Economic Update
Falling profits, public spats combined with a drop off in viewers and the prospect of increased competition all suggest difficult times ahead for South Africa’s public broadcaster.

On September 18, the South Africa Broadcasting Corporation (SABC) released its results for the 2006-07 financial year, showing that the broadcaster’s profits had dropped by R200m ($28m) in the 12-month period, down from $54m the previous year.

Dali Mpofu, SABC chief executive officer, attributed much of this loss to increased spending on infrastructure upgrades and new technology, with $69.4m having been outlayed in these two areas.

“We needed to do massive investments in technology, in people and in various other aspects such as the acquisition of rights and so on, for us to be able to compete meaningfully in that space,” Mpofu said when announcing SABC’s results.

Mpofu put forward a number of options to boost funding for SABC, including an increase in state support, which currently accounts for 2% only of the broadcaster’s total revenue of $600m in the past financial year, compared to 77% from advertising and 18% from licence fees.

In all, SABC operates three television channels and 18 radio stations. All but three of the radio outlets and television station SABC 3 are non-commercial. However, it is the commercial units that carry the rest of the network. This is despite the Independent Communications Authority of South Africa (ICASA) ruling that as of last year, the SABC had to limit its advertising content to 12 minutes in the hour.

One other avenue that SABC is going down is having its programming aired on pay per view television networks, the next big thing in South African media.

Faced with the prospect of a massive increase in competition for viewers, with four new pay television networks scheduled to be launched at the beginning of next year, SABC has applied to the ICASA to enforce an article of the 2005 Electronic Communications Act requiring subscription broadcasters to carry, and pay for, the programmes of the public broadcaster.

While three of the four new networks are generally amenable to having SABC’s channels included on their play list as a public service, being forced to pay for the privilege is another matter.

“There is a cost implication and it might just be unaffordable,” Chris van Zyl, a spokesperson for Telkom Media, a subsidiary of Telecom South Africa, told the local press on September 16. “We may have to pay for their content, but do we necessarily want their content?”

However, one of the winners of the new licences, WOWtv, has come out strongly against carrying SABC content. As WOWtv intended to air Christian-based programming, it would be inappropriate for it to also broadcast SABC material, the network’s chief financial officer Luyanda Mangquku said on September 16.

“The SABC, or any other broadcaster in South Africa, has a totally contrasting view to what we stand for,” Mangquku said.

While SABC may have just cause to require the ICASA to force the new stations to carry its material, it is also embroiled in another “pay for play” story that has done little to improve the broadcaster’s image.

A number of South Africa’s leading recording artists have claimed SABC affiliates have demanded payment before their work is given air time.

While denying the practice of artists having to pay to get airtime was a SABC policy, a spokesman for the broadcaster said such practices could be taking place at an individual level and that an investigation had been launched into the accusations.

There has also been a public brawl in the media over claims that the hierarchy of the ruling African National Congress ignored the views of deputies when naming candidates to fill vacancies on SABC’s board, claims hosed down by the party as being “mischievous and fanciful”.

The SABC also has to face another issue, with viewer numbers easing in the past financial year, down 0.6%, a situation that is set to worsen when the South African public become spoiled for choices with the launch of the new subscription networks.