcaster should be unequivocally protected by this legislation.

This is of vital importance so that the Public Broadcaster can play its role well into the future without any form of interference resulting from ambiguous legislation.

2. GOVERNANCE OF THE CORPORATION

The general thrust of the Bill regarding the governance of the Corporation is that the SABC will be governed in accordance with the provisions of the Companies Act.

While a number of provisions in the Companies Act may be appropriate for the Public Broadcaster, several are not, given the role and need for independence of the SABC.

A fundamental distinction between the SABC and any other company governed by the Companies Act — including state corporations — is that the board of the SABC is appointed by the State President on the advice of the relevant Portfolio Committee of Parliament, and in accordance with certain principles as outlined in Section 12 (a)(b)(c) of the Bill.

This point of departure is important in understanding the role of the SABC and the distinction thereof between its Board and any other Companies Act board, or any other state corporation board.

Thus, its powers and responsibilities should be drafted — in the Bill — in such a way that the board of the SABC will be able to play the kind of role that is expected of the public broadcaster by the South African public, Parliament and the State.

The Bill seems to have given more powers to the Minister on the grounds that he or she is the representative of the shareholder.

The role of the board in the governance of the corporation is almost non-existent, without ministerial over-shadow.

We contend that a board appointed in the manner above should be entrusted with the responsibility to represent the shareholder, and this should be provided for in this law.

Finding an appropriate solution to this problem would enable the drafters to find suitable provisions that will relieve the Minister from the kind of responsibilities that are apportioned to this office by Sections 16, 17, 19, among others.

2.1 Composition of the board

The composition of the board of the SABC has the potential of presenting certain serious problems for the governance of the SABC.

2.1.1 The reduction of the board from the present maximum of 16 to a maximum of 11 with three directors being executive members will present problems for the SABC, if account is taken of the need for broader representivity and the accumulation of skills as provided for in Section 13 (1) (a) (b) (c) of the Bill.

It is proposed that the size of the board be increased to a minimum of 12 and a maximum of 15 with three directors being non-executive members. The quorum for meetings of the board should be adjusted accordingly.

2.1.2 Qualification of Board Members: In order to ensure more diversity and representivity on the board of the SABC, it is proposed that disability and gender be added in Section 13 as a qualification for appointment to the board.

2.1.3 Executive Directors: The Bill proposes the appointment of three executive

directors. These, the Bill says, should be the Chief Executive Officer of the Corporation, the Chief Operating Officer and the Director of Finance.

This seems to have been drawn from the Companies Act.

However, as indicated above, the governance needs of the SABC may very well differ from those of ordinary Companies Act corporations.

It is our view that, given the strategic and structural needs of the Corporation that may change from time to time, it would be limiting to specify the positions of the executive directors.

For example, at the time of breaking up the SABC into two arms — commercial and public broadcasting — the board and the Group Chief Executive may decide that the heads of each of the arms should be the two other executive directors because of the importance of their roles.

Therefore, it is suggested that, save for the position of the Group Chief Executive or Director General of the Corporation, the other two positions should not be specified.

2.1.4 Executive Committee: On the other hand, the Bill proposes that the Corporation will have four additional executives as members of the Executive Committee (Section 14 (1)).

Our view is that specifying such a number in law could have practical problems that might make it difficult for the SABC to appoint more executives, if it so requires in view of strategic or structural needs.

It is proposed that Section 14 (1) be amended to omit the positions of the Chief Operating Officer, the Financial Director and the four additional members.

It could then read: The affairs of the Corporation are administered by an Executive Committee consisting of the Chief Executive Officer, two executive directors and other executive members of the Corporation appointed by the board.

2.2 The Regulator and the Public Broadcaster

Section 18 (3) of the Bill indicates that the IBA will monitor the SABC for compliance with the Charter.

This is an unusual arrangement in the broadcasting world, where one statutory body is supposed to monitor another.

Our understanding of the role of the board of the SABC is that of ensuring that the SABC delivers on its mandate or the Charter and that — like the IBA — it accounts to Parliament through its annual report or other mechanisms.

We would like to suggest that the IBA monitors only the Public Commercial Broadcasting Services arm of the SABC, because this arm is supposed to operate in an environment where it competes with private broadcasters, and that its mandate will be drawn by the IBA through its licence conditions.

In many countries the arrangement is that where public broadcasters are established by law, they account to either Parliament or Government for their compliance with mandates, and the regulator is there to create norms and monitor the private industry which can not be regulated by law.

The role of the IBA as far as the public broadcaster is concerned should be limited to the issuing of licences for the purposes of spectrum allocation and governance. Otherwise, the mandate is allocated by Parliament through legislation and the Charter and the SABC should account to Parliament on its compliance.

3. FINANCES OF THE CORPORATION

The cornerstone of any editorial independence is financial independence or the independence to use resources to achieve editorial ends.

The thrust of the Bill, given its Companies Act foundation, is to give financial control to the government of the day, on grounds that it represents the shareholder.

This arrangement, however managed, will tend to lead to perceptions of state interference in the affairs of the SABC in areas that could compromise or constrain the journalistic, creative and programming independence of the Corporation.

Indeed, to avoid this, the law governing the Canadian Broadcasting Corporation, the Broadcasting Act, states in Section 52 (2) "...The Corporation is not required to

(a) submit to the Treasury Board or to the Minister or the Minister of Finance any information the provision of which could reasonably be expected to compromise or constrain the journalistic, creative or programme independence of the Corporation; or

(b) include in any plan or summary thereof submitted to the Minister... any information the provision of which could reasonably be expected to limit the ability of the Corporation to exercise its journalistic, creative or programming independence."

The implication in the Bill that the SABC will submit business plans and financial statements to the Minister may be construed as going against the sentiments of the above provisions.

Such a practice may indeed be abused by an irresponsible Minister or government to exercise all forms of controls over the SABC, including the editorial area. At present, or in the past, the SABC has not submitted business plans or financial statements to the Minister.

We would like to propose that any provisions requiring or complying that the SABC will present financial statements to the Government be removed, and that the accountability of the SABC for the usage of its funds be kept in the requirement to present an Annual Report to Parliament.

3.1 Payment of Dividends

Section 16 (4) of the Bill suggests that "Any dividends received by the state must be paid into the National Revenue Fund".

This provision supposes that the dividends of the SABC will be forwarded to the state.

The SABC advises against this. Over the years, legislation has protected the SABC from this practice, thus enabling the Corporation to use its surpluses for developmental projects.

The emerging competitive environment in the country's broadcasting industry makes the above arrangement even more necessary.

We suggest that this provision be amended and Section 18 of the present Broadcasting Act be kept.

3.2 Cross-Subsidisation

Section 11 (4) of the Bill suggests that the public broadcasting services of the SABC will be subsidised by the public commercial broadcasting services "to the extent recommended by the Board and approved by the Minister".

We do not understand the logic and the need for the Minister's approval in a transaction

of this nature.

As we have indicated above, we believe that the Board's composition should make it appropriate to perform such a function.

We believe that a Board so constituted should have enough powers and authority to decide on the usage of resources of the Corporation within the Corporation.

4. TELEVISION LICENCES

The Bill has omitted legislation governing TV Licences entirely. We would like to propose that the entire legislation on TV Licences in the Broadcasting Act 73 of 1976 and the Radio Act 3 of 1952 be included in this Bill with some amendments.

The Bill, as well as the White Paper on broadcasting Policy, places TV Licence fees as one of the major sources of funding the Public Broadcasting system.

At present neither radio nor television at the SABC break even.

Television licence fees revenue is used to cover the losses of the two services and enable the SABC to have a surplus.

The emerging competitive environment might very well worsen the situation as advertising revenue may decrease.

This will require that the collection of TV Licence fees be improved dramatically.

This can only happen if legislation enabling and enforcing TV Licence payment is tight enough to close all possible loopholes that make it possible to evade payment.

Thus, a few additions to the TV Licences legislation are proposed.

4.1 Enforcement Mechanisms

A provision should be inserted to enable the SABC to issue licences for TV sets from the manufacturing and importing point, against payment.

This will enable the SABC to register all persons purchasing TV sets.

Current estimates are that there are over 1,5 million owners of TV sets that are not

registered as TV Licence payers.

The legislation proposed here would eliminate, or at lease minimise, this problem.

4.2 Payment for more than one set

A provision should be inserted making it mandatory for the payment of a TV Licence fee for additional TV sets at a cost equivalent to a third of the total TV Licence fee.

During our inspections we have come across families living at one address possessing

several TV sets but paying for one TV Licence only.

This is an exploitation of the current legislation that allows a situation where only one licence is required for any number of TV sets provided that they are all at the same address.

The amendment proposed would enable the SABC to claim at least a third of the TV Licence fee in instances like this.

4.3 Payment of TV Licences by the State

Current legislation requires the Minister to pay the SABC an amount of money for TV sets owned by the State.

To our recollection this has never happened.

A few months ago the Minister told Parliament that he was in favour of a situation where each State organisation pays for the licences of the TV sets they possess.

This is indeed the practice with services rendered to the State by other parastatals. The State pays for water and lights, postage, telephones, etc. It does, therefore, follow that the payment of TV Licences should be handled in the same way.

Since the Minister's remarks in Parliament we have registered almost all Government departments. To strengthen this, Section 20 of the Broadcasting Act 73 of 1976 should amended to read: The Accounting Officer of each State Department shall be required to pay the SABC and amount of money for the TV Licence, in relation to all TV sets in the Department’s possession.

4.4 TV Licences and tariff increase

The present legislation requires approval by the Minister to increase TV Licence tariffs.

This has created certain practical problems resulting in a situation where the SABC has not been able to increase tariffs for the past three financial years.

This has led to an increase in collection costs from 12% in the first of the three years to about 30% in the present financial year as the gap between costs and revenue narrows.

This leaves the SABC with less and less money to fund the activities for which TV Licence fees are collected.

The norm overseas is about 5%.

We propose a clause enabling the SABC to increase the TV Licences tariff every year by an amount that is not above the Consumer Price Index, as defined by the Central Statistical Service.

5. THE SABC CHARTER

We are concerned that the Bill is tabled without the promised SABC Charter.

We would like to point out that in some cases, the Charter of the Public Broadcaster is actually the document setting not mandate or content issues as well as governance provisions (See BBC Charter here annexed).

If this were to be the case with us, most of the provisions of the Bill would be in the Charter, together with the mandate or content issues.

On the other hand, passing the Bill without the Charter does not enable us, or even Parliament, to ascertain whether some provisions of the Bill would not end up constraining the drafting of the Charter and forcing Parliament to amend the Broadcasting Act or live with a defective Charter.

6. MISCELLANEOUS

Other issues that we would like to raise are as follows:

1(c) (XM) "old" should rather be "previous"

3(4)(e) should not read "… disabled programming"

but "… programming for the disabled".

7. CONCLUSION

As we have indicated above, we welcome the process that began with the drafting of the White Paper on Broadcasting Policy and will lead to the passing of new broadcasting legislation.

The concerns we have raised here are based on our understanding of the industry and what we think would be both legally and constitutionally sound, as well as practicable.

Appendix 2: Association of Marketeers

Association of Marketers

Click here for the Association of Marketers response to the Broadcasting Bill

SUBMISSION ON THE BROADCASTING WHITE PAPER TO THE MINISTRY FOR POSTS, TELECOMMUNICATIONS & BROADCASTING BY THE ASSOCIATION OF MARKETERS

1. INTRODUCTION

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

The membership of ASOM comprises 182 companies or business interests and their staff, as well as the thousands of products and brands which have been established over a number of years. Our membership commands approximately 80% of advertising monies spent in broadcasting, representing an investment close on R2 billion per annum.

This Memorandum will endeavour to comment, in broad terms, on issues outlined in the White Paper that we believe could restrict the viability of broadcasting, and in so doing frustrate the laudable aims of ensuring a broadcasting environment imbued with the important public interest values of access, diversity, equality, independence and unity.

As an Association representing the views of diverse marketers, it is difficult for us to offer specific views on what is ostensibly a broadcasting issue, and therefore it should be for the broadcasters who are directly affected, to comment. However, we are major contributors in the economic health of commercial broadcasters as they owe their very existence to the advertising monies we provide, and as such consider ourselves major stakeholders. What we seek in this Memorandum is to express the general needs of marketers in the use of the broadcast media, and to comment on areas that we believe will restrict broadcasters from meeting those needs effectively. At the same time, give the Ministry the benefit of our broad experience as the prime users of broadcasting for advertising purposes. Therefore, our submission, by definition, will confine itself to the interfacing of broadcasting and its advertising role.

At this stage the Association of Marketers wishes to record that what is set out below should not be construed as the Association's full and final views regarding the regulatory process. In the circumstances ASOM, and its individual members in their own right, reserve their right to make further representations, in the appropriate fora, regarding all regulatory issues.

2. GENERAL COMMENTS

2.1 The Association of Marketers' Role

ASOM wishes to represent, protect and promote the interests of marketers to ensure a market place which is conducive to the principles of entrepreneurship and free enterprise, without unnecessary restrictive regulation. In order for the broadcast industry to flourish, it is imperative that the Ministry ensures the establishment of a free and fair broadcasting market place, in which our members will be able to conduct their business unencumbered, and make their contribution to the growth of the South African economy. This would further ensure that marketers would be able to make their contribution to the Governments' Reconstruction and Development Programme and GEAR.

2.2 Democratisation

ASOM supports the process of democratisation in South Africa through a diversity of voices and the principle of freedom of expression, which includes "commercial speech".

ASOM must however sound a warning that a diversity or multiplicity of voices should not lead to undue or uncontrollable media fragmentation. Media fragmentation could rapidly come into conflict with, and be counter productive to, the needs of the advertiser, which are :

- marketers need viable conduits into their markets;

- marketers understand that the best way of communicating to a market is in its own language and genre;

- marketers have a need to reach mass and niche markets cost effectively.

The need to reach niche markets has to be balanced by economic reality - broadcasters must be able to deliver cost effective audiences. (In other words audiences which are viable or large enough). Marketers would be prepared to compromise on tight target markets if broader markets could deliver a proportion of that target market more cost effectively.

3. PUBLIC BROADCASTING

ASOM supports the principle that a Public Service Broadcaster has a mandate to inform, to educate and to entertain. We are unshaken in our belief that there is a need for a Public Broadcast Service to exist, to serve the information and education needs of all South Africans via quality programming; it needs to provide the ruling authorities with a means of communicating their policies and achievements to the entire populace. It has to serve the country's cultural, social and political needs with quality, credible programmes. It has to serve the diverse language and ethnic needs of our rainbow nation, and therefore by definition, needs to reach innumerable niche audiences. We feel strongly that in order to fulfil this daunting task, there probably is a need for two public broadcasting services to meet the needs of our diverse language groups equitably.

Public Service Broadcasting, to perform its function correctly, needs to be unencumbered by a commercial imperative or profit motive. It needs to provide a quality service to meet the cultural, social, educational, language and political needs of South African citizens, and therefore should be funded by the fiscus and licence fees. Public broadcasting will, by virtue of its mandate, carry the majority of local content programmes which should nurture the entire production industry, at the same time becoming a major user of the talents and creative skills of South Africa's performing artists.

Public and Commercial broadcasters have different mandates, for a Public Broadcast Service to be reliant on advertising monies for its survival defeats its mandate to produce high quality informative and educational programming. Funding by the fiscus and licence fees will prevent it becoming prostituted by chasing audiences to create advertising revenue. The availability of sponsored programmes on the other hand is perfectly acceptable.

The Association of Marketers fully supports the concept of creating the SABC as the public broadcaster. However, we still question the inclusion of advertising revenue as a funding mechanism as laid out in Chapter 8.3(i) of the 1998 Broadcast Act.

We fully support the principle objectives of the Public Broadcaster, in that they need to be a comprehensive broadcaster, offering services to the whole country, providing programming of a high standard that informs, educates and entertains :

- Enriching the cultural heritage of South Africa through support for the Arts.

- Contributing to a sense of national identity, by reflecting the multi-cultural, multi-racial and multi-lingual diversity of our national audience.

- Providing significant news and public affairs programming which meets the highest standards of journalism, as well as fair coverage, impartiality, balance and independence from governmental, commercial and other interests.

- Including educational programming from a wide rage of social political and economic issues.

- Exposure of national sports, developmental as well as minority sports.

- The inclusion of programmes which encourage local production and the use of local talent.

- Nation-building through shared national conscious and identity.

4. COMMUNITY BROADCASTING

"The White Paper proposes a change in the formulation of the definition of a community licence. It states that community broadcasting must be inclusive and that any common interest must be catered for within the framework of a geographically-founded community radio service."

The Association feels it is patently unfair to create community broadcasters as non-profit organisations, and expect them to survive by selling advertising time.

We do not disagree with community radio broadcasters, especially if they serve specific needs and tight audiences such as Campus Radio or a church parish or even shopping centres.

Regional radio is essentially community radio, it should, and does, serve community needs. There should be regional radio that provides for classical music lovers, country music, indigenous music, plays, theatre, ballet and opera audiences amongst the more traditional demographic parameters. It can serve all community needs via transmitter splits and focused foot-printing, and it can be adequately funded by advertisers, or it can equally fall within the realm of the public broadcasting, funded by licence fees.

Therefore if community radio is going to be defined geographically, and be expected to fund itself by attracting advertising revenue, they should be given Regional Commercial licences.

5. COMMERCIAL BROADCASTING

We feel the term "Private Broadcaster" is misleading. They should be referred to as "Commercial Broadcasters". The manner in which private broadcasters are described in the White Paper does not make them commercial broadcasters in the true sense but merely a commercial public broadcasting service, which imitates the role of the public broadcaster in so doing offering no competitive edge or differentiation to its audiences or advertisers. Commercial broadcasters need to differentiate their position in order to attract advertising monies.

Advertising is the prime wealth creator vital to the health of our economy. It is the dynamo that drives the free market economy. If South Africa wants to redistribute wealth to all its citizens, it has to create wealth, and to create wealth we need to encourage consumption. Advertising creates demand for goods and services, these need to be produced, which in turn creates employment. Employed citizens have purchasing power, they can demand more and better products and services, thus creating an upward economic spiral.

To advertise effectively, marketers need unencumbered, fully commercial services, operating in open competition with each other to provide clearly identifiable, differentiated, economically viable, quality audiences.

Without competitive mass media there can be no mass consumption, and therefore no mass production. There will be no competition between products and services, there will be no choices for the consumer. Brand equity could not be built, thereby leaving only commodities in the market place and uninformed, commercially naïve, exploitable consumers.

Audiences watch television and listen to radio primarily to be entertained and informed. Education per sé through commercial media is very much a secondary consideration.

Commercial broadcasters should not be forced to carry undue and severe local content quotas, they need flexibility to meet audience needs.

It is ASOM's considered opinion that the mandates of Commercial Broadcasting and Public Broadcasting are diametrically opposite, and therefore it is patently unfair to expect a Public Broadcaster to seek funding via advertising revenue. It is equally unfair to dictate that Commercial Broadcasters fulfil public service functions, and be locked into local content and advertising time slot quotas.

6. ESSENTIAL TRUTHS

There are certain essential truths that need to be recognised in commercial broadcasting, they are :

* The marketer/advertiser uses media as a conduit to carry his sales message - for no other reason. All a marketer is concerned with is getting his advertising to reach his target market as cost effectively as possible.

* There are many diverse customers with a multitude of differing needs. Media cannot be all things to all advertisers, this means there is an opportunity for different stations delivering different audiences.

* Without advertising revenue, broadcasting will be almost non existent. All South Africa could afford, would be a single Public Broadcasting Service, funded by either the fiscus or licence fees.

* Increasing rates lead to broadcast media pricing themselves out of the market in relation to opposition media types. A marketer has many other avenues available in which to reach his target market.

* Falling audiences also result in higher costs per thousand, and therefore make broadcasting a less desirable advertising media, with the result that marketers look to other means of reaching their target markets more cost effectively.

* In commercial broadcasting, market forces need to be left unencumbered by time restrictions, quotas and programme conditions. The market will dictate as to what the broadcaster can or cannot do.

* The audience is the final arbitrator as to the success or failure of a broadcaster. The market will rapidly signal to a broadcaster, via the tuning dial, their preferences for the fare that the broadcaster is serving up.

* The listening and viewing needs of an audience need to be met. One cannot dictate to an audience what they should watch, or listen to.

* The more restrictions on types of advertising, i.e. tobacco, liquor, fast foods and childrens' advertising, leads to a lessened revenue stream to broadcasters, which results in compensating rate increases being spread across fewer product types, affecting the viability and profitability of the broadcasters. The net result is less finance, therefore less broadcasters, less production, less broadcasting time, poorer programmes and job losses.

* Broadcasting is a language, not a racial, issue. Listeners and viewers need to be communicated to in their own language, genre, cultural envelope and according to contemporary customs, folkways and mores.

Having set the scene we would like to comment on aspects of the White Paper, starting with Radio.

RADIO

1. Meeting of Defined Population Coverage Goals

"Private Broadcasters should be required to meet defined and realistic population goals."

In the first place, the reality is that all radio licences issued to private/commercial broadcasters are regional in format. Only the SABC has national services.

Private broadcasters deliver differentiated audiences in order to offer the advertiser conduits into specific markets suitable to their products. Legislation cannot lay down specific parameters.

If government intends to alter the current broadcasting environment in respect of requiring private broadcasters to expand their coverage areas, they could upset the 'positioning' of the private broadcasters, which could cause them to loose business or alternatively result in massive cost increases.

In any event, such a proposal can only affect new licences as present broadcasters have established 'footprints' in terms of their licence agreements. Clarity is required on what the government means, and hopes to achieve, by this consideration.

2. Introducing New Services

The advertising cake is finite, a delicate balance of supply and demand of radio services must be taken cognisance of. Therefore radio licences cannot be granted willy nilly. The addition of new services must take cognisance of the existing services in the market, their programming formats and the audiences they attract.

If research shows a need for a particular format that need may well exist, but it may not be big enough to be economically viable. There are in fact many niche needs, but sight must not be lost of the fact that we are dealing with broadcasting, i.e. mass media.

3. Addressing Disadvantaged and Minority Groups

"The private radio sector must provide diverse services addressing a wide cross section of the public, particularly disadvantaged and minority groups. Programming should be directed specifically to all language groups and private broadcasting should reflect the culture, character and aspirations of all South Africans."

This misses the most important point of commercial radio, that is they have to deliver viable audiences to advertisers if they are to survive, and be profitable. It is their audiences that dictate programming and format. They cannot focus on all the provisions required above. We come back to our original concept that one must not confuse Public Broadcasting prerogatives with that of the Commercial Broadcaster. Addressing disadvantaged and minority groups is the exact mandate of the Public Broadcaster. Disadvantaged and minority groups are not the consumers of fast moving packaged goods, they do not have the purchasing power for branded goods, it is only branded goods that are advertised, not commodities.

4. News Obligations

"It is expected that private broadcasters will provide in-depth reporting and discussion on matters of significance, such as general elections, national commissions and inquiries".

Once again, this falls within the mandate of the Public Broadcasting Service. Commercial radio stations should be left to decide by themselves what news and information services they should provide to meet their particular formats and audiences. News services are one of the most expensive programming areas. A private broadcaster needs to weigh-up the size and quality of the audience he will attract, its saleability to the advertisers, their format and economic viability before he commits himself to news and information programming, or he will be out of business.

5. Favouring South African Programming

There is nothing wrong with this sentiment, and there is no doubt a vast audience demand for South African programming. But, once again, it depends on where the broadcaster positions his station in terms of demographics and psychographics. Broadcasters are obliged, in terms of their present licence conditions, to broadcast a quota of local music and theatre. Therefore, if anything, local content quotas should be made more flexible and lowered in the case of commercial broadcasters. A strong Public Broadcasting Service should be able to satisfy local programming requirements and could entertain higher quota levels. In Commercial Radio choice of programming is audience-driven and advertising money follows audiences.

Chapter 3. of the White Paper recognises that the commercial broadcasting sector needs initiatives to stimulate investment, growth and provide for employment opportunities. Competition and the need to derive advertising revenues is the core function of a private broadcaster. They need 'light touch' regulation, and flexibility, if they are to attract the investment required to flourish.

Government will not create a private broadcasting industry that they envisage, if they try to make Private/Commercial broadcasting a clone of Public Broadcasting Services.

Radio is doubtless the most cost effective way to provide broadcasting services, giving the advertiser reach and penetration into markets. It can provide a diversity of services for all South Africans, a choice of services, a diversity of programme content and diversity of avenues. But only if free market principles are allowed to operate.

TELEVISION

The same principles of audience-driven programming that apply to radio, also apply to television services. Television services need to produce a choice of services and programming to appeal to specific demographic and psychographically segmented markets. The same essential truth prevails, programming attracts audiences and audiences attract advertising revenue - Advertising revenue is the life blood which makes commercial television possible.

1. New Licences

New licences are welcomed by marketers. The more competition there is, the better the programming, the bigger the audiences and the more competitive the advertising rates become. However, there is a down-side, it relates to supply and demand. Once again, the advertising cake is finite, it can only expand so far. The present rate of production costs, and media inflation which are running well above the current CPI, results in the marketers finding it increasingly more difficult and expensive to use television as an advertising medium, and therefore they are turning to more cost-effective ways of reaching their markets. Also, the more television stations the higher your cost per thousand becomes, therefore only national advertisers have sufficient budget to support national television. There is very little left over to be placed in less cost-efficient regional television.

The Association agrees that development in the industry must be monitored and analysed prior to the decision to grant further television licences. Not only the broadcasters should be consulted, but that the marketing industry should also be included in all deliberations.

2. Benefits of Inclusive Approach

ASOM has on a number of occasions made known its disappointment in not being included on the Stakeholders Committee, and therefore the major provider of broadcasting revenue was excluded and not consulted, thereby making a mockery of the inclusive approach. The IBA formulated public service obligations which were within the tolerance of the new television service, and which took account of the viability of the SABC. History showed that the SABC ran at a loss for many years, until it consulted with the marketers, and took their advise of changing from an allocation system to a demand driven advertising system. Also, they changed their rigid programme format and quota system to an audience demand driven programme policy.

ASOM are concerned about the proposal regarding the IBA's recommendations to the Minister, as follows :

- The marketers and the broadcasting industry appear to have been excluded from being consulted;

- The White Paper does not include the possibility of the IBA making its study or recommendations available to the public for discussion;

- Public participation in policy formulation is excluded;

- The regulators and the Minister will make important decisions about the market, without the input of the industry;

- The White Paper contains no clear policy, or criteria, which will guide the Minister in making a decision to adopt or delay the recommendations of the Regulator;

- The Regulator's recommendations may be subject to the whim of the Minister.

The Association strongly believes that the industry should be consulted and the IBA should publish, for public comment, its full report and recommendations to the Minister.

3. Timetable for Local Content

"The government will direct the regulator to formulate a strategy to achieve a broadcasting system which is predominantly South African in content. The regulator should include a timetable to meet this requirement. In no case shall this period be more than 10 years."

Whereas ASOM supports the initiative to develop the local content industry, our views on television are the same as expressed on radio, given that the broadcasters' viability be held paramount. The fundamental principles of cost and affordability must guide any strategy to increase the level of local content. Unless audience demand, station positioning and programming are met, psychographic and demographic needs of audiences are satisfied, and commercial imperatives are acknowledged, it is highly unlikely that investment in television broadcasting will prosper. Local content cannot reach affordable levels compared with foreign programming. Television is a maw, it uses material at a tremendous rate. Our local industry would be hard pressed to provide programming for commercial television. If the Public Broadcasting Service are to meet their objectives they will more than use up the total capacity of our local production industry. We also cannot achieve economy of scale in the way Hollywood and Britain can on entertainment programmes. We can also only sell a limited amount of local production in the international market to offset production costs, and spread the load. A commercial broadcaster can purchase the best international television programmes and movies at approximately R600 per minute vs R8 000 per minute for local productions, and R3 000 per minute for dubbing. There simply is not enough advertising money to afford the rates that need to be charged to recoup R8 000 per minute programming costs. We appeal, once again, to keep local content requirements, on local commercial broadcasters, to an absolute minimum, or they simply will not be able to survive.

Until local programming meets audience demand and satisfaction, and matches international prices, policy or regulations, dictating quotas will be ruinous to broadcasting enterprises.

There is a further down-side. The initiative to increase the levels of local content beyond the market tolerance, will push up advertising rates where they are no longer compatible with other media. Also, reality shows local programmes do not attain the ARs of top international programmes, therefore a broadcaster's cost per thousand ratio will be totally unacceptable to advertisers, who will then move their monies into programmes delivering higher audiences or into other media entirely. The essential truth is higher income audiences in LSMs 7 and 8 gravitate to quality entertainment, and if it is not available on local free to air channels, they will find it in the multi channel satellite environments or in subscription, cable and web services. Therefore by foisting unrealistic local content levels on sophisticated audiences free-to-air broadcasters will lose premium audiences and become ghettos of the broadcasting environment.

4. Priority Access to the Advertising Cake

"Since free-to-air services provide the greatest social contribution to the highest number of South Africans, they should have priority access to the advertising cake."

We believe that restricting media from obtaining advertising, or operating in a free competitive environment is unconstitutional. If opposition forms of television exist to free-to-air they should be left free to compete fairly.

By restricting advertising time on subscription services it is not going to ensure that free-to-air gets more of the cake. We stress, once again, that advertising money follows viable audiences irrespective of the minutes available, it will only invest where the audiences are. All that will be accomplished is that the demand will be greater than the supply therefore rates will go up on services that are providing the appropriate audiences, therefore investment in advertising on services with lesser viable target audiences will lose money. The only way to ensure everybody gets a fair slice of the advertising cake is to foster competition. We believe that fair competition between broadcasters should prevail as suggested in 3.3.2 of the White Paper. Government is not going to accomplish this by restrictive legislation, only by allowing market forces to prevail. Lower hourly limits on subscription services will not generate more advertising money in the free-to-air coffers.

5. Sports Policy

"The government's commitment to the provision of national sports to all South Africans must find expression in policy or regulation."

ASOM agrees whole heartedly with this sentiment and we believe it is the function of the National Public Service Broadcaster to ensure this coverage. However, we believe that sport should be included in the local content quotas of Commercial Broadcasters, this will ensure the South African public has every opportunity available to be exposed to national sport.

The prohibition of the acquisition of exclusive rights for national sporting events by subscription services is a lost cause, and it mitigates against world trends. Sport has become a profession, attracting mega financing. It has moved from the realm of amateurism into the world of professional big business. Broadcast rights of major sporting events are swiftly overtaking advertising as a prime funder of broadcasters. Government could find itself in a position in the future, where it will not have the rights to broadcast sport on the national carriers, and the sporting population of South Africa will find itself all the poorer. All the legislation in the world will not be able to prevent sporting events being beamed into South Africa via satellite, by rights owners. Here, once again, only the well-healed audiences will be privileged to see it. Regulation of this nature could turn into a double-edged sword. It would be better to allow subscription services, and in fact private free-to-air services, to negotiate for exclusive rights. The public broadcaster could always obtain the rights for a time delayed broadcast which can reach the nation a few minutes later than the 'live' broadcast.

6. Developmental Sports

Once again, this is the prerogative of the Public Broadcaster. The Private Broadcaster will cover developmental sports if there is an audience demand for this. If the private broadcaster cannot attract sufficient size audiences to attract advertising money, the imposition of mandatory showing of developmental sports would prove to be totally uneconomical, and therefore affect the viability of their very existence.

7. National Service to reach 80% of the population over the next 3 years

Terrestrial television relies on economy of scale, it is only viable when you have sufficient viewers in range of your transmitters, as one extends into the deep rural areas this becomes far more expensive and less cost efficient, as your cost per capita increases alarmingly. The only way to reach everybody i.e. 100% economically is via a satellite footprint. The investment of erecting highly expensive transmitters in deep rural areas can be better spent by setting up communal satellite viewing centres in rural villages and towns.

8. Regulation of advertising minutes

Regulating the maximum number of advertising minutes that may be broadcast by various broadcasters, does not provide the other broadcasters with a greater share of advertising. The proposition that the limiting of advertising minutes in certain categories of broadcasters will ensure the other players a greater share of the advertising budget is not necessarily true, marketers don't need to commit their allocated budget to television, they can shift this into other media or other forms of advertising such as sponsorship or promotions.

Quotas on advertising time, length of commercial breaks and positioning of breaks mitigates against market demand, and can spell the death knell to a successful commercial broadcaster.

In commercial broadcasting, market forces need to be left unencumbered by time restrictions, quotas and programme conditions. The market will dictate as to what the broadcaster can or cannot do.

Broadcasters are beholden to an economic reality. For their service to be financial viable, it must meet the audience/markets needs, as well as those of the advertisers/marketers. The audience is the final arbitrator as to the success or failure of a broadcaster. The market will rapidly signal to a broadcaster, via the tuning dial, their preferences for the fare that the broadcaster is serving up.

Marketers will avoid clutter and irritation of their target markets at all costs. Eight minutes in the hour is about all the advertising exposure the market will bear before they tune out, or leave the room for other activities. Marketers know this and therefore will not accept more than two minute advertising slots at a time. They also will not accept more than four advertisers in a break, let alone competitive products. Irrespective of the time allowed a broadcaster, the marketer will decide whether it is worthwhile placing his advertising on a station which will guarantee audiences. The truth is only prime time spots are in a sold-out position, there is ample availability in shoulder time, and if prime time becomes cluttered and too expensive marketers will move into shoulder time, as long as it too does not become cluttered. The buying and selling of ad break time depends on supply and demand of audience and product mix, and not on time quotas. Most broadcasters' available advertising time (except for peak time) is usually much less than the average maximum minutes permitted under the current regulatory system. Neither government policy nor regulations of the maximum advertising minutes per hour can determine a broadcasters share of advertising. It is the advertisers who choose where and how they want to spend their budget. The purpose of the regulatory technique for capping advertising is usually to ensure that broadcasters do not over-commercialise their services, and that the advertising minutes fall within the audience tolerance threshold. Capping does not equalise adspend across broadcasters, it is programme content and audience profiles that determine the flow of advertising monies. Advertisers only migrate between media if they get better cost per thousand rates, and the appropriate target audiences.

9. Review of hourly limits

"The regulation will review the hourly limits on free-to-air stations to determine whether they are set at an appropriate level every two years."

The Association of Marketers believes this issue should not be legislated on in the first place, as market forces, audience availability and broadcasters' economic priorities will determine the limits of advertising breaks in an hour. If it is regulated, then reviews will need to be more frequent than biannually as the very existence of a broadcaster could depend on these limits. This is really a broadcasters problem and not a marketers one.

10. Local Content Funding

"Policy should support the funding of local content production."

The public broadcaster will make the most use of local production, and there will be massive demand for local products. Normal business principles should be applied and not have government provide subsidisation. The film industry was subsidised in the past, which led to low standards and corruption. Competition is healthy and the production industry needs to stand on the quality of its products.

As it stands, last year 8 500 new television commercials were made, assuming 245 working days and an average of 2 days per spot, this means that 70 production companies were kept fully occupied producing advertisements throughout the year. Therefore commercial television used up the total capacity of commercial producers in South Africa.

The Association of Marketers has no position on the situation where funding is provided for by the fiscus, or out of broadcasting licence fees. We would object heavily if a levy was to be imposed on commercial broadcasters. The reality of levies is that it is not the broadcaster who pays, but the marketer through increased rates, and eventually the man in the street through these costs being passed onto the consumer product. Broadcasters merely source the money by building it into their advertising rate cards, thereby making advertising rates less desirable. Advertising budgets are finite there usually is an allocation for a particular media, all that happens is the same money buys less exposure, and less exposure leads to lower sales which in turn leads to cuts in marketers' budgets. Levies therefore are self defeating.

CONCLUSION

We cannot stress strongly enough that we need a vibrant, competitive environment in the commercial broadcasting milieu if it is to be successful, and take its rightful role in contributing positively to the South African economy. It is important that legislation is 'light touch'. The more restrictions there are the more natural market forces are depressed and the harder it becomes to run a profitable broadcasting business. Advertising is the life-blood of commercial broadcasting. Self regulation in advertising exists in South Africa and has been successfully applied for the past 25 years. Therefore, there is no further need to regulate advertising, normal competitive prerogatives and the industry itself ensures that it works. The more restrictions on the type of product advertising such as tobacco, liquor, fast foods and advertising to children leads to a lessened revenue stream to broadcasters, which results in them needing to compensate for lost revenue. The only way they can do this is by increasing their advertising rates, which carries the danger of them pricing themselves out of the market, forcing marketers to seek alternative media as a means of promoting their products.

Government by limiting the products that can be advertised, will also affect the one industry that they are trying to encourage - That is the television production industry. Cutting advertising on products that are allowed to be sold, will have a radical effect on this industry, resulting in increased production costs because of loss of economy of scale. Coupled to this the Rand/Dollar/Pound rate is creating massive repercussions on the cost of production, as film and equipment is mainly overseas sourced, which means it is becoming almost impossible to afford the production of television commercials. More local multinational companies are importing international commercials, designed for satellite broadcasting, which does not recognise borders, cultural and language prerogatives, they are universal communications, and flighting them on South African television further exacerbates the need not to use local production facilities.

The broadcasting industry is a vital and vibrant one. It is a huge creator of jobs both within its own core business and among the plethora of suppliers to the industry. Therefore it is vital that the industry be assisted in every way possible to become highly competitive in order to bring the cost of advertising down. Aspects such as limiting advertisements, capping advertising time, insistence on programmes which cannot attract significant viewers all mitigate against the broadcasters maximising their competitiveness in order to become viable businesses, and providing significant conduits to the advertisers in their efforts to communicate their products and services to their customers.

DERRICK DICKENS

EXECUTIVE DIRECTOR

3 September 1998

Appendix 3: MNET

M-Net

M-NET'S RESPONSE TO THE WHITE PAPER ON BROADCASTING POLICY AND THE BROADCASTING BILL, 1998

[Note: formatting of document lost while importing into PMG infobase]

SEPTEMBER 1998

EXECUTIVE SUMMARY

PART 1: FUNDAMENTAL ISSUES IN THE BILL

Dispensation applicable to the SABC Ltd.

M-Net supports the corporatisation and restructuring of the SABC Ltd. M-Net also supports the statement that public commercial broadcasting services should be regulated in the same way as private commercial broadcasting services. The principle that private commercial broadcasting services should be less regulated than public broadcasting services has been recognised and accepted. M-Net proposes that the Bill reflect this principle.

Cross media-control

M-Net recognises the principle underlying the need for a diversity of views. M-Net cautions that the Bill in attempting to regulate cross-media control rules may result in unintended consequences. Such regulation may in fact make South African companies uncompetitive at home and abroad against foreign companies who have multi-media interests and are not hamstrung by restrictive cross-media control regulation.

The role of the IBA and the Ministry

M-Net recognises that government has a role to play in the development of policy and that this conforms with international best practice. However, M-Net believes that South Africa is unique in that it constitutionally protects the independence of the IBA. M-Net is concerned that in some respects the Bill may be inconsistent with section 192 of the Constitution.

PART 2: REPRESENTATIONS ON ADDITIONAL ISSUES IN THE BILL

The definition of broadcasting services

M-Net has difficulty with the definition of a broadcasting service in this Bill. It is too wide and includes a wide range of activities that could not possibly have been intended. For example any magazine or newspaper that solicits subscribers would be defined as a broadcasting service and would require a licence.

SABC charter

M-Net welcomes the protection of the independence of the SABC in the provision of news and public affairs programming. In the interests of fair competition, M-Net proposes that the IBA should be involved in the process of formulating the charter and the obligations to be imposed on the public broadcaster.

Broadcasting of national sporting events

M-Net proposes that national sporting bodies and broadcasters should be part of the decision-making process that decides which events should not be screened on an exclusive basis. M-Net also believes that this forum should address the sale of national sporting rights to foreign broadcasters.

Community broadcasting services

M-Net proposes that the current definition of community in the IBA Act be retained.

Financing the Authority

The raising of a licence fee that is not related to a user charge is unconstitutional on the basis that it constitutes a tax and has not met the constitutional procedures for the raising of a tax.

Delegation of licensing powers

The power to grant, renew and amend broadcasting licences is a core function of the IBA. M-Net proposes that this function should not be delegated to a committee.

PART 3: ASPECTS OF THE WHITE PAPER

Promotion of overall economic growth

The White Paper stated that the regulatory and policy framework must provide economic growth, global competitiveness and create jobs. M-Net wholeheartedly supports this statement. Government must therefore set policy in a manner that will reap the rewards that it expects from the broadcasting industry.

BOP broadcasting

M-Net is concerned about the dispensation proposed for BOP television. Insufficient consideration has been given to the effect this may have on the new commercial licensee.

Local content

M-Net welcomes the proposed inquiry into local content carriage by broadcasters. It will provide a forum to determine the role that the public broadcaster and commercial broadcasters must play in providing local content.

Digital convergence and multi media

This is a complex issue and M-Net supports the proposal made in the White Paper that it should first be the subject of a public inquiry.

Financing production in South Africa

The establishment of a South African Broadcasting Production Agency is welcomed. This agency should provide a useful forum for debate on creative ways and incentives that could be used to finance the production industry.

A new regulatory framework

M-Net supports the proposal for merging the support staff and facilities of the regulators. The merger will present a saving of costs and allow for interaction and co-operation on convergence issues that will shortly be facing South Africa. However, the constitutionally guaranteed independence of the IBA needs to be safeguarded in the merged structure.

INTRODUCTION

M-Net welcomes the opportunity to comment on the White Paper on Broadcasting Policy, May 1998 ("the White Paper") and the Broadcasting Bill, 1998 ("the Bill"), particularly since the company participated in the process preceding the Bill. M-Net had representatives in the stakeholders' committee, attended the broadcasting colloquium and participated in the process leading up to the drafting of the Bill. M-Net also submitted written representations in response to the Green Paper. The representations made to the Parliamentary Portfolio Committee on Communications are a culmination of this process.

This policy process will bring certainty to the regulatory framework that governs the broadcasting industry. M-Net believes that a stable and dynamic regulatory framework will contribute to the development of a healthy and vibrant industry that in turn will promote investment and economic growth in the industry. The White Paper in the preamble aptly records that "broadcasting can make an inestimable contribution towards the social, political and economic development of this country."

It is in this vein that M-Net makes its written representations to the Parliamentary Portfolio Committee of Communications

Structure of representations

These representations consist of three parts dealing respectively with -

fundamental issues in the Bill;

additional issues in the Bill;

aspects of the White Paper.

PART1

FUNDAMENTAL ISSUES IN THE BILL

INTRODUCTION

In this part M-Net addresses the following three fundamental substantive issues-

the dispensation applicable to the South African Broadcasting Corporation Limited ("the SABC Ltd"),

the limitations imposed on cross-media control of private broadcasting services; and

the role of the IBA and the Ministry.

DISPENSATION APPLICABLE TO THE SABC LTD

Introductory comments concerning the SABC Ltd

M-Net supports the corporatisation of the SABC. The Bill envisages the incorporation of the SABC as "a limited liability company" having a share capital. The SABC Ltd is to consist of two operational entities, namely a public broadcasting service and a public commercial broadcasting service.

M-Net believes that the restructuring of the SABC in this manner will have positive consequences. The most important is that the public broadcasting service of the SABC Ltd will be able to perform a public mandate and will not be hamstrung in delivering on this mandate by the need to produce commercial programming. The public broadcasting service will be subsidized by the public commercial broadcasting service. Section 11(d) sets out this intention. This is welcomed as a successful public commercial broadcasting service will be able to make a positive financial contribution to the public broadcasting service.

The restructuring of the SABC Ltd has provided an opportunity to clarify exactly what the roles and regulatory regimes for each of the broadcasting services should be and in turn to clarify the regulatory framework. The principle that commercial broadcasting services (which now include the public commercial broadcasting service) should be less regulated than public broadcasting services has been accepted. However, the regulatory regime set out in the Bill for each broadcasting service does not give effect to this principle.

Summary of concerns about the dispensation applicable to the SABC Ltd.

An analysis of the dispensation applicable to the SABC Ltd, compared with that applicable to private broadcasting services, gives rise to concerns about the following three issues -

the revenue sources of different broadcasting services;

the programming and coverage obligations of different broadcasting

services; and

the question of who is entitled to a licence.

Revenue sources of different broadcasting services

In analysing the revenue sources of different broadcasting services, these representations will focus on -

the revenue sources of the SABC Ltd's public broadcasting service, and

the subsidization of the SABC Ltd's public broadcasting service by the SABC Ltd's public commercial broadcasting service.

Revenue sources of the SABC Ltd's public broadcasting service

The White Paper stated that

"the public broadcasting arm of the SABC will also be allowed to sell advertising time, but such services cannot obtain their predominant form of revenue from advertising."

M-Net supports this principle and believes that it conforms with international best practice. There are important reasons for this principle.

The public broadcaster is not driven by market forces or commercial incentive. For this reason it can sell advertising time more cheaply, at non-competitive rates. This depletes the revenue commercial broadcasters receive from advertising because they have to sustain advertising rates at the same level as that of the public broadcaster to remain competitive.

The limitation seeks to ensure that the public broadcaster schedules for its public mandate rather than to attract advertising.

The White Paper also stated that the public broadcasting service should rely on a mix of funding. M-Net supports this principle, but believes that licence fees, followed by government funding for specific projects, ought to be the primary source of revenue for that service. There are a number of reasons for this.

The licence fee is a form of tax on equipment (i.e. on the use of a television set). Those fees must therefore be used by broadcasters to perform a public mandate.

The public broadcasting service would be provided with a secure long-term source of funding. This would relieve it from external pressure, both political and commercial. That independence is important for maintaining the integrity of the public broadcasting service and distinguishing it from private broadcasting services.

It is also important that members of the public who have access to the public broadcasting service must make a financial contribution for that access in the form of licence fees.

Government funding should take the form of specific projects, such as educational services and funding for the elections. In the first week of February 1998 the Minister of Education, Dr Sibusiso Bengu proposed an education channel, which proposal was favorably received by the Minister of Communications, Minister Jay Naidoo. The provision of such a service by the public broadcasting service would clearly fall within its public mandate. If there is to be a viable and vibrant public broadcaster in South Africa that is required by legislation to perform a public service mandate, then there must be adequate financial support from parliament.

In conclusion, M-Net believes that the policy laid out in the White Paper should be given effect to in the Bill. Consideration should therefore be given -

to regulating the extent to which the SABC Ltd's public broadcasting service can rely on different sources of income;

to ensuring that licence fees, followed by government funding, are the primary source of revenue for the public broadcasting service; and

to introducing advertising caps for the public broadcasting service, which caps must be lower than those imposed on commercial broadcasting services (both public and private).

M-Net believes that regulating in this manner will ensure a separate identity for the public broadcaster and clarify the role that the public broadcaster plays in delivering on its public mandate. It will also ensure that the public broadcaster does not unfairly compete with private broadcasters - including its commercial sister.

Subsidization of the SABC Ltd's public broadcasting service by the public commercial broadcasting service

M-Net supports the subsidization of the SABC Ltd's public broadcasting service by its public commercial broadcasting service. This subsidization will assist the SABC Ltd's public broadcasting service to perform its public mandate. s9(2) of the Bill states that the public broadcasting services and commercial broadcasting services must be separately administered. It is not clear whether this extends to separate accounting and auditing systems.

It is important that this separation should be clear and transparent. s11(d) states that the public commercial services of the SABC Ltd must subsidise the public broadcasting services. M-Net has already stated its support for this section, but recommends that the section should also explicitly clarify that the public broadcasting services should not subsidise the public commercial broadcasting service.

The principle that the commercial broadcasting services of the SABC Ltd should be regulated in the same manner as private broadcasters should be realised in every respect. This means neither subsidization from licence fees or government grants nor exemption from the payment of licence fees. This requirement is essential if the public and private broadcasting services are to be confident that there is fair competition between the SABC Ltd's public commercial broadcasting service and private broadcasting services.

Programming and coverage obligations of different broadcasting services

The table below summarises the programming and coverage obligations imposed by the Bill on the SABC Ltd's public broadcasting service, compared with those imposed on private broadcasting services (including the SABC Ltd's commercial broadcasting services).

Nature of obligation Obligations imposed on the SABC Ltd's public broadcasting service Obligations imposed on private broadcasting services

Diverse range of programming "must strive to offer a broad range of services targeting, particularly, children, women, the youth and the disabled" (s10(1)(g))

"must provide significant news and public affairs programming which meets the highest standards of journalism, as well as fair coverage, impartiality, balance and independence from government, commercial and other interests" (s10(1)(d))

"must provide a diverse range of programming addressing a wide section of the South African public" (s27(1)(a))

"must include news and information programmes on a regular basis, including discussion on matters of national and regional, and, where appropriate local, significance" (s27(2)(c))

"must meet the highest standards of journalistic professionalism" (s27(2)(d))

Language "must strive to make services available to South Africans in all the official languages as circumstances permit" (s10(1)(a))

"must strive to be of high quality in all of the languages served" (s10(1)(c)) "must provide, as a whole, programming in all South African official languages" (s27(1)(b))

Educational programming "must include significant amounts of educational programming …" (s10(1)(e)) -

Cultural Programming "must reflect the diverse cultural and multilingual nature of South Africa and all of its cultures and regions to audiences" (s10(1)(b))

"must enrich the cultural heritage of South Africa by providing support for traditional and contemporary artistic expression" (s10(1)(f)) "must reflect the culture, character, needs and aspirations of all of the people in the regions that they are licensed to serve" (s27(2)(a))

Local content - "must provide an appropriate significant amount of South African programming according to the regulations of the Authority" (s27(2)(b))

"must include levels of South African drama, documentaries and children's programmes that reflect South African themes, literature and historical events, as prescribed by regulation" (s27(4)(a))

"The Authority may make regulations on the amount of South African programming and other matters which reflect these circumstances, bearing in mind the objects of this Act" (s27(5))

Sports programming "must include national sports programming as well as developmental and minority sports" (s10(1)(i)) -

Independent production "must include programmes made by the Corporation as well as those commissioned from the independent production sector" (s10(1)(h)) "must include significant amounts of programmes acquired from the independent production sector" (s27(4)(b))

Coverage - "must within a reasonable period of time be extended to all South Africans and provide comprehensive coverage of the areas which they are licensed to serve" (s27(1)(d))

As can be seen from this table more onerous obligations are placed on private broadcasters. Not only will this adversely impact on private broadcasters, but also on the public commercial broadcasting service of the SABC Ltd and its ability to cross-subsidize the public broadcasting services of the SABC Ltd.

A private broadcasting service needs to be able to create a distinctive profile. Internationally, the trend in broadcasting is towards the development of niche markets. A loss of flexibility in scheduling appropriate programming will interfere with that commercial imperative. Innovation in programming and competition between broadcasters will be reduced. This will impact on the contribution that private broadcasters can and do make to the GDP, the creation of employment and in the provision of skills.

International developments are interesting in this regard. In discussing the bankruptcy of the fifth television channel in France, "La Cinq", Barendt suggests-

"[Equally] the fall of La Cinq indicates that it may be difficult for private channels to survive if their programmes are tightly regulated."

Barendt continues by suggesting that the British authorities, in lightening programme standards for commercial broadcasters in 1990, had decided that -

"… it has become clearer that the duty to provide a comprehensive service is really a characteristic of public broadcasting".

This point was also endorsed by the German Constitutional Court through the "Grundversorgung" doctrine-

"Previously it had held that broadcasting freedom must be protected by legislation, to ensure, for example, that viewers and listeners received a comprehensive range of unbiased programmes. Now it ruled that programme restraints could be relaxed a little for private channels, because the essential basic provision (unerlassliche Grundversorgung) of public service broadcasting was the responsibility of the public channels. This obligation was imposed on them because their programmes reached the whole public and they were not subject to the commercial pressures of advertisers."

M-Net believes that private broadcasting services (including the public commercial broadcasting service) should enjoy light-touch regulation.

It is also critical that if the commercial broadcasting service of the SABC Ltd is to be a success and be in a position to cross-subsidize the public broadcasting service, it must create an identity distinct from its sister service. Light-touch regulation would ensure its financial success and its ability to support the non-commercial programming of the public broadcasting service.

Turning specifically to the language requirements, whilst private broadcasting services, and particularly free-to-air services, ought to be encouraged to contribute to the development of South Africa's eleven official languages, the public broadcasting service ought to bear the primary responsibility in performing that role. This is the present position in the IBA Act (s2(e)(i)). It was also the view of both the IBA and of the Portfolio Committee on Communications when those bodies considered the issue. Given the number of languages spoken in South Africa, the provision of programming in multiple languages is not economically viable. The public broadcasting service, as the recipient of licence fees and government funding, is best placed to meet those costs.

As regards the question of coverage, it appears that no coverage obligations are imposed on the public broadcasting service, whereas a private broadcasting service "must within a reasonable period of time be extended to all South Africans and provide comprehensive coverage of the areas which [it is] licensed to serve" (s27(1)(d) of the Bill). These coverage requirements are not economically viable. Sentech, commenting on the IBA's proposal that the new free-to-air private television licensee be required to ultimately achieve a coverage of 85%, stated-

"…the 85% level specified within the life of the licence is considered to be an excessive burden to the licensee. This level would require a considerably larger network than those currently in use".

This is primarily due to the spread of the rural population in South Africa. For example, it is estimated that to reach the last 35% of the population would cost more than twice as much as it costs to reach the first 65%. Furthermore that expansion is not accompanied by a proportionate growth in advertising revenue.

Programming obligations imposed on private subscription broadcasting services

These obligations are to be found in ss(1),(3),(5) and (7) of s27 of the Bill.

A distinction ought to be drawn between free-to-air broadcasting services and subscription services. That distinction relates to the differences in the funding of those services, the nature of those services and their varying degrees of influence in relation to the public. Those differences determine different ways in which those services ought to be regulated and the extent to which those services are required to fulfil public service obligations. The IBA stated that-

"Subscription broadcasting will, in general, be more lightly regulated than free-to-air services because of the private nature of the agreement between the service provider and the subscriber".

Subscribers are paying for particular programming that the subscription broadcasting service must provide.

As regards the language obligation in s27(1)(b), that provision cannot apply to a subscription broadcasting service, since the language of that service's programming must be determined by the choice of language of the service's subscribers.

Subscription services should therefore be subject to light touch regulation in respect of local content and its choice of language should be determined by the subscriber.

Entitlement to a licence

s18 of the Bill states that notwithstanding the provisions of the IBA Act or any other law, the SABC Ltd is entitled to be issued any licence required in terms of either the IBA Act or the Telecommunications Act, 1996 (Act No 103 of 1996). Unlike the SABC Ltd, all other persons do not enjoy the same entitlement.

This is an extraordinary provision. It allows the SABC Ltd to be provided with licences (either commercial or public broadcasting licences, or both) virtually on demand. s18 gives an immense advantage to the SABC Ltd in relation to private entities with whom it is competing in the field of broadcasting, signal distribution and telecommunications. s18 may well result in domination by the SABC Ltd in the private broadcasting market and may create unfair competition between a state enterprise and the private sector. There is no limitation on the number of licences that can be provided to the SABC Ltd and the IBA is obliged to grant these licences to the SABC Ltd regardless of the effect they may have on existing broadcasters or the market as a whole. In this regard it is important to note the comments of the Department of Trade and Industry-

"The interaction between the public and private sectors has become increasingly complex. This is particularly true in the case of corporatised public enterprises … . It is clear that we do not have a situation where the public and private sectors conduct their activities in separate economic spheres. As a result the question of level playing fields inevitably arises."

LIMITATIONS IMPOSED ON CROSS-MEDIA CONTROL OF PRIVATE BROADCASTING SERVICES

Proposed new s50 of the Bill

The first three subsections of s50 of the IBA Act are to be replaced with the following-

"(1) No person who is a position to control a newspaper may be in a position to control a radio or television licence in an area where the newspaper has an average readership of more than 15% of the total newspaper readership in that area, if the licence area of the radio licence overlaps substantially with the said circulation area of the newspaper;

(2) The substantial overlapping of circulation referred to in subsection (1) shall be interpreted to mean an overlap by 50% or more.

(3) There shall be full and extensive disclosure of the shareholding and financial structures of private broadcasting licences to the Authority."

The reasons for cross-media control limitations

The White Paper stated that-

"The control of a number of media by one person or entity limits the spread of views and ideas. Such concentration of control or media access in the hands of a powerful few, is a threat to the diversity of information."

The intention is that cross-media control rules will protect and ensure that a diversity of views will be spread.

M-Net supports the principle of diversity. However, the proposed cross-media control limitations present the danger that they may stifle the local economy and restrict its ability to compete internationally. Such regulation therefore may have unintended consequences. The need for restrictive limitations have in part been eroded by significant environmental changes. These include-

developments in, and convergence of, technology in the information, telecommunications and broadcasting industries;

the diminishing scarcity of the spectrum;

the increasing globalization of those industries: national boundaries are disappearing;

the increasingly competitive conditions in those industries; and

the increasing investment required in those industries.

Studies for the European Commission have noted that convergence in those industries has led to many alliances being formed because no single company has all the skills and resources to develop new services.

"Underlying that analysis is the reality that few, if any of today's market players will have the skills or resources to straddle the whole of the value chain within a converged environment, so that the emergence of major players in the sectors affected by convergence will inevitably rely on partnering to varying degrees."

There is an accelerated vertical integration in the converging industries, as companies seek to build critical mass, buy expertise and source funding. In 1996 alone, the value of mergers and acquisitions in converging industries was more than $150 Billion. (See Appendix 1 for an indication of new convergence alliances). Policymakers need to note those developments if they want South African industries to become internationally competitive.

It is interesting to note that in the light of substantial changes in converging industries, the European Commission has stalled its attempt to put forward a media-concentration directive. The fear is that such a directive will block the investment of capital in new technologies by those most knowledgeable in those industries at a time when international conglomerates are unfettered.

The involvement of international media giants in six of the seven applications for the private free-to-air television broadcasting licence demonstrated many of those developments. Those foreign partners are global players, several of whom straddle different industries: the ownership of movie studios, the publication of books, the print media, the radio and television industry, subscription services and the sports sector. Two such examples are NewsCorp and Time Warner. These two corporations have already entered the South African market in various ways and will be competing with South African corporations in those industries. The Green Paper on Broadcasting Policy acknowledged these developments-

"Media organizations from other parts of the world have demonstrated an interest in the evolution of the South African broadcasting system. The overseas organizations have been for some time operating in policy environments which allow for less stringent regulations. In this way they obtain economies of scale which might disadvantage South African companies prevented by limitations on cross-media control as presently constituted."

Regulation by way of competition policy

To the extent that any regulation is required, that regulation ought to be by way of competition policy and legislation applicable to all sectors of the economy. Sector-specific regulation often departs from general competition principles and has the tendency to create islands of inefficient economic activity in the market. Furthermore, alliances across industries (as is occurring between the information, telecommunications and broadcasting industries) will require oversight from bodies that are not hampered by sector-specific considerations at the expense of national developments.

That issue was addressed in the KPMG Report -

"Competition law and regulation are applied differently. Competition law is applied retrospectively by a competent authority once a concern is raised. Regulation imposes obligations on companies with the aim of preventing potential problems before they occur. We believe that regulation in any sector over and above competition law must be fully justified.

Convergence alters the basis of government intervention in the telecommunications and audiovisual sectors and changes the balance between competition law and regulations. A key reason … is that there will be many more distribution channels open to service providers. Many of our key recommendations reflect this fundamental change and regulatory emphasis."

Elaborating on those issues-

The Report states that the removal of scarcity means that the plurality of opinion will more readily occur. It will therefore become less of a concern to regulate it.

The Report proposes that competition policy should be the main tool by which the convergence sectors will be regulated. It will be applied by an authority having competition expertise.

The Report proposes that if this approach is adopted, it may be necessary to conceptualize the notion of markets (this should be based on the users' view of the services and should be independent of the technical method of delivery) on the one hand, and the different elements of the value chain, covering content (creation, production and packaging), service provision, conveyance and consumer interface on the other.

It is important to note that the Department of Trade and Industry follows a similar approach-

"In promoting these initiatives the Department seeks means of intervention that are characterized by a facilitory approach, primarily through empowering competitors and consumers to advance their own interest. …Injured competitors would have the right to bring action against a company engaging in unfair competition, complemented by a cause of action for citizens or consumers injured by unfair competition.

The government's view is that monopolies law should be effected by a competent, professional agency with powers to investigate and respond rapidly and robustly to anti-competition conduct….The possibility of politically-inspired intervention will also be removed by eliminating the exercise of ministerial discretion in the enforcement of competition law…"

There is also a concern about the need to ensure fair competition between state enterprises and the private sector. Mention is made in these representations that this concern is shared by the Department of Trade and Industry (see paragraph 38). Thus, if there is to be regulation it must be applied across the board. Neither the SABC Ltd, nor other state enterprises such as Telkom or Sentech, should be excluded from those regulatory provisions. Any such exclusion would result in unfair competition.

In conclusion, rather than regulate specifically for the broadcasting industry, regulations should be by way of the Department of Trade and Industry's competition policy and the competition legislation that is presently being debated in this session of parliament. The Competition Bill provides for the investigation, control and evaluation of-

restrictive practices, including both restrictive horizontal and vertical practices;

abuse of a dominant position; and

mergers.

Limitations proposed in the Bill are too restrictive

The most important difference between the present position and the amendments in the Bill is that whilst the present position refers to an average "ABC circulation of 20%" of the total newspaper readership in an area, the new s50(1) refers to an average "readership of more than 15%" of the total newspaper readership in an area.

The primary function of the Audit Bureau of Circulation of Southern Africa is to certify circulation figures by independent professional auditors using standard audit procedures. As regards newspapers, the circulation figure of a newspaper represents the average number of copies of a newspaper sold over a specific period (usually this is a six-month period, but it could in exceptional cases be a three-month or a twelve-month period).

The Bill indicates neither by whom, nor how, the percentage of readership is to be established. Nevertheless, one can safely state that it will be a significantly less accurate figure than the ABC circulation figure.

In summary, there are important differences between the two formulations-

The ABC circulation figure indicates the number of copies of a newspaper that are sold, whereas the readership figure indicates an estimate of the number of people who read a newspaper.

The ABC circulation figure is likely to be far more accurate than the readership figure.

The present percentage is higher than the proposed percentage in the Bill (20% as opposed to 15%).

The net effect is that the cross-media limitations that are being imposed in the Bill are far tighter than those presently imposed in the IBA Act.

The limitations proposed in the new s50(1) do not accord with international trends. For example-

In the British Broadcasting Act, 1996, the relevant clause is "a national market share of 20%", where the market share is understood by the number of copies of a newspaper that have been sold over a certain period. It is also important to note that in Britain the cross-ownership provisions specifically exclude satellite and digital broadcasting services.

A majority of European countries have either no limits or a far higher percentage.

In terms of the Australian Broadcasting Services Act, 1992, the relevant provision states that "at least 50% of the circulation of a newspaper is within the licence area of a commercial television broadcasting licence or a commercial radio broadcasting licence".

The imposition of strict limitations will only serve to disadvantage South African companies competing with global players who operate in policy environments which allow for less stringent regulations. This consequence runs counter to the stated policy of the Ministry, namely to devise a framework that will allow South Africa to compete effectively in the global information society and that will attract investment in the industry.

THE ROLE OF THE IBA AND THE MINISTRY

M-Net recognises that the governance of the communications sector constitutes three parts: policy formulation, regulation and service operation. M-Net also recognises that government has a role to play in the formulation of policy. This conforms with international best practice. The Bill gives effect to this structure.

Item 5 of Schedule 1 of the Bill introduces a new s13A into the IBA Act. That section deals with the role and powers of the Minister. Essentially those are as follows-

to determine all matters relating to the privatization of government broadcasting enterprises;

to direct the IBA to undertake special investigations and inquiries and to report on any matter within its jurisdiction; and

by notice in the Government Gazette, to issue to the IBA policy directives.

M-Net believes that issuing of directives by the Minister should from part of a public process and allow for the involvement of interested stakeholders. The new section 13A recognises the importance of these principles-

The Minister must consult the IBA.

The directive must be published in the Government Gazette.

Interested parties may make written representations.

The Minister must refer the directive to the relevant Committees of Parliament for comment.

Whilst M-Net believes that the separation of these roles conforms with international best practice, it does have one concern. South Africa is unique because it constitutionally protects the independence of the IBA. M-Net is concerned that in a some respects, the Bill is inconsistent with s192 of the Constitution.

PART 2

ADDITIONAL ISSUES IN THE BROADCASTING BILL

Introduction

In this part M-Net addresses a number of issues in the Bill.

The definition of broadcasting services

s4 requires services other than broadcasting services and signal distribution broadcasting services, as defined in the IBA Act, to be licensed. However, it is difficult to determine the services to which this section will apply-

There are three definitions of a "broadcasting service".

There is no definition of "distribution service".

The definition "a broadcast service" in s4(2) is too wide. It includes, for example, "any activity which provides a service which -"

solicits subscribers; or

solicits advertising.

On the basis of this definition, the entire print media would be required to apply for a licence. Similarly, the provision of a service which "acquires programming rights for South Africa" should not be required to apply for a licence.

M-Net believes that broadcasting services and persons who provide broadcasting signal distribution (as defined in the IBA Act) ought to be required to apply for a licence under broadcasting legislation.

In addition to the lack of clarity as to who is required to apply for a broadcasting licence, it is also unclear as to the licence for which application must be made. There is no correlation between the description in s4 of the services for which a licence is required, and the categories of broadcasting licences listed in s5 of the Bill.

s4(1) and (2) also do not make it clear whether an entity that provides a range of services requiring a licence is to apply for a licence in relation to each of those services, or to a composite licence. If the former option is to apply, this will impose an unnecessary burden both on the industry and on the regulator: multiple licence applications will be both time-consuming and expensive.

SABC charter

M-Net supports the protection of the SABC Ltd's independence in the provision of news and public affairs programming as set out in section 10(1)(d). However, M-Net believes that this provision should extend to the content and scheduling of the SABC Ltd's programming as well as the management of its affairs. M-Net also believes that the IBA should be consulted and involved in the drafting of the charter (e.g. setting local content and advertising limitations) so as to ensure fair competition between broadcasting services.

It is useful to look at equivalent legislation in other jurisdictions. In Canada, the Canadian Broadcasting Act, 1991, requires the Canadian Broadcasting Corporation to be accountable to parliament, whilst s52 guarantees the independence of the CBC. In Australia, the Australian Broadcasting Corporation Act, 1983, contains a Charter for the Corporation and the Act provides that the Board must ensure that the ABC functions with the maximum benefit of the people of Australia and that the Board must maintain the independence and integrity of the ABC. In Britain, an agreement between the Secretary of State and the British Broadcasting Corporation guarantees the independence of the BBC in all matters concerning the content of its programming and the time when they are broadcast, as well as the management of its affairs.

Broadcasting of national sporting events

s27(7) states-

"Commercial subscription services may not acquire exclusive rights for the broadcast of national sporting events, as identified in the public interest from time to time by the Authority in consultation with the Minister and the Minister of Sport and in accordance with the regulations determined by the Authority through a public process."

M-Net believes that national sporting bodies and national television broadcasters should also be consulted by the Authority. Sporting bodies have a right to trade in their sporting rights. National television broadcasters should compete fairly for those rights. For these reasons these two groups should form part of the decision- making process. There is also a need to strike a balance between the need for the public to see certain events free-to-air, on one hand, and the need for sporting bodies to raise funds for development purposes, on the other hand.

M-Net is also concerned that this decision-making mechanism may not be able to prevent the sale of national sporting rights to foreign broadcasters. In the past, national broadcasters were forced to buy back rugby rights sold to News Corporation owned by Australian Rupert Murdoch at exorbitant prices.

Foreign services may also use those rights to enter the South African television market on satellite to the detriment of local television broadcasters. M-Net suggests that this issue also needs attention and cannot be addressed unless the sports bodies are part of the decision making process.

M-Net also recommends that "national sporting events" should read national interest sporting events. Currently the section refers to all national sporting events regardless of the interest in those sports.

s29: Community broadcasting services

In the IBA Act there are two meanings given to "community". The one is a geographically founded community, whilst the other is a group of persons or sector of the public having a specific, ascertainable common interest. In contrast, the Bill seeks to recognize only the first concept of "community".

M-Net proposes that the current meaning of "community" be retained.

Item 6 of Schedule 1: Financing of Authority

s15(1) of the IBA Act is amended by the substitution of a new ss(1). The funding resources of the IBA are reduced, and in particular, any licence fees which the IBA receives will not accrue to it but are to be paid directly to the National Revenue Fund.

To the extent that licensees benefit from having been allocated a licence, they ought to pay a user charge to the regulatory authority in the form of a licence fee. That licence fee must relate to the licensing costs incurred by the regulatory authority.

However, it is problematic for the state to use the licence fee as a means of raising national revenue. Previously, M-Net has argued that the 2% levy on annual turnover which it is required to pay as an annual licence fee is tantamount to the imposition of an additional tax and increases M-Net's effective tax rate to nearly 60%. That level of taxation runs contrary to the Department of Finance's proposal that the overall corporate tax burden should not exceed 25% of gross domestic product.

The Department of Finance has also expressed concern at the proliferation of taxes levied by various tiers of government. Those concerns are shared by the Katz Commission. The imposition of licence fees which are tantamount to an additional tax strengthens those concerns. It also serves to reinforce South Africa's image as a tax-unfriendly environment, sending negative signals to foreign investors. This consequence runs counter to the stated intention in the White Paper of attracting investment.

Item 18 of Schedule 1: Delegation of licensing powers by IBA

In item 18 of Schedule 1 to the Bill, s69 of the IBA Act is amended as to enable the IBA to delegate to a committee the power to grant, renew, amend or transfer any licence. That power is central to the regulation of broadcasting. Given the provisions of s192 of the Constitution, which require an independent broadcasting authority to regulate broadcasting, it is doubtful whether this power can be delegated.

PART 3

ASPECTS OF THE WHITE PAPER

Introduction

In this part M-Net addresses issues in the White Paper that have not been incorporated in the broadcasting Bill but which it nevertheless believes are important.

Promotion of overall economic growth

M-Net agrees that the regulatory and policy framework must provide economic growth, global competitiveness and create jobs. Subscription television has already made a significant impact on the South African economy. An analysis published in February 1998 revealed that in 1997 M-Net injected R945 million into the South African economy and contributed R171 million to the fiscus.

M-Net believes that the broadcasting industry as a whole can continue to make significant contributions to the GDP. Internationally, globalisation and developments in, and convergence of technology, has compelled the liberalisation of the information, telecommunications and broadcasting industries. It is important that South Africa keep abreast of these developments. These industries will be the dominant industries of the 21st centuary. It is imperative that South Africa finds ways to participate and compete effectively in those industries. South Africa must regulate in a manner that will reap the returns that it expects from the broadcasting industry.

BOP Broadcasting

M-Net is concerned with the dispensation proposed for BOP television. The White Paper states that BOP television will be carried as a satellite service on Astrasat and free-to-air in Gauteng and that it will operate as a for profit business unit. Effectively this means that the SABC will have two commercial broadcasting services in Gauteng.

M-Net recommends that government consider the impact this proposal will have on the new commercial television licensee.

Local content

M-Net agrees that the production of local content is important. In its Green Paper submission M-Net made a number of proposals regarding incentives to produce local content and argued that if quotas were necessary, private broadcasters should be required to spend a minimum amount of money per year on local content programming, rather than having fixed local content percentages. M-Net welcomes the inquiry into local content carriage by broadcasters as it will provide a forum in which these issues, and the role that the public broadcaster must play in providing local content, can be debated.

Digital convergence and multi-media

M-Net welcomes the proposal that the regulator should conduct a public inquiry and report on the regulatory regime for multi-channel distribution systems and looks forward to participating in that inquiry.

Financing production in South Africa

The financing of production in South Africa by broadcasters and the government ought to be explored further than is done in this chapter. There are many incentives that could be adopted. These include: equity investment schemes, tax incentive schemes, rebates on licence fees for investments in the production industry, incentives to attract investments, and incentives that would advance international co-productions, co-financing and co-operation concerning distribution.

The establishment of a South African Broadcast Production Agency is welcomed and hopefully this body will be able to consider and debate the proposals made above.

A new regulatory framework

Internationally, the approach varies as to whether or not telecommunications and broadcasting ought to be regulated separately. In the USA, the FCC regulates both telecommunications and broadcasting through separate bureaus. In other countries, such as the UK, Germany, France and Australia, regulation of telecommunications and broadcasting is in terms of separate legislation and by separate regulatory authorities. As recently as last year, the Australian government saw fit to retain that separation.

M-Net proposes the following:

The support staff and facilities of the authorities regulating telecommunications and broadcasting ought to be shared.

However, the regulation of telecommunications (point-to-point services) and broadcasting (point-to-multipoint services) in South Africa ought to remain separate. In other words, there ought to be an authority responsible for the regulation of telecommunications (SATRA or its equivalent) and a separate authority responsible for the regulation of broadcasting (the IBA or its equivalent)

A separate agency ought to be responsible for planning and managing the spectrum. SATRA and the IBA would then be responsible for assigning the spectrum based on the spectrum agency's allocations to those authorities.

Legislation will need to address how issues concerning convergence are dealt with by the two regulatory authorities (i.e.SATRA and the IBA).

The proposal that support staff and facilities be shared has a number of advantages:

The sharing of support functions would facilitate liaison and co-ordination between those authorities and allow for a comprehensive approach to the regulation of those industries. This would be important, given developments in, and the convergence of, technology.

The combining of support functions would be administratively efficient.

The costs of administering those authorities would be reduced.

As regards the independent broadcasting regulatory authority, the following is proposed:

Regulation must be independent of government and political interference. That is required in terms of s192 of the Constitution.

The manner in which members of the authority are appointed and removed from office affects the independence of that authority.

The regulatory authority must be capable of carrying out its functions and must therefore consist of persons who, between them, have the necessary qualifications, expertise and experience.

The competence and impartiality of the regulator must be evident and its procedures must therefore be transparent.

Procedural and substantive criteria for decision-making must be clear in order to provide legal certainty.

CONCLUSION

M-Net wishes to extend its thanks to the Portfolio Committee on Communications for giving it an opportunity to make written and oral submissions on the Bill even though the Committee is faced with such pressing time constraints. M-Net hopes that its comments and suggestions contribute to the debate on the critical issues that currently face the government, the regulator and the industry in respect to broadcasting policy.

Appendix 4: Midi TV

Midi TV

Midi TV

Response to the Broadcasting Bill

1. Objectives of Corporation (SABC):

"… to hold existing stations and to construct, acquire, lease, establish and install additional stations for broadcasting purposes, as well as apparatus for the reception of broadcasting services, to achieve its objectives or anything ancillary or related to those objectives" (Page 16, section 8 (c))

1.1 Comment

e.tv is concerned about the apparent open license that this clause grants to the SABC to expand its capacity particularly because it does not state whether this would include the proposed public commercial broadcasting service. If so, it would be contrary to the submission made by Government in the White Paper on Broadcasting Policy where it stipulates:

"The Government recognises that private television uses substantial amounts of risk capital and must have sufficient revenues to meet its obligations... .At the same time it recognises that the system will take some time to adjust to the arrival of the new player and the changes to the structure of the new SABC television station" (White Paper page 23 section 3.3.2)

Any unbridled increase in the SABC's broadcasting capacity through its mandate to "construct, acquire, establish and install additional stations for broadcasting purposes" could pose significant threat to e.tv's and indeed any new entrant's ability to compete favourably with the SABC for the already limited advertising revenue.

1.2 Recommendations:

· The SABC's expansion should be viewed within the context of its impact on e.tv as a new player

· A thorough impact study should be conducted and the results thereof put up for industry scrutiny and input before the legislation is passed.

2. Public and commercial broadcasting services

"The public broadcasting service provided by the Corporation must strive to make services available to South Africans in all official languages as circumstances permit" Page 18, section 10-(1) (a)

and

"Commercial broadcasting services must provide, as a whole, programming in all South African official languages Page 30, section 27-(1) (b)

2.1 Comment

e.tv understands the moral value of broadcasting in all South African languages and has committed to providing for the Nguni and Sesotho language groups within its first year of broadcasting. Its expansion into other language groups will be determined by need. e.tv also believes that broadcasting in all eleven official languages should be one of the primary responsibilities of the SABC as a government, public and commercially funded entity. It is therefore inconceivable that commercial broadcaster obligations in this regard should be more stringent than those of the SABC.

2.2 Recommendation

· The viability of imposing this obligation on the commercial broadcaster without any concessions should be reconsidered. Failing which,

· Government should enable e.tv access to the proposed funding for local content

3. South African Broadcasting Advisory Body

"The advisory body must, after consultation with the National Film and Video Foundation and the broadcasting industry, make recommendations to the Minister determine

(a) policy and strategies to govern the production and display of local content

(b) financing strategies to support the production and display of local content

(c) supply-side measures and initiatives to support the production of local content" (page 36, section 4)

3.1 Comment

e.tv would welcome the opportunity to participate in such a body

4. Persons and bodies consulted

e.tv notes that the station was not consulted in the preparation of the Bill and some of the provisions directly impact on e.tv's commercial viability. e.tv seeks clarification as to the reasons why it was not consulted. (page 60, Section 2)

e.tv wishes to note that as a commercial concern it relies heavily on regulatory stability and policy continuity.