The R2-billion TV licence question
A former SABC board member maintains that the best way to address the SABC’s declining TV licence revenue is to replace it with a household public broadcasting fee that South Africa’s dominant pay-TV and streaming service must be legally bound to help collect.
MyBroadband recently spoke to GIBS Media Leadership Think Tank head Michael Markovitz about ways to address the dismal performance of the SABC, which reported a R1.13 billion loss in its 2023 financial year.
The SABC’s TV licence compliance rate plummeted from 31% to 13% between the broadcaster’s 2018 and 2023 financial years, while TV licence revenue declined from R968 million to R741 million.
The broadcaster’s advertising revenue has plunged even more — from R4.58 billion to R2.61 billion over the past five years.
The problem is that much of the SABC’s public mandate content — including news and entertainment in less-used indigenous languages — is less attractive for advertisers but costs a lot to produce or procure.
Markovitz was part of the previous board, which served from October 2017 to October 2022.
Markovitz told MyBroadband that the SABC was the world’s most commercially dependent public broadcaster, with more than 80% of its revenue coming from advertising.
During his time on the board, the SABC’s public mandate content cost was estimated at R2 billion a year, while the government only provided around R153 million in funding through advertising spots.
To continue offering less-monetisable locally-relevant content, as the SABC is required to do by law, an alternative funding mechanism is required.
The previous SABC board developed the idea that the country’s leading broadcaster and streaming service should help the SABC collect a fee to help plug the hole in its public mandate budget.
While the proposal sparked backlash from MultiChoice and Netflix, Markovitz maintains it was not as controversial as they argued.
“It was wrongly understood by many and also wrongly articulated by government, in certain respects,” Markovitz said.
Michael Markovitz, head of the GIBS Media Leadership Think Tank
Markovitz told MyBroadband he is still researching the best alternative funding mechanism but has defended the plan to use MultiChoice as a collection agent.
He took particular issue with MultiChoice saying the strategy was “unprecedented” and that it had not been done anywhere else in the world.
Governments in Europe — including Denmark, France, and Spain — are busy implementing the European Union’s Audiovisual Media Services Directive, which makes it mandatory for streaming services to have 30% of their libraries consisting of content made in Europe.
If they fail to meet this requirement, they must re-invest a portion of their revenues in a particular country into the local filmmaking industry.
In Switzerland, the government has also approved a 4% tax on companies like Netflix to fund local content production.
Markovitz said this type of legislation was harsher than what the SABC had proposed, which was not a tax or that anything should come out of MultiChoice or Netflix’s revenues.
“We were simply saying they should be designated as collection agents and they could even, in my view, charge a collection fee,” he said.
Vast majority of DStv subscribers not paying TV licences
In theory, making it mandatory for DStv to collect the broadcasting levy from its customers could significantly boost the SABC’s publicly-funded revenue.
According to MultiChoice’s latest results, it had about 7.61 million subscribers in South Africa by the end of March 2024.
Most of these customers access its service through a TV set, which means they should have a TV licence.
The SABC’s database had roughly 10.5 million TV licence holders in 2023, but only around 13% paid their fees. That means only about 1.37 million people were compliant.
If one optimistically assumes that all those who pay their TV licence are also DStv subscribers, over 6.2 million DStv subscribers are not paying their fees — around 82.1% of the company’s total customer base.
In theory, making it mandatory for DStv subscribers to pay the public broadcasting levy could significantly boost the SABC’s public funding.
However, there is also the danger that DStv could scare off more customers who argue that they do not require the SABC’s services, even though that is not the basis for the broadcasting fee.
The company is already struggling with a dwindling customer base in South Africa, where it lost 409,000 customers over the last year.
Several other proposals have been made to replace the SABC’s TV licence revenue. However, Markovitz was sceptical about how effective or feasible these could be.
If the fee were to be billed as an additional item of municipal rates and taxes, the SABC could encounter problems with collecting its due.
Numerous municipalities are grossly mismanaged and are underpaying their electricity and other bills.
If the South African Revenue Service collected the levy as an additional tax, Markovitz argued it would go into the National Treasury’s “big pot”, and the SABC would once again be at the mercy of the government’s decisions on how much it should get allocated.
If the SABC were to be privatised, as proposed by organisations like the Free Market Foundation, Markovitz believes that content in many indigenous languages would all but disappear as private broadcasters had little to no incentive to make content outside of the big languages of English, Afrikaans, and Zulu.
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