e.tv in the South African
regulatory context
Policy Objectives
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
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
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
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
TV licence hearings - 1997
• e.tv 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
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 BronwynK:
– Division of SABC into PBS and CBS Refer P10 of
– Public service objectives of SABC submission
• Local content regs consequently amended
e.tv: Summary of Licence
e.tv’s Promise of Performance
• 45% local content in performance period
• 4 hours prime time drama per week
• 16 hours children’s programming per week
– 20% local
– 20% languages
• 19 hours information programming per
week (2 in prime time)
• Minimum weekly language obligations
e.tv’s 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
e.tv’s 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
e.tv: Business Overview
e.tv 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
• e.tv becomes 2nd largest channel in SA: 2002
• Break-even: March 2004
Cost of Broadcasting
• Set-up, infrastructure & technology
• Signal distribution
• Local programming (R per minute)
• News
• International programming ($ per hour)
• Staff
• Operational
e.tv Investment
• Projected: R500m over three years
• Actual: R1.5bn over five years (requiring
new shareholder investment)
• 1st profit of R30m at end of fifth year
• Profit potential limited by unfair
competitive broadcasting environment
Principles governing commercial
broadcasting
Advertising
Audiences Programming
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
Most popular programming
e.tv
• Wrestling
• Movies
• Local (Backstage)
General
• Local
• Movies
Regulation for a competitive
environment
Revenue sources
• e.tv:
- Advertising (limited to 12 mins per hour)
• SABC:
- Advertising (no limits)
- Licence fees
- State funding
• M-Net
– Advertising (open window: added benefit)
– Subscription fees
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)
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?
Current regulatory issues
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
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
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
– e.tv has eroded SABC’s audience and market
share
– Continued growth by e.tv will have devastating
effect on SABC
– Therefore light-touch regulation should apply
e.tv 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)
• e.tv licence conditions more onerous than SABC
• SABC CBS must have same licence as e.tv
e.tv submission (market)
• e.tv growth has stagnated from early 2004
owing to commercialisation of SABC
• e.tv 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)
e.tv 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 e.tv
e.tv 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
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