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1 in the South African regulatory context

2 Policy Objectives

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

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

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

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

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

8 Broadcasting Act 1999 White Paper on Broadcasting Policy 1998 –Initiated by government –Regulatory objectives for SA broadcasting system –Structure & functions of public broadcasting system Broadcasting Act –Division of SABC into PBS and CBS –Public service objectives of SABC Local content regs consequently amended BronwynK: Refer P10 of submission BronwynK: Refer P10 of submission

9 Summary of Licence

10 Promise of Performance 45% local content in performance period 4 hours prime time drama per week 16 hours childrens programming per week –20% local –20% languages 19 hours information programming per week (2 in prime time) Minimum weekly language obligations

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

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

13 Business Overview

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

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

16 Investment Projected: R500m over three years Actual: R1.5bn over five years (requiring new shareholder investment) 1 st profit of R30m at end of fifth year Profit potential limited by unfair competitive broadcasting environment

17 Principles governing commercial broadcasting Advertising Audiences Programming

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

19 Most popular programming Wrestling Movies Local (Backstage) General Local Movies

20 Regulation for a competitive environment

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

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

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

24 Current regulatory issues

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

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

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

28 submission (legal) Broadcasting Act sets out general statements of principle – not licence conditions Licence conditions must be measurable and quantifiable to be enforced Licence conditions determine quotas and not content – therefore no BoR infringement Proper regulation of SABC key to ensuring fair competitive environment in SA (s2 objectives in IBA Act & Broadcasting Act) licence conditions more onerous than SABC SABC CBS must have same licence as

29 submission (market) growth has stagnated from early 2004 owing to commercialisation of SABC serves a higher low-income market than any SABC channel other than S1 (Nielsen) SABC is a virtual monopoly –Three TV channels & 19 radio stations –Cross-promotion –Counter-scheduling (competition in acquisitions) –Cross-selling (anti-competitive discounting)

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

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

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

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