The SABC wants DStv to pay for its channels – Why it won’t work

The SABC’s support of a proposal to scrap a regulation that requires pay-TV broadcasters to air its programming for free could be a very bad move.

This proposal is contained in the Department of Communications and Digital Technologies’ Draft White Paper on Audio and Audiovisual Content Services, which suggests several amendments to South Africa’s Broadcasting Act.

Under current broadcasting laws, services like MultiChoice’s DStv, e-TV’s Openview, and  On Digital Media’s Starsat are required to provide access to the SABC’s free-to-air channels to their customers according to a “Must Carry” rule.

In exchange for the costs associated with this requirement – which includes the provisioning of satellite channels – they are not required to pay for this content, however.

The SABC believes these regulations have prejudiced it at the expense of well-resourced subscription broadcasters, which is why it has supported the dropping of Must-Carry requirements.

“This will give the SABC an opportunity to commercially exploit its content through carriage agreements, whilst achieving universal service and access to its services at the same time,” the broadcaster said.

“It is the SABC’s view that the carriage agreements or transmission consents will contribute significantly to the public broadcaster’s revenues,” it added.

MultiChoice, however, has come out against the changes, claiming that the current rules should be retained as they were working well and achieving their objective.

“Must Carry rules continue to serve an important public interest objective – ensuring that public broadcasting service channels are available to as many citizens as possible,” a spokesperson for the company told MyBroadband. 

Mutually beneficial

According to television broadcasting journalist Thinus Ferreira, it would be a grave mistake if the Must Carry rule is scrapped.

“It’s understandable why the financially struggling SABC has come up with this and other ideas, as it is looking at quick revenue-generating plans, but this idea as part of a set of TV mall smash-and-grab plans might not be to the long-term benefit of the public broadcaster,” Ferreira said.

He stated that both the public broadcaster and MultiChoice benefitted equally from the current Must Carry rule.

“It’s a misguided public relations spin attempt for either MultiChoice to claim that the SABC benefits more or for the SABC to claim that MultiChoice benefits more,” Ferreira said.

He maintained that the SABC was able to reach a much larger audience due to being available on services like DStv.

“The SABC’s purpose is to be a free, public broadcaster that brings news, information and entertainment to as many citizens as possible,” Ferreira said.

In addition, the wider carriage of its channels has enabled the SABC to charge more for advertising.

“Those additional viewers on StarSat or DStv are factored into the rate cards for channels for 30- second spots, so the SABC has benefitted from being carried on pay-TV platforms.”

“Similarly pay-TV operators benefit as well, although they have to offer up satellite bandwidth to channels.”

Ugly carriage agreement negotiations

Ferreira expects that if Must Carry regulations are dropped, it could lead to similar carriage agreement disputes as in the US, where pay-TV operators and channel distributors get involved in nasty disputes which spill over into the public domain.

“More and more pay-TV operators simply drop TV channels they no longer want to pay for because there are acrimonious differences over price,” Ferreira said.

“Dish TV in the US for instance slammed the door on HBO’s channel as well as the Spanish free-to-air broadcaster Univision’s channels a few years ago and there are many more examples,” he stated.

The overall result of this has been that fewer people have access to various channels.

Ferreira warned that the same could happen if Must Carry rules are not kept in South Africa.

“Is South Africa really prepared for a situation where StarTimes’s StarSat says ‘We’re too small so it’s too expensive to carry SABC 2’ or MultiChoice saying ‘SABC 1 doesn’t fit in with the quality of our general entertainment channels block we’re dumping it’?”

He added that both Must Carry and Must Pay cannot be implemented simultaneously because no private company nor any consumer could or should be forced or ever expected that they must take a product and then also pay.

“MultiChoice and StarTimes/StarSat would likely initially pay but pay-TV operators are private, commercial companies and they offer a service where they want the customer to pay money in exchange for a perceived value or quality,” Ferreira said.

SABC has more to lose

Thus, while the short-term impact would potentially bring a valuable revenue injection for the SABC, over the long-term it could lose viewers and subsequently suffer losses in ad revenue.

Ferreira maintained that the SABC had far more to lose from scrapping Must Carry than DStv.

“Even for consumers on a lower-end package, any Pay TV service, although it’s something functional. it is also a status symbol,” Ferreira said.

“That satellite dish on the roof of a house – whether it’s in a rich suburb or a township – sends a message to the neighbours: ‘I have access to better TV and I pay for it’.”

“Viewers will bemoan the loss of the SABC or a SABC channel but very few really get something like StarSat or DStv for access to the SABC,” Ferreira said.

“More people get and hold on to their pay-TV or streaming services because they actually want more TV than what is available from a public broadcaster so the net effect should be negligible,” he added.

Now read: MultiChoice slams SABC plan for DStv to collect TV Licence fees

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The SABC wants DStv to pay for its channels – Why it won’t work