Funding public broadcasting January 2009

1. Funding public broadcasting January 2009

2. 2006�SABC annual results dazzle�The SABC has posted an after-tax profit of R383 million for the year ended March 31 Biz Community 31 August 2006

3. 2008�SABC reports drop in profit�The South African Broadcasting Corporation's (SABC) 2008 operating profit has dropped from last year's R182,8-million to R111,3-million.�Mail and Guardian Oct 10 2008 Need to look at why � was it just the end of the boom � or is SABC to blame � high costs.Need to look at why � was it just the end of the boom � or is SABC to blame � high costs.

4. 2009 �SABC Running on Overdraft� SABC surviving on a R500 million Absa overdraft and struggling to pay its debts. Sunday Independent 25 January 2009 What happened to all those other years of profit?What happened to all those other years of profit?

5. Some info 2007 Revenue increased 8% Expenditure increased 19% (consulting fees by 186% - from R41m to 135m) 2008 Revenue increased 9% Expenses increased 14% - consulting fees by another 68%

6. �If the SABC were a listed company, its shareholders would have abandoned it long ago. A culture of wasteful expenditure, misappropriation of funds, theft and rocketing costs appears to have become entrenched - and the auditors had to issue a qualified report on the latest financials.� Financial Mail October 08

7. Why? In year end March 2008: R76m written off in programmes purchased but not broadcast within licence period Qualified as no substantiation of R1.5bn of expenses Another R46m classified as �wasteful� expenditure

8. Expense examples SABC is getting top heavy: 2005: 15 members of Exco 2008: 21 members of Exco Salaries of management increasing 2007: CEO � R3.8m (including allowances and performance bonus 2008: CEO � R4.5m � 19.7% increase

9. ID WANTS ANSWERS ON R2.7 MILLION SABC OLYMPIC �GRAVY PLANE� 12 Exec and Board members went to Olympics opening Cost is R2.7m

10. Give the SABC more of our money? For What?

11. Status now Licence Fee (17%) Advertising (78%) Government funding (2%) Cross subsidisation????? Down from 18% year before Cross subsidisation ICASA allows same amount of advertising on both commercial and public commercial � SABC 1 slot R74 000 SABC 3 slot R55 000Down from 18% year before Cross subsidisation ICASA allows same amount of advertising on both commercial and public commercial � SABC 1 slot R74 000 SABC 3 slot R55 000

12. Now have multi-channel environmentContent distributed across different platforms

13. The problem is deeper than just ratios of commercial funding to public

14. What are problems with commercial funding? Dependent on boom times SABC chooses programmes attractive to advertisers � not audiences Doesn�t allow long term planning Emphasise cheap programming Interferes with editorial independence Affects actual time for programming � news is actually 22 minutes not 30

15. Commercial funding limits diversity SABC is largest broadcaster SABC has greatest reach Therefore can dominate advertising (about 75 percent of all TV adspend) Not sustainable for other broadcasters

16. �The sheer size of the SABC provides it with a distinct uncompetitive advantage. With three television channels and 21 radio stations, it is able to offer advertising packages which other broadcasters cannot match. It is also able to monopolise the audience by using its multiple channels to promote its services. It is the only broadcaster in the country which operates national commercial radio services which provides it with a sizeable advantage over its private sector competitors.� Golding,M (CEO e-tv)

17. Licence fees Difficult to collect � new regulations focusing on dealers has assisted Income increased with roll-out of transmitters BUT IN SA 8.6m television households 5.3m licence fee holders 50% of these non-compliant Predict defaults will increase No increases in South Africa licence fee since 2004 Collection fees might surpass licence fees

18. Government funding Can impact on independence Not a government priority ANC resolved for more public funding (60 percent) Hasn�t been implemented � and not in new budget In 2007/08 government funding declined by 10%

19. Cross subsidisation Hasn�t worked As a company SABC has to pay company tax

20. Justifying costs Need to justify costs Need to be accountable on costs IN SA 2003 Programme costs 42.5% Admin costs 40.8% 2006/07 Programme costs 38.3% Admin costs 46.6%

21. International changes UK: Regulator OFCOM is holding enquiry into public broadcasting Calling for best model to meet audience needs Is funding for BBC only way of meeting these What about fragmentation (across different platforms) What if growing resistance to licence fee as don�t watch?

22. International cont� France Phasing out advertising on public broadcaster by 2011 Lost revenue replaced by taxes on internet, mobile phone and commercial broadcasting companies

23. What to do Don�t just impose new models Look at ratios and mechanisms for funding Need to determine actual needs of broadcaster Laws must emphasise transparent accounting Need to research benchmarks for admin costs vs programming costs for public broadcasting Need to ensure trust of public, government and advertisers

24. Principles Protect from perceptions of manipulation through funding Public broadcaster must be able to plan (link to charter?) Levels of funding must be durable and justifiable Must be transparency

25. Principles cont� Must determine what are fair costs Costs must be linked to public interest value and must be monitored to show added delivery STUDY WHAT %GDP ALLOCATED TO PUBLIC BROADCASTING?

26. mECHANISMS WHAT IS BEST MECHANISM FOR DETERMINING IDEAL PUBLIC FUNDING LEVELS? Who decides? Parliament, Ministry, Treasury, independent body, regulator? What capacity does the body have?

27. Means Evaluate means Is licence fee best mechanism? Tax on radios/electricity? Tax on other broadcasters? Earmark specific budget lines (e.g. transmission) for government?

28. Transparency and accountability Build into law Require by legislation/licence conditions what must report on Breakdown what percentage spent on specific types of programming? Breakdown percentage of budget went to programmes from different regions? Breakdown percentage of budget on different languages?

29. Rethink whether or not public funds (from government and public) goes to a broadcaster or programming?