This article was first published by Business Brief on 28 August 2024
The South African Broadcasting Corporation was established in 1936 by the Broadcasting Act that year. That Act was substituted by a 1973 Broadcasting Act, which has been replaced by the current Broadcasting Act, of 1999.
Pursuant to a 2002 amendment of the Act, the Corporation has been converted into a public company with a share capital; its sole shareholder is the State. The Corporation being a state-owned company, its name now bears the suffix “SOC Ltd” required by the 2008 Companies Act.
The Broadcasting Act imposes onerous duties on the Corporation.
The Act requires the Corporation to provide, in all official languages, a wide range of programming that reflects South African opinions and artistic creativity, displays South African talent in education and entertainment programmes, offers a plurality of views and a variety of information and analysis, and provides for a broad assortment of audience interests, beliefs and perspectives.
The Corporation must maintain a high standard of accuracy in news and programmes on matters of public interest. It must nurture South African talent and train people in production skills. It must provide or subsidise variety, musical or other performances. Its services must extend beyond the Republic’s borders.
The Corporation must have local-content, language and religious policies, ensure that its services treat all population segments and official languages equitably, and strive to be of high quality in all languages. It must be responsive to the needs of deaf and blind users.
The Corporation must provide radio and television programming that informs, educates and entertains.
The Corporation’s service must include significant amounts of educational programming from a wide range of social, political and economic issues, including human rights, health, early childhood development, agriculture, culture, religion, justice and commerce.
Its commercial services must commission a significant amount of programming from the independent sector and operate efficiently to maximise revenue.
The Corporation runs five television channels and 18 radio stations.
The Act says that the Corporation’s programmes must be funded by any means of finance, including advertisements, subscriptions, sponsorships, grants by the State, donations by others, and television licence fees.
According to the most recent available financial statements of the Corporation, for its financial year which ended on 31 March 2023, its chief executive officer stated that having to fulfil the Corporation’s mandate comes at great cost. The Corporation must broadcast programmes which, although of value to target audiences, do not attract advertisers and hence are produced at a financial loss. Financial sustainability will require legislative change.
The year’s financial statements show that television licence fees received made up 16 percent of the Corporation’s total revenue for the year. Earnings from advertising amounted to 57 percent of revenue, sponsorship revenue was 15 percent of the total, and 12 percent came from other sources.
The Broadcasting Act and regulations read with the 1995 Electronic Communications Act stipulate that as a rule no-one may use or possess a television set without an annual television licence issued by the Corporation.
For use in a private household, only one licence is required for all television sets belonging to the same owner. The owner’s dependent family members residing in the household can use the sets without needing their own licences.
Where the owner of a television set cohabits with another person in the same household as unmarried life partners, the owner’s partner does not require a licence to use the owner’s set. The couple must give the Corporation an affidavit confirming that their relationship is permanent.
Businesses need a licence for each set in their possession.
If a user possesses a television set as a lessee (for at least twelve months for business use and six months for domestic use), the lessor must hold the licence for the set or sets concerned.
The Corporation issues a licence on payment to it of the licence fee prescribed by the Minister of Communications. The Minister has prescribed a fee of R225 annually.
State schools do not need a licence. Television set manufacturers and repairers and their employees do not require licences to test television sets which they manufacture or repair on their premises.
Businesses must, after every licensing year, give the Corporation an audited statement of the number of television sets that were in their possession that year. If a business disposes of a set, it must furnish to the Corporation the transferee’s identity number or any registration number, physical and email addresses and daytime telephone number.
Dealers must, before selling a television set, obtain a copy of the purchaser’s identity document or proof of the purchaser’s registration number if applicable, and the purchaser’s physical and email addresses and daytime telephone number.
Each dealer must at the end of every month give the Corporation a summary of the number of television sets sold by it that month and copies of the purchasers’ identity documents or proofs of their registration numbers if applicable. Dealers must also at the end of each licensing year give the Corporation an audited statement of the number of television sets sold by them that year. Dealers must keep all these records for 24 months.
Contravention of or failure to comply with any of these requirements is an offence in relation to each television set concerned and is punishable by a fine of up to R500 for each offence or imprisonment for up to six months or both.
A dealer that sells a television set to anyone who does not have a television licence and who is not exempt from having one must pay the Corporation a R3,000 penalty.
The Corporation’s inspectors may require anyone who must possess a television licence to produce it. An inspector may require anyone who uses a television set, or the owner or occupier of premises on which a set is used, to produce it for examination. An inspector may require anyone who uses a television set to furnish his or her identity document.
Inspectors may require a business, dealer or lessor to produce records relating to transactions involving television sets and may make copies of those records.
Inspectors may enter any residential or business premises, if necessary to exercise their powers. Entry to a residence after dark requires a warrant or the occupier’s permission.
Despite the existence of all these stringent measures, they have proved to be largely ineffective.
The Corporation’s financial statements for the year ending 31 March 2023 reported that the Corporation invoiced users of television sets an amount of R4.651 bn in licence fees payable. But only 19 percent of those invoices were paid, a mere R741 million.
The Corporation reported a net loss for the year of R1.127 billion, and current liabilities which exceeded current assets by R612 million. The Auditor-General reported to Parliament that the Corporation was therefore commercially insolvent, because it was not able to pay its debts as and when they were due, even though its assets exceeded its liabilities.
The Auditor-General was unable to obtain sufficient audit evidence to confirm the reasonableness of the cashflow forecasts for the Corporation’s viability in the foreseeable future. Consequently, he was unable to confirm whether it is appropriate to prepare the financial statements using the going-concern assumption.
In 2019 the government reportedly gave the Corporation a R3.2bn bailout which enabled it to pay creditors and initiate a turnaround.
Zakhele Mthembu of the Free Market Foundation points out that South Africans have been boycotting the payment of their television licences for years, yet the State has persisted in mandating them. When laws are absurd, their observance becomes absurd, too. 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.
In October 2023, the Minister tabled in the National Assembly a Bill to replace the 1999 Broadcasting Act and to provide for continued governance of the Corporation. This Bill (the South African Broadcasting Corporation SOC Ltd Bill 32 of 2023) has been referred to the Assembly’s Portfolio Committee on Communications for its consideration.
An object of the Bill is to address findings in court rulings about the governance and management of the Corporation.
The Bill reproduces in substantially the same form all the 1999 Act’s provisions described above that require users of television sets to obtain television licences from the Corporation and pay the prescribed television licence fee.
The Bill states that the Minister must, in consultation with the Minister of Finance, develop a feasibility study and business case for a funding model to ensure that henceforth “the majority of the Corporation’s funding is sourced from the State-based funding mechanisms”. The precise meaning of this phrase is unclear.
The Minister must develop the new funding model within three years after the Bill is adopted as an Act of Parliament and been brought into operation by proclamation of the President.
The Minister must publish the draft funding model in the Government Gazette with an invitation for public comment. The Minister must, after considering comments received, finalise the funding model, submit it to the Cabinet, and recommend that the Cabinet approve it.
The Bill states that the approved funding model will then replace current arrangements for funding the Corporation.
The Bill does not provide for the express repeal of its provisions requiring users of television sets to obtain television licences from the Corporation and pay the prescribed television licence fee. Presumably that is to be implied.
The Portfolio Committee must give the Assembly a report on the Bill and can recommend amendments. The Assembly will then consider the Committee’s report and its recommended amendments to the Bill if any. Members of the Assembly may propose amendments. The Speaker may refer these to the Committee for further report. Amendments are put to the Assembly for decision.
The Speaker must then refer the Bill to the National Council of Provinces. The Council may pass the Bill subject to its own proposed amendments.
If the Council proposes amendments, the Speaker of the Assembly must refer them to the Portfolio Committee for its further report and recommendations. The Assembly may pass the Bill with or without amendments.
Assuming the Bill as passed is constitutional, the President must assent to and sign it. The Bill is then an Act of Parliament and must be published.
It is unlikely that the whole process will be finalised within a year.
Even though the Bill may then have been passed, signed as an Act of Parliament and published, that alone is not enough to bring it into operation. According to the Bill, the Act will, as is common in Acts of Parliament, only come into operation on a date to be determined by the President by proclamation in the Gazette.
There is no time limit on when the President must bring the Act into operation. It could be another year or so before that happens.
Then the Minister has three more years to develop a new funding model for the Corporation. Only after public comments have been considered must the Minister finalise the funding model and submit it to the Cabinet for approval.
One can reasonably expect that any such new funding model for the Corporation will not be finalised and implemented in less than five years. In the meantime, the current situation, of mass refusal by users of television sets to pay the prescribed fees to obtain television licences will continue, with the Corporation being in a continual state of financial crisis.
The Public Media Alliance in the United Kingdom observes that the Corporation has since 2017 tried to alter the Broadcasting Act to levy a licence fee, not only on the use of televisions, but also on the use of computer laptops, tablets, smartphones, monitors and like devices. The Alliance has stated that, as of July 2023, this breathtaking suggestion was a mere proposal.
The proposal to levy a licence fee on the use of computer laptops, tablets, smartphones, etc., does not accord with the South African Broadcasting Corporation SOC Ltd Bill 32 of 2023 as introduced in Parliament. The Bill aims to levy licence fees only on the use of television sets in the ordinary sense of that term, as the 1999 Broadcasting Act does now.
But watch this space.
