Warning about TV licence increase

The SABC’s potential plan to increase TV licence fees will backfire, according to veteran broadcasting journalist Thinus Ferreira.

The public broadcaster recently told Parliament it may approach the Department of Communications and Digital Technologies for permission to hike the fee.

It explained that South Africans no longer regarded the TV licence as a legitimate or necessary budget item, resulting in the user base stagnating.

“There’s no new person like a young person that is buying a TV licence,” the SABC said. “It’s the same people that were paying from day one (who) are paying today.”

“The people that have not paid from day one are the people that are not paying today. It’s the same pool of people that are paying the TV license at the SABC.”

In the SABC’s last reported financial year of 2023/2024, only roughly 14.4% of TV licence holders paid their fees.

As part of a seven-step turnaround plan, the SABC is considering asking the government to increase the fee, presumably to extract as much revenue as possible from a dwindling user base.

The fee has remained at R265 per year or R28 per month since 2013. If the broadcaster had imposed annual increases linked to inflation, it would have cost around R471 for an annual licence by April 2025.

However, Ferreira told MyBroadband that increasing the fee would result in the compliance rate dropping further.

“The same SABC that told the government it sits with almost 90% of people not paying now wants the remaining few people to pay more,” he said.

“Any chief financial officer who studied tax compliance or a chief executive officer who has knowledge of the law of demand in economics knows that a higher price means fewer consumers will pay.”

Ferreira also questioned why the SABC would take this approach when it acknowledged that the TV licence regime was not working.

“The SABC itself told Parliament the TV Licence is outdated, yet now it wants to make more money from it. It doesn’t make rational sense,” he said.

Too much spending and very little new content

MyBroadband also asked Ferreira how the SABC could become profitable. He maintained that the broadcaster’s biggest problem was its out-of-control spending.

“You can’t keep spending more than what you get, which is what the SABC continues doing. How the broadcaster’s operating currently remains wholly unsustainable,” Ferreira said.

“Many of its radio stations and two of its three main TV channels are all loss-making. No business entity can survive like that.”

Ferreira said the broadcaster’s finances would look even more dire if it paid signal distributor Sentech almost a billion rand in outstanding debt.

While the SABC has told National Treasury it expects to make a profit in the current financial year, Ferreira said this would turn into a loss if the broadcaster settled its Sentech debt.

Sentech is the state-owned signal distributor that owns and operates South Africa’s terrestrial TV and radio broadcasting network.

Outside traditional broadcasting, the SABC has seen some positive early signs with its digitalisation strategy, thanks to strong user and traffic growth for its SABC+ streaming service.

However, Ferreira said that the platform would need bespoke first-window content and more monetisation to truly be successful.

“The SABC is competing with the likes of Netflix, Disney+, VIU and DStv. Bad content fails to lure viewers,” he said.

“Commissioning new customised content or licensing content specifically just for SABC+, where it’s available there first for an exclusive period, is what will draw viewers and registration sign-ups.”

Ferreria said if the SABC’s content was available elsewhere, like on its regular TV broadcasting or DStv, the consumer would get the impression that having SABC+ was optional.

He also criticised the SABC for constantly focusing on its archive of classic content, which many viewers were not interested in rewatching.

“It needs to start following the US streamer approach, where platforms commission new shows based on existing or legacy intellectual property, which is specifically for streaming.”

“The SABC should long have started doing things like a Going Upper sitcom for SABC+ with episodes exclusively on the streaming service.”

In addition, it could get popular personalities to do podcasts revisiting old talk show episodes and revive premium IP like Top Billing with new presenters and episodes only available on SABC+ for an extended period.

Bite-size chunks of this content can then be posted on social media like TikTok and Instagram to lure younger viewers to watch SABC+.