The impact of the Netflix age: SABC wants limits on ad revenue for private broadcasters

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The SABC describes the current financial crisis as 'the most critical for the future and sustainability of this 84-year-old institution'.
The SABC describes the current financial crisis as 'the most critical for the future and sustainability of this 84-year-old institution'.
  • The SABC asked for updates to regulations on broadcasting revenue from advertising and similar funding sources.
  • The regulations of revenue from advertising, infomercials and sponsorships have not been updated since 1999.
  • SABC head of policy and regulatory affairs Philly Moilwa says the broadcaster has already faced an unfair playing field from DStv and etv.

The SABC has urged the Independent Communications Authority of South Africa (Icasa) to put limits on the amount and scope of revenue that private subscription broadcasters and over-the-top platforms can get from advertising, infomercials, and programme sponsorships.

The public service broadcaster submitted this request to the regulator during a hearing on Monday morning on the regulation regime on broadcasting revenue from advertising and similar funding sources.

In March, Icasa published a discussion paper for the review of the regulations on advertising, infomercials and sponsorships dating back to 1999. All broadcast licensees must adhere to the code administered by advertising regulations prescribed by the authority.

At the beginning of Monday's hearing, chair of the authority's advertising and sponsorship committee, Luthando Mkumatela, said with the rise of the Internet and digital streaming platforms such as Netflix, it was apparent that the regulations on advertising revenue needed an update.

SABC head of policy and regulatory affairs, Philly Moilwa, said the public service broadcaster had even slimmer pickings in a space where DStv and were already getting a bigger slice of the pie from advertising.

"Rapid growth of the Internet has prompted advertisers to shift their attention to online advertising instead of traditional broadcasting.

"More restrictions will inhibit growth instead of enabling it. Light regulations will aid us in coping with the onslaught of unregulated internet advertising and over-the-top advertisers," said Moilwa.

Moilwa said up to 77% of the SABC's revenue was from advertising and sponsorships and that a slight change to the regulations should be measured against its impact as government grants only constitute 3% of SABC's funding.

"While we appreciated mixed funding, this is quite an extreme situation that puts the SABC in a precarious position and any change has a huge impact on the public service broadcaster's finances," Moilwa said.

Watertight cap 

He recommended that an advertising limit or restriction of advertising minutes and other measures be imposed on subscription players. He said the SABC needed a "watertight" advertising revenue cap for subscription services to secure the sustainability of free-to-air channels and providers.

"DStv had a decrease, which is a situation where you need to look at. SABC has a limited number of channels. DStv has multitudes of channels and eMedia has been able to increase their number of channels, which is why they have been able to grow," he said.

Moilwa said when the growth of free-to-air revenues are placed next to DStv's figures in ads and sponsorships, the two are incomparable. He said while the SABC has the largest audience, it gets a small share of revenue.

"This points to the disparity in the number of channels and no limitations on inventory on which to trade.

"They can have zero rated channels that encourage discounting. The SABC cannot afford to give these discounts because we have a limited number of channels and cannot discount at the rate of other broadcasters. We cannot afford these discounted rates, because we have no way to recoup them," said Moilwa.

SABC COO Ian Plaatjes said advertising and sponsorships have become central to the sustainability of free-to-air broadcasters and any updates to the regulations should not be to the detriment of broadcasters.

"The industry has migrated into the digital age and has seen revenue shift from traditional to digital media. This necessitates review of regulations not only for clarity but to ensure that the regulations are relevant to current and future changes in broadcasting," said Plaatjes.

Monday's hearings were the final day for Icasa to get submissions from broadcasters and sponsors. He had previously received submissions from Outsurance and Media Monitoring South Africa. Icasa is aiming to wrap up hearings by March next year.

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