Premier Soccer League Broadcast Rights: Meeting with SABC

Meeting report

SPORT AND RECREATION & COMMUNICATIONS PORTFOLIO COMMITTEES: JOINT MEETING
20 June 2007
PREMIER SOCCER LEAGUE BROADCAST RIGHTS: MEETING WITH SABC
 
Chairperson: Mr G Oliphant (ANC)

Documents handed out:
SABC Press Release SABC media release on broadcasting rights for South African soccer (see Appendix)

Audio Recording of the Meeting

SUMMARY
The meeting was called at short notice to discuss the controversy over television rights for local football as Premier Soccer League (PSL) had sold its broadcast rights to a pay-television channel, SuperSport, for five years. The South African Broadcasting Corporation told the Committee that there had been contractual arrangements with the Premier Soccer League to negotiate the renewal of the broadcasting rights contract. It was felt that the Premier Soccer League had acted in bad faith by allowing SuperSport to negotiate a deal while it should have been dealing with the South African Broadcasting Corporation on an exclusive basis. There was also no mention of radio rights, an important component of the broadcasting package.

Members stressed that the game must be accessible to the poor, who relied on radio or free-to-air television to enjoy the game. It was agreed that the Premier Soccer League must be called to appear before the Committee to explain its side of the story.

MINUTES
The Chairperson described what had happened between the Premier Soccer League (PSL), South African Broadcasting Corporation (SABC) and SuperSport (SS) regarding the broadcasting rights of PSL matches as a debacle. The meeting had been called at short notice.

Adv Dali Mpofu (Group Chief Executive, SABC) introduced his team. He said that there had been several misconceptions when the PSL and SS had concluded their recent deal.

Mr Ashwin Trikamjee (Board Member, SABC) said that there were important issues to be discussed from the broadcaster’s point of view. These issues were also important for the country to understand. In 2006 Adv Mpofu had advised the SABC Board that there was a need to commence negotiations with the PSL for the renewal of the contract. There was an indication of a possible agreement on the principle of the matter, and Adv Mpofu had been given the authority to negotiate on the price. There had been negotiations back and forth. A stumbling block was that the PSL had never said what they wanted, but had rather asked the SABC what they were prepared to pay for broadcast rights. This was not the way the SABC preferred to operate.

A part of the negotiations was that the SABC would only be allowed to televise a limited number of games. This was linked to the price being asked. A dispute had been declared. It had gone to arbitration, and there had been a series of interdicts. The SS deal had come out of the blue, and the SABC had received no notice of this development.

Mr Trikamjee said that the SABC Board had met the previous day. They had agreed that the PSL was in breach of contract. The rights of the SABC had been infringed upon. Football was a sport of national interest. The public must have access to the game. They had therefore called for an urgent meeting. The SABC had a constitutional mandate to allow access to sport, and in particular they had a commitment to promote access to soccer.

He thanked the public for their support. This had come from both members of the public and various organisations. The feeling was that professional football must go back to the SABC, which was the eyes and ears of the nation. The question of radio rights had not been addressed. SS had no capability in this regard, but it was a very important concern for the public. Even the Freedom of Expression organisation, which had always attacked the SABC in the past, had voiced their support.

Adv Mpofu said there were several factual issues and misconceptions which had to be cleared up. The SABC had been involved with the PSL since the formation of the PSL nine years previously. In fact, their involvement dated back to the early days of television in the country, and much further back in radio. The brand had been developed with the PSL and its predecessors.

He said that many fans had never been in a stadium. Their only contact with the sport was through the airwaves of the SABC. Commercial channels could not be equated with the SABC. The public broadcaster had no profit motive. It operated in the general interest of the public. All citizens were treated equally. Commercial stations were profit-driven. Various sectors were targeted, as there was an impact on their business. He felt that the sale of the rights to SS was the beginning of the mass privatisation of football. The situation was not fine in a developing country like South Africa.

Adv Mpofu said that there were several contractual issues involved. The SABC had been portrayed as crying after the negotiations had failed. The current contract, which covered the period 2002 to 2007, had been signed in 2004. Clause 4 of the contract specified that six months before the end of the contract period, the renewal would be negotiated. Negotiations would be carried out in good faith, and for the first three months of the period would be exclusive between the PSL and the SABC. This would have covered the period up to 31 March 2007, or some later date as agreed by the parties. The PSL would not negotiate with any third party in this time. There was also a matching right in the contract. After the exclusive period, the PSL could go to the open market, but the SABC still had the right to match any offer. This was a standard broadcast contract as the SABC had concluded with various other organisations.

He said that he had met with the PSL on 5 December 2006. They had agreed to end the negotiations by the end of February. He had confirmed this by a letter written the next day. They had also agreed that exclusive negotiations would continue until the end of February 2007, and only after that would the PSL enter into negotiations with any third party. The SABC would have the right to match any offer until 30 April 2007. Mr Trevor Phillips (Chief Executive Officer of the PSL) had replied to this letter on 8 December 2006, and agreed on the facts of the meeting as laid out in the SABC letter.

Adv Mpofu said that the SABC’s head of sport, Mr Sizwe Nzimande, had been tasked to negotiate the details with Mr Phillips. On 5 February 2007, the parties had agreed on a timetable on how to proceed. On 16 February, the PSL had made a formal proposal to the SABC on rights and the price. Mr Phillips confirmed this the following day.

The first act of bad faith was that on the 16 February, the PSL issued an invitation to tender (ITT). This could not be described as negotiation. It was a “take it or leave it” situation. There was a fundamental change in the approach to the rights. For example, the SABC would lose its copyright rights as well as the right to sub-licence. The SABC received this on 17 February, a Friday, and Adv Mpofu had only seen it on the following Monday. He had sent a letter to the PSL on 20 February. He expressed the SABC’s disappointment that a detailed ITT had been issued while the negotiation process was still continuing. The SABC had not wanted to respond. This was contrary to the good faith principle. The ITT also indicated the PSL’s intention to go to the open market, and implied that further negotiations with the SABC would be a waste of time. The SABC could not accept this situation.

Adv Mpofu continued that the PSL responded about the pricing issue. On 22 February it rejected the SABC’s claim that the ITT was a breach of the good faith principle. A meeting was held on 23 February, where the SABC said that it was a simple matter. On 5 February an offer had been made on the price and conditions of the package. Deadlock had then resulted, and the issue was taken to arbitration in accordance with the conditions of the original contract. A letter was sent on 2 March inviting the PSL to attend an arbitration meeting.

He said that the PSL had received this letter, but denied that they had an obligation to set a price for the rights. A meeting was held on 3 March, but no progress was made. On about 5 March, he heard a rumour that the PSL was working on a deal with a third party. The SABC requested an undertaking by 6 March, but there was no comment from the PSL. The SABC had then resolved to pursue its legal rights. There was no undertaking from the PSL by 7 March, and by then he knew that the PSL was talking to SS. They had then gone to court. On 5 April an interdict was issued in favour of the SABC. The court had asked who else the PSL was negotiating with, and seven other parties were named. The judge said that the matter was urgent, and the interdict would expire on 25 May. This had seemed reasonable at the time.

Adv Mpofu said that the SABC’s normal senior counsel, Azhar Bam, had been appointed as an Acting Judge at this time. This was a normal obligation in the profession. A new counsel had to be appointed. He had a new perspective on the case, and "put all the eggs in the basket" of the contractual document. No attention had been given to the issue of bad faith, and he amended the approach. This had been opposed by the PSL. There had also been an argument with the PSL’s lawyers. They were not available to appear in court until 28 May, which was after the interdict had expired.

He said that a new ITT was issued on 24 May. The court case had resumed and the deadline had been extended to a date in June. The SABC still believed that a deal could be reached through arbitration. The Charity Cup would be the first event of the new season.

Adv Mpofu said that in terms of the deal with SS, there would be 150 games which would be passed on to the free-to-air channels. The SABC and eTV could bid for these. However, the African language radio stations would miss out completely. Far more people relied on these radio stations than on television. Furthermore, hundreds of SABC employees relied on the channel’s soccer coverage for their work. The three SABC channels had a larger footprint than any other station. Buying the rights from SS would be entering a secondary market, and would be more expensive.

The PSL had said that one of the reasons for selling the rights to SS was that it would make a lot of money from the deal, which would benefit players and administrators. The number of matches being offered to SS was double that given to SABC in the past. By calculating the rights package on a cost per match basis, the SABC had in fact been paying more per game. The picture would be even more distorted if the radio rights were included.

Adv Mpofu acknowledged the existence of a free market, but said that parties must still respect contracts. The PSL had failed to do this. The international trend was for soccer coverage to move to pay TV channels. He would not give examples, but this was mainly evident in rich countries. In developing countries the free-to-air sector was still important. It was not true that the SABC had not bid for the rights. They had told SS not to get involved with the PSL during the exclusive negotiation period, but the SABC did regard SS as an innocent party in the dispute. He had had an interview with Mr Irvin Khosa f the PSL, who had said that there was an indemnity clause in the SS contract. If the SABC were to win the court case, then SS would have no right to sue the PSL. There were too many caveats in the contract, and he felt that it was a move to impress sponsors. He felt that the SABC had been wronged both at the contractual and private level.

Mr Mvuzo Mbebe (Group Executive, Commercial Enterprises, SABC) said that the previous contract had been drafted in 2001. Everything had happened correctly with that contract. Of the PSL management, only Mr Phillips had not been a party to that contract. This was not something new, and was not being denied. It had been put into the public domain that the SABC had dealt badly with the PSL. At the time that the previous contract had been negotiated, the PSL had used four different teams. Different figures had been presented at each meeting. With this contract, the SABC had been expected to set its own price. With the previous contract, the price had been much lower than expected. In fact, he had even told the PSL that they could not run the game on the price that they were asking, and the deal had been changed to give the PSL more money.

He said that the PSL had failed to say that it was in financial trouble in 2001. The SABC had bailed them out by giving them money. The PSL had been insolvent at times. Major sponsors had withdrawn. The SABC had underwritten the ABSA Cup, and had sweetened the deal with ABSA. They had been given free airtime, as were other sponsors brought on board such as South African Airways and Coca-Cola. These were undisputed facts.

Mr Mbebe said that the SABC had been accused of only covering 75 games. This was not correct. In terms of the earlier contract, there was a limitation on live games. The SABC had been restricted to a minimum of 36 and a maximum of 52 league games per season. There were similar limitations to the other competitions organised by the PSL. The current SS contract states a limit of 100 free-to-air games and 100 on pay television.

The PSL had some problems with coverage. Firstly, they were concerned about the overexposure of the game. This had been the argument at the time. Secondly, the PSL had feared the impact of live television on match attendance. They had also made a request that there be a blackout of coverage in the city where the match was being played, but the SABC had refused to accept this. The memorandum of understanding between the SABC and the PSL had obliged the SABC to negotiate with SS regarding midweek games. The SABC had bought 110 matches so that they could sub-licence those matches. There was a relationship issue with SS. He asked why the SABC should be obligated to act as a gatekeeper. There had been a fight over the English premiership. He felt that it was a political matter. SS had only really catered for rugby and English soccer fans, and had been reluctant to show the South African game.

Mr Mbebe said there were other critical facts. One was the cost per match. One had to remember the cost per match. In terms of the new deal, SS would be showing 486 games, while the SABC had only been given 162 per season. In the 2006/07 season, the cost per match to the SABC had been approximately R450 000. He was guessing what the figure for SS was, but estimated it to be in the region or R411 000 per match. The increase on the SABC contract compared to the 2001 contract was 26% while the increase by SS would only be between 5 and 10%. This was not a real increase, or was only because of the increased number of games.

There was a question of the quality of the product. A minimum quality of product was expected, and facilities had to be provided. The SABC had given R11 million in free airtime for the clubs. The money had never been used in the five years of the contract.

Mr Mbebe said that the current ITT had closed at 17h00 on 7 June. Within seven days, two of which were weekends, the PSL had evaluated three contracts and negotiated on them. The evaluation team would have had to work in record time to achieve this. The first Board meeting following the close of ITT was held only on 14 June. He doubted if the evaluation team could have achieved this in the short time available.

The Chairperson found this very interesting.

Mr R Pieterse (ANC) said that it had been a good move to get Mr Mbebe into the SABC. The first time the story had broken was on SABC news, even though the news was bad. The Group Chief Executive Officer had been interviewed and was not impressed. It was a pity that the SABC was not dealing with the Local Organising Committee, as they could not be trusted. Even if the SABC won the court battle, then the trust between them and the PSL would be lost. SS had a relationship with the PSL, and was supporting some programs to improve the administration of the organisation. Small club officials were running a multi-billion rand organisation.

Mr J Masango (DA) said that the Committee had to hear the other side of the story, and should discuss the matter with the PSL. The government had nothing to do with SS.

Mr B Komphela (ANC) said that the Committee’s first obligation was with the public broadcaster. They first had to ascertain the facts.

Mr Masango said that accessibility was crucial. Even he, who enjoyed a better standard of living that many other South Africans, did not have access to SS. The timing was bad, as the momentum towards the World Cup in 2010 was building up. He asked what the outcome of the arbitration was on the renewal of the contract. Mr Khosa was undermining professional sport. He asked if the SABC could match the amount offered by SS. There should be a way forward, and this had to be determined.

Mr R Bhoola (MF) said that it was a question of public access, and this was a profound duty of the public broadcaster. South Africans loved soccer, and the majority of the fans were black. The majority of the population earned only about R800 per month, and if they were forced to subscribe to pay television, this would be an added burden to poverty. People must have access to maintain the initiative in the time leading up to the 2010 World Cup. The A1 Grand Prix had been held in Durban and had been an overwhelming success. It would be a sad day if the SABC were to lose the battle for television rights. The inequalities and injustices of the past had to be addressed. If the people could not watch games, then all these efforts would be in vain. Access would also be denied for small businesses. There was quite a lot to digest, especially the interpretation of the good faith clause. He asked what the legal opinion was on this issue. He asked if there had been a deliberate staggering regarding the court ruling and interdict. He asked what the impact would be on the SABC. The reintroduction of the ITT showed an area of weakness and shadow. He asked if it was incumbent for the PSL to revert to the SABC on the question of matching rights.

Ms N Ntuli (ANC) said that the Committee had heard the SABC’s side of the story, and that the people must be heard. Poor people would be badly hurt by this decision. She disagreed that there was too much exposure to the sport. This was one sphere in which all South Africans could unite. She was talking about previously disadvantaged individuals, who were still poor. The SABC should have the passion to go back to the arbitration. Something had to happen in the interests of the people. They thought that it was a case of the SABC not being prepared to make a matching offer.

Mr R Reed (ANC) said that it was obvious that the correct route would be to launch a legal challenge to the SS / PSL contract. It went deeper than that. Access was needed for the ordinary people. Administrators were interested in profit rather than the game. He asked how the SABC could negotiate with people like that.

Ms M Morutoa (ANC) noted that seven was an unlucky number. Information was needed from the other parties. What had happened was unbelievable, and was disgraceful. She asked why there was in imbalance in the offers made to SABC and SS. The way forward had to be legal. People were taking advantage of government institutions. She asked why this was happening now with 2010 coming up.

Mr D Dikgacwi (ANC) said that both parliamentary committees must issue a statement. R11 million’s worth of airtime and the other issues raised had to be highlighted. The SS payments could mean more money for the players, while it had been alleged that the SABC paid peanuts. He had never heard of a minimum wage for soccer players. The club owners decided this, and there was no standard.

Ms W Makgate (ANC) said that they were dealing with unaccountable people. The people did not have access to the media, and soccer was the only form of entertainment. The interests of the community should be considered. The Committee had to get the feeling of the people on the ground. Radio commentary was important.

The Chairperson said he would give the SABC delegation a chance to respond. The matter had already been raised in the Communications Portfolio Committee, who had already had their last formal meeting for the quarter. He did not know what interventions they could make. The SABC had to be allowed the legal space to pursue the matter. Not all of the Committee members could be present, given the short notice of the meeting, and there might have to be a follow-up meeting in the near future. For the public, this was a key issue.

Mr Trikamjee said that he expected that the PSL would repeat information already given at the meeting scheduled for the following Monday. They would accuse the SABC of delaying the process. There had to be a simple way forward, and the legal route was one option. He had been involved in the game all his life. The parties had to get around a table. This was not the story of SS, but was a story of South Africa’s history. He said it would be easy for the SABC to give an equal or better offer. He knew what the figures were.

Adv Mpofu said that would be a fair statement. It was what was reflected in the correspondence. He was in Cape Town when the judgement had been made, and had rushed back to Johannesburg to discuss it. Nothing had eventuated, and he did not know what more the SABC could do. He was willing to meet with the PSL again, but did not know if it would be meaningful. All the members had discussed the question of access. It was a fact that some people would never have access. Radio listeners would be particularly affected if there was no settlement.

It was a shame that this was happening with 2010 on hand. The reintroduction of the ITT was very central to their case. He asked why the PSL had taken advantage of the interdict dates. Social cohesion and poverty were major issues, and surely something could be done to address these while the legal battle raged. These were real issues to South Africans. The goal of a universal service was not being achieved, and this development would be a step backwards.

Adv Mpofu said that there were broader issues as well. If profit was the only motive, then the country could close shop. Soon only the rich would have access. Football had to remain in the public sphere. Arbitration was continuing. He did not know when the process would end. He did not want to answer on the matching rights issue.  They were not at that stage yet. However, he was not frightened by the figures. The SABC was prepared to pay fair market value. The good faith clause breach led him to believe that the PSL had another agenda. Arbitration had brought the lawyers running. This would not have been the case if the parties were acting in good faith.

Mr Mbebe said that even if all the games were shown on eTV, then 20% of the SABC1 viewers would miss out because of the smaller reception area. So too would the millions who relied on radio coverage.

Mr Pieterse said that football was a sport of national interest. It should not be allowed to be exclusively on a pay channel.

Adv Mpofu said that when the crisis had happened, the issue of national interests had been revisited. A robust look was needed.

The Chairperson said that this was not a simple matter. He wished the SABC luck. The stakes were high.

Mr Komphela appreciated the attendance of members from both Committees. He had held discussions with Mr Mbebe, and knew that the SABC would pay a fair price for the rights. One or two people could never be enriched at the expense of the people. The President had said that there could be no “get rich quick” schemes. The most important thing was that the President was urging negotiations. The Minister had said that he had pleaded for the negotiation process to continue. Matters were not being attended to. The Committee had a responsibility to be biased towards the poor. They would not allow this situation to go unattended. The plight of the downtrodden had to be considered. No union would allow its members to be dismissed because of greed. This situation could not be allowed.

He saw three important issues. Firstly, an investigation was needed. People were saying that there was a conflict of interest between Mr Khoza and the SABC. He was interested to know if Mr Khoza had declared his interest as a Multichoice shareholder. Secondly, the PSL should visit the Committee and be asked about the role played by the SABC. Members of the PSL executive had the incentive that if they raised any funds, then they would get 10% of the money raise. This situation could not be tolerated. Finally, the SS football team should not be part of the negotiations. Matters could not be decided in this way. Resulting decisions would not be sound. The Minister should launch an investigation. The interest of South African people should be placed first. The PSL and SABC would be called to appear before the Committee again. They needed to present their stories at first hand.

The meeting was adjourned.

Appendix:
Media Statement by the Chairperson of the SABC Board on the SABC and PSL dispute
Johannesburg, Tuesday 19 June 2007:

The SABC Board is deeply concerned about the PSL’s recent announcement of its intention, in breach of contract, to award professional football rights to a pay-television channel. This announcement is a clear legal infringement of SABC’s rights. Moreover, it is completely at odds with an unspoken, but powerful tradition of the right of public access to football in South Africa. As the nation’s premier and only public broadcaster, the SABC clearly cannot accept this situation.

Football in South Africa, unlike most countries in the world, has the significance as a sport “of national interest”. It is a force for social cohesion and immense national pride. Our public, especially poor communities must have full access to watching and listening to professional football. This has been a right which the SABC has promoted on behalf of the nation for decades.

The Board calls upon the leadership of PSL to urgently meet with the SABC management team to negotiate a settlement to this dispute. We fully support our management team in their efforts to represent the best interests of the public broadcaster. Whilst we are quite clear about our legal rights, and will vigorously protect the sanctity of our legal contract, the Board wishes to see this matter amicably resolved such that the nation’s only public broadcaster can exercise its constitutional mandate of promoting public access to sports.

The SABC and the PSL have a joint and primary responsibility for promoting football in the collective interests of our nation. We firmly believe that this common agenda is shared by both SABC and PSL. This alone should be a sufficient motivation for getting both parties together in earnest to seek a mutually-rewarding solution.

The Board also wishes to thank the South African public for its widespread and unprecedented support. Apart from countless individual voices, we have also been heartened by the vociferous support shown by organisations such as the ANC, the SACP, COSATU, Concerned Artists, Communications’ Workers Union, the Freedom of Expression Institute as well as important sections of the print media. This solidarity has been a clear message that professional football must be returned to the eyes and ears of the nation – the SABC.

Issued by Mr. Eddie Funde, Chairperson on Behalf of the SABC Board