South African household levy to fund SABC proposed

The South African Broadcasting Corporation (SABC) has proposed a household levy as a new funding model to help the state broadcaster collect the necessary revenue to adhere to its public service mandate.

Its current funding model has relied on a combination of advertising and TV licence fees, which the SABC has struggled to collect, only receiving 13% of R4.7 billion invoiced fees in the 2023 financial year.

As a result of South Africans’ TV Licence revolt, the SABC is in financial distress. Therefore, it is primarily funded by government bailouts — taxpayer money.

South Africa’s public broadcaster has argued that access to its content has expanded to multiple devices and is no longer only available on a TV, creating a need for a household levy.

The SABC has said the South African Revenue Services (SARS) and DStv owner MultiChoice must help collect the levy.

This new model was presented by Philly Moilwa, SABC’s head of policy and regulatory affairs, during a public hearing on the new SABC Bill hosted by Parliament’s Portfolio Committee on Communications and Digital Technologies.

Moilwa identified SARS as the most effective collection agency for levies due to its role as a tax collector in the South African economy.

He also said that pro-competitive licence conditions are another means that can be used to collect revenue, where the dominant subscription broadcaster can factor the fee into its subscription cost.

However, SABC CEO Nomsa Chabeli told Parliament that the broadcaster will need interim relief while an alternative funding model is being developed.

As currently written, the SABC Bill stipulates that the ministers of finance and communications must conduct a feasibility study and develop a new funding model within three years of it being enacted.

In the meantime, the SABC must continue to try and collect TV Licences from an unwilling and disillusioned public.

According to its 2023 financial results, TV licence fees amounted to only 16% of the public broadcaster’s revenue — advertising comprised 57%, sponsorships made up 15%, and the rest came from other sources.

The public broadcaster only receives 3% of its funding from the government.

This is not the first time the SABC has advocated for MultiChoice to collect revenue on its behalf or emphasised that South African residents can view its content without requiring a TV.

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.

Ultimately, no version of the household levy proposal made it into the Bill. Rather than address the SABC’s most pressing problem, the draft bill aims to kick the can down the road.

Because of dwindling revenue generation, Moilwa alluded to government bailouts as a means for the state broadcaster to remain financially stable until it has created a new funding model.

SABC chairperson Khathutselo Ramukumba argued that state broadcasters around the globe “heavily fund their public broadcasters in order to meet their public service mandate.”

Ramukumba said that the SABC is far worse off than these countries, given the multiplicity of languages and cultures that must be expressed as part of its public service mandate.

The same law that obligates South Africans to pay a TV tax also holds the SABC to a very stringent broadcasting mandate, requiring it to programme its broadcasting in a way that is often unappealing to advertisers.

The Broadcasting Act of 1999 requires SABC to programme its five TV channels and 18 radio stations to treat all population segments equally and broadcast a wide variety of audience interests in all official languages.

As the SABC has noted, this comes at a great cost and makes attracting advertising revenue difficult for more niche broadcasting segments, resulting in a financial loss.

However, the Broadcasting Act also mandates that South Africans pay for a TV licence if they own and use a TV in their household. This also applies to businesses that own a TV.

Failure to pay for the licence will incur a 10% monthly penalty up to a maximum of 100% per year.

Furthermore, the Act specifies that a court could impose a maximum penalty of R500 fine or up to six months in prison.

The SABC will need some form of increased government funding while it formulates its new funding model, as critics believe South Africans will continue their public boycott of TV licence fees.

“When laws are absurd, their observance becomes absurd, too,” says Free Market Foundation senior associate Gary Moore.

“But when disregard for the law enters the psyche of any society, it becomes difficult to have that society respect useful laws such as those against harming persons or property.”