The SABC wants MultiChoice to pay for its free-to-air channels, which DStv is forced to carry on its platform.
This is even though the pay-TV broadcaster has spent millions on carrying the SABC’s channels on DStv since 2008, while the public broadcaster has not paid a cent.
In addition, the SABC derives more than half a billion rand a year in advertising revenue from its presence on DStv platforms.
This is according to MultiChoice South Africa Executive for Corporate Affairs Collen Dlamini, who spoke to MyBroadband about ICASA’s draft regulations on must-carry rules.
ICASA’s proposed amendments to the ‘Must Carry’ regulations require subscription-based broadcasters like MultiChoice to meet certain requirements to carry the SABC’s content.
In a hearing on the regulations on Monday, the SABC asked ICASA to clarify whether these terms will include the payment of carriage fees.
MultiChoice has argued the regulations should leave room for negotiations for a mutually beneficial Must-Carry regime.
Under the current rules, pay-TV providers must air the SABC’s free-to-air channels to assist the public broadcaster with its mandate of keeping South Africans informed.
As part of this, they are not required to pay the SABC for the content but must pay their own costs for carrying the channels.
The SABC now wants MultiChoice to pay for its content and has maintained that its channels are a big drawcard for DStv subscribers.
SABC group CEO Madoda Mxakwe said that “having the public broadcaster and public funds partially funding the operations of the largest television broadcast business on the African continent” was not sustainable.
Dlamini said while MultiChoice supported reasonable and proportionate must-carry obligations in the public interest, it was opposed to an obligation that would compel subscription broadcasters to carry channels like the SABC and pay for them.
“The practical effect is to compel subscription broadcasters to use their programming budget to pay for Must-Carry channels without having any choice about whether it wants those channels and even if it does not wish to carry them, does not consider that it obtains material value from them and does not agree to this in negotiations,” Dlamini said.
He maintained that a Must-Carry, Must-Pay obligation would not be permissible as a matter of law and be unconstitutional and invalid.
Furthermore, Dlamini said international best practices did not support such an obligation.
“MultiChoice has not identified any mandatory Must-Pay obligations which require subscription broadcasters to pay the public broadcaster for the channels which they must carry anywhere in the world, except Estonia.”
“In fact, the opposite is true – in several countries ‘Must-Pay’ refers to an obligation on the public service broadcaster to pay the subscription broadcaster for the carriage of its channels,” he added.
Dlamini said that MultiChoice had spent more than R108 million between 2008 and 2020 to carry the SABC’s free-to-air channels.
These included costs incurred on satellite bandwidth and fibre contributions.
Meanwhile, the SABC has not incurred any costs related to its ‘Must Carry’ agreement with DStv, Dlamini stated.
The SABC has also asserted that 20 of the most-watched programs on DStv are from SABC broadcast television, which meant that DStv benefitted from its content.
Dlamini stated the popularity of the SABC’s channels on DStv was irrelevant in the current context because MultiChoice was forced to carry them in any case.
In addition, he claimed that DStv’s customers do not subscribe to its service for SABC channels.
“The SABC channels are freely available on various platforms other than DStv,” Dlamini said.
“ICASA conducted a regulatory impact assessment which found that ‘there is no compelling reason why 80% of the population would choose to pay for services that are available free of charge’.”
Dlamini added that MultiChoice received neither advertising revenue nor subscription revenue from SABC viewers.
“The SABC gets all the revenue earned from advertising on SABC 1, SABC 2, and SABC 3 on the DStv platform, including approximately R560 million in extra advertising revenue per year from the SABC’s audience via DStv.”
“This is additional advertising revenue which the SABC earns because it ‘sells’ the DStv audience numbers to advertisers.”
He added that DStv actually forgoes the opportunity to provide other channels from which it could earn revenue by carrying the channels.
Dlamini said it would be premature to state whether DStv would have to increase its prices if it was forced to pay for the SABC’s content, given that the regulations are still in draft form.
“In principle, however, if MultiChoice were to start paying the SABC to carry its channels, it would incur an input cost which it would have to recouped,” Dlamini said.
“This is a factor which MultiChoice would have to take into account, along with other factors, when determining DStv subscription fees annually.”