Jane Duncan

Business Day, March 1999

Recently, a controversial new Broadcasting Act came onto the statute books. The Act was referred back to Parliament by President Mandela on the grounds that certain powers given to the Minister could impinge on the independence of the Independent Broadcasting Authority, and these problems led to these powers being amended. Yet, there are other substantive problems with the Act that were not flagged, and that are in urgent need of public debate even though it has already been passed. These are especially the plans around the South African Broadcasting Corporation, where the Act's plans to corporatise (or commercialise) the SABC may well result in the marginalisation of public service broadcasting, rather than its protection and promotion. The right to information of the most marginalised in our society is at stake, especially women, the elderly, the unemployed and the rural poor, as these groups largely do not have the buying power to attract commercial services. Corporatisation also threatens the viability of the twelve language policy.

It is unfortunate that the Act was treated as a rush-job, given that more public debate was needed. Civil society had only a tiny window of opportunity to respond in writing to the Act once it was released last August: seventeen working days to be precise. This was a ridiculously short time frame to consider such a vital piece of legislation.

In terms of the Act, the SABC is to be corporatised, with the state (effectively the Minister of Communications) as the sole shareholder. The services will be separated into public service and commercial arms, with the latter cross-subsidising the former. The Minister will have the power to veto the amount set aside by the Board for cross-subsidisation. The government has also floated the option that the commercial arm could be privatised (either partially or completely). These changes are being effected to gear the SABC for self-sufficiency, as footing the bill of R1.2 billion for SABC services would be a recurring drain on the fiscus.

The problem with these plans is that no-one really knows whether they will work. In fact, corporatisation will be an expensive business, and may cost the SABC more than it can afford, given its commitment to fund the public service arm.

What is not clear at the moment is whether the SABC is now going to be paying company tax. If it does not, then it may well face legal challenges by commercial competitors on the grounds that the SABC's commercial services enjoy a competitive advantage. This is precisely the sort of instability that the legislators wanted to avoid.

If the SABC does pay tax, then the financial pressure may compel it to increase its income to compensate. If the SABC's ability to attract advertising revenue is decreasing in the face of intensifying competition from commercial broadcasters, then where will the money come from? The licence fee? The licence fee has increased recently, and unemployment continues to rise: collecting the licence fee in these circumstances is a task of Sisyphean proportions. To compound the financial pressures, the SABC will pay a portion of its after-tax profits to the state as a dividend.

Add to this the cost of separation of the two arms. In terms of the White Paper on Broadcasting on which the Act is based, arms-length contractual agreements will have to be drafted in respect of the shared facilities and infrastructure. Conceivably, this could mean everything from the production studios to the toilets. Arrangement could be so torturous in their complexity that a costly army of lawyers, contract specialists and accountants would be needed to administer them. Saving money can be an expensive business. Given these financial pressures, the SABC could also find it difficult to add commercial value to its operations, much of the profits will be absorbed by the public services. They could be seen as a commercial 'liability', irrespective of their value as a social asset. In fact, as competition increases, the SABC will face increasing pressure to plough its revenues largely into the commercial arm simply in order to stay ahead.

The situation could get even more serious, though. If the government exercises its policy option to privatise the commercial arm, then the whole cross-subsidisation arrangement falls flat on its face. Where will the public service arm get its money from then? The privatisation option is more that likely given that Minister of Public Enterprises Stella Sigcau said recently, 'we accept that business is not the business of government', and that privatisation was the preferred option for public businesses. So the government turns state-owned enterprises into public businesses, and then argues that government has no business running them. In the light of this statement, it should not take a rocket scientist to see where the SABC is heading.

What if the government only partially privatises the commercial arm? The private shareholder will also want to see significant return in their investment, which could turn up the commercial pressure even more.

The lack of a stable revenue base is already pushing the SABC to invest heavily in sales and marketing to ensure that it continues to attract advertising. In the process, it is being geared to chase a ever-shrinking pool of middle and upper-income earners, a chase which is inherently unequal as it cannot enjoy the same level of freedom as its commercial competitors given its fiduciary duties and public service obligations. This chase has already been at the expense of the SABC's public service mandate, when it accepted a recommendation from the slash-and-burn international consultants, McKinsey and Associates, to decrease the level of local content and increase the use of the advertisers' language of choice, English. If the SABC was unable to sustain its mandate before corporatisation, heaven help it afterwards.

We are gambling with the future of a strategic public institution, by setting in place institutional arrangements that could well collapse under the weight of their own logic. In the light of our recessionary realities, more equitable financial solutions need to be found other than advertising and licence fee collection. The latter has been termed a 'regressive form of poll tax' as a fixed amount is charged irrespective of income levels: surely, there is something very wrong about treating unequals equally. The financing of public services through general taxation, however flawed, offers a more equitable solution than 'user-pays' schemes, and would have made corporatisation unnecessary. However, given that corporatisation is now a reality, our attention should be directed towards whether the SABC should be made to return a dividend or pay income tax in the light of its financial instability.

Worldwide, information gaps are widening between rich and poor. If we do not find creative national solutions to this growing global problem, the consequences could be terrible. Those of us who are committed to the basic aims if the broadcasting system outlined in the Broadcasting Act - especially around democracy and universal service - are duty bound to rethink the current plans around the SABC, as they may well prove to be inappropriate, costly, and ultimately unworkable.