TV licence disaster and a looming SABC financial crisis

There is a lack of urgency from the government to help South Africa’s public broadcaster out of a looming financial crisis.

Over the past few years, the SABC has seen its TV licence revenues plummet as an increasing number of households and businesses refuse to pay their fees.

In the SABC’s 2022/2023 financial year, the TV licence compliance rate stood at 13%, down from 31% five years ago.

That means 87% of TV licence holders did not pay their fees in the SABC’s previous financial year. TV licence revenue stood at R741 million in 2023, R3.76 billion short of what the SABC had billed.

The broadcaster would have been close to breaking even or making a profit instead of recording a R1.13-billion loss in 2022/2023, if the compliance rate was around 40% or more.

Historical TV licence debt has also climbed to over R44 billion, with at least 9.2 million defaulters as of last year.

In addition to declining TV licence revenue, the SABC’s advertising revenue has also seen year-on-year plunges.

Between its 2018/2019 and 2022/2023 financial years, this revenue dropped over 40% from R4.47 billion to R2.61 billion. DStv and eMedia have seen their advertising revenues increase over the same period.

The graph below shows how the SABC’s TV licence and advertising revenues have declined from 2014 to 2023.

The SABC does not have the financial means to pursue large-scale legal action against TV licence defaulters. It has not been silent on the funding model’s shortcomings.

To try to counter dwindling compliance, it initially called for the fee to be increased in 2018, but this did not happen.

In 2020, the SABC controversially proposed requiring a TV licence for all devices that can access its services, including Internet-connected products like smartphones, tablets, and laptops.

In 2021, it changed its stance. Instead, the broadcaster proposed replacing the TV licence with a household broadcasting levy as part of its submission on amendments to the Broadcasting Act, otherwise referred to as the SABC Bill.

That was also met with criticism, as the SABC’s proposal included that the dominant pay-TV broadcaster and streaming service collect these fees on its behalf.

The biggest players in this market are MultiChoice and Netflix. Both companies have criticised this proposal, questioning its feasibility and associated costs.

The broadcaster also explained that one of the issues constraining advertising revenue growth and increasing costs was its public service mandate.

The SABC must broadcast certain events and programming that might not be as attractive to advertisers as its entertainment, including soaps and dramas with millions of viewers.

Its board has warned that running a commercially viable business while maintaining the SABC’s public broadcasting responsibilities was unsustainable.

Household levy is still supported — but collection responsibilities remain unknown

In recent feedback to MyBroadband, the SABC reaffirmed its support for the household broadcasting levy.

However, it was far less assertive about the dominant broadcaster or streaming service being required to collect it.

“The SABC supports the proposal for a public media levy. However, it must be noted that no collection method or agency can be considered until the regulations are known,” the SABC said.

The broadcaster said the SABC Bill was awaiting the finalisation by parliament and the Department of Communications and Digital Technologies.

“We will then comment accordingly when we are required to do so,” the SABC said.

The Organisation Undoing Tax Abuse has argued that approving the bill in its current form would put the SABC at further financial risk.

The organisation has raised concern that the bill contained no specific changes or proposals for funding the SABC in the immediate future and instead proposed a three-year timeline for developing a new funding model.

Outa urged the Parliamentary Communications Portfolio Committee to consider a regular annual state grant for the SABC’s public broadcasting services.

“This would avoid the irregular and disastrous last-minute bailouts but provide a more stable revenue stream, particularly for the public broadcasting sector,” the organisation said.

The Free Market Foundation has called for a more drastic change — the total privatisation of the broadcaster.

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TV licence disaster and a looming SABC financial crisis