Contents:

• Representations from the FXI to the Independent Broadcasting Authority (IBA) on the protection and viability of public broadcasting services

  1. The Public Interest

  2. The Protection of Public Broadcasting Services

  3. Mechanisms of Public Access to the Board of the Public Broadcaster:

  4. The viability of Public Broadcasting Services

  5. Conclusion

• Further Representations from the FXI to the Independent Broadcasting Authority the protection and viability of Public Broadcasting Services related to the financing of those services

  Notes

  Annexure 1

Representations from the FXI to the Independent Broadcasting Authority (IBA) on the protection and viability of public broadcasting services

1. The Public Interest

These representations are made in terms of Section 28 (8) of the IBA Act which in turn refers to section 45 (1).

We draw the attention of the IBA to the Primary Objectives of the Act under which it was constituted (Section 2). In particular we stress that the consistent injunction to the IBA is an overriding requirement to serve the "public interest". The following references under Section 2 heavily underscores that obligation:

Section 2 states: "The primary objective of this Act is to provide for the regulation of broadcasting activities in the Republic in the public interest though the Independent Broadcasting Authority established by Section 3...".

Section 2 then provides for the promotion of a number of objects where the theme is serving the public and the public interest, among them:

• Developing services which are responsive to the needs of the public (Section 2 (b));
• Ensuring that services develop and protect a national and regional identity, culture and character (Section 2 (c));
• Provide for regular news services (Section 2 (c) (ii) (aa)), actuality programmes on matters of public interest (Section 2 (c) (ii) (bb)), programmes on political issues of public interest (Section 2 (c) (ii) (cc));
• Ensure that the needs of language, cultural and religious groups are duly taken into account (Section 2 (c) (I));
• As are the needs of the constituent regions of the Republic and local communities (Section 2 (c));
• Refrain from undue interference in the commercial activities of licensees while at the same time taking into account the broadcasting needs of the public (Section 2 (n)).

It is therefore of paramount importance that the IBA be guided by public interest, and not merely by the sectarian and specific interests of broadcasters. We would submit that based on the reading of the IBA Act, the IBA is enjoined to regard the public as the most important stakeholder in broadcasting. Section 28 of the Act which instructs the IBA to conduct the so called "triple inquiry" enjoins the IBA to achieving the objects of the Act and applying the principles set out in Section 2, including those which we have referred to.

2. The Protection of Public Broadcasting Services

We are addressing two separate issues under this heading. The first deals with the protection of public broadcasters against interference from any Government, now or in the future, or interference from any political parties. The second deals with the issue of the economic viability of public broadcasters. 

As no definition of the term "protection" is given in the Act, we presume that the normal meaning of the term is intended. According to the Oxford Dictionary protection means the act of "keeping safe, defending, guarding (a person, thing from, against danger, injury, etc.)".

We believe the issue of protection was inserted into the Act because of the recent history of the public broadcaster where it was used as a propaganda tool by the previous government and where that governments ideology was regarded as paramount and the interests of the public as of minor importance. Thus, the intention appears to be to protect the public from being misused or abused by the State or political parties or other interests to serve a particular ideology or other cause which is not in the public interest.

To achieve this, we believe, that the public broadcaster must at all times ensure that it conducts itself totally independent of the governing and opposing political parties in any of the national and provincial assemblies, political parties outside those institutions and of vested commercial and other interests which may strive to exert influence on the public broadcaster.

By appointing a Board for the South African Broadcasting Corporation (SABC) by an open hearing process - as was done in 1993 when a panel of judges and other lawyers questioned candidates short listed from nominations made by the public from which they then selected 25 Board members, who were then appointed by the then State President, a measure of independence and protection from interference was given to the SABC. But it was not sufficient.

There was intolerable intrusion by the former State President who refused to appoint seven of the 25 candidates selected by the independent panel was forced, after a number of private argumentative meetings with the then State President or his representatives, to forward another seven names whom he finally appointed.

Further, during negotiations between the Campaign for Independent Broadcasting (CIB), a predecessor organisation of the FXI, and the former government, about the new appointment procedure of the SABC Board, the former government refused to appoint a selection panel consisting of essentially civil society representatives. They would only agree to a panel consisting of judges and other lawyers, so that such a panel was finally appointed.

In the FXI's view this was a seriously flawed decision because if the public broadcaster is to be expected to act in the public interest, then its controlling body should be appointed by people representing the public interest. While one judge or advocate could be regarded as representing a segment of public interest, a panel of lawyers is patently only representative of the legal fraternity and not of the public interest.

Such flawed procedures, if repeated in future, hold serious dangers of inadequate consideration of potential nominees because the legal panel representing only one segment of civil society, and who among themselves have very little knowledge of the role and functioning of broadcast media, cannot be relied upon to select the appropriate people to the Board. The inclusion of judges, given that they are ultimately appointed by the government, further introduces the danger of political interference by the governing party.

Therefore the following recommendations are made:

The IBA Act, or other suitable legislative instruments, be amended to provide for the appointment of the Board of the public broadcaster by the following process and to provide for the conditions attaching to the conduct of board members.

2.1 Nominations for board members to be called from the general public in the same manner as done in 1993 and with the same safeguards which excluded persons holding political office, persons with commercial broadcasting interests, etc. The criteria applied are similar to those contained in Section 5 of the IBA Act regarding membership of the IBA Council. The FXI is the custodian of documents emanating from the CIB and we can make available the list of criteria which was used in the appointment of the 1993 SABC Board. It may be necessary, however, to review some of the criteria in the light of developments since then. Such a review, however, should include broad public consultation. (Also see recommendation 4.9)

2.2 A selection panel consisting of 9 persons should be appointed from the ranks of civil society to consider the qualifications of candidates, and to draw up a short list of nominees according to the criteria referred to above. Short listed candidates should be interviewed in public and thereafter the panel should appoint the board. The State President or any other person holding public or political office must not have the powers to veto the appointment of the Board, or of any of the members appointed to it. It must be a pure civil society process. The underlying principle here is that the public broadcaster is independent of the influence of government or any political parties and so therefore the latter institutions must play no role in the selection and appointment of the Board of the public broadcaster.

2.3 The only area where we would condone a role for a political institution is in the appointment of the selection panel. The appropriate portfolio committee of Parliament (Communications), which is a multi-party forum, should call for civil society nominations from the general public of persons to be appointed to the selection panel. The same public and political office and broadcasting interest restrictions should be applied to members of this panel. The panel should elect its own chairperson. It would be desirable for public hearings to be held in the appointment of this panel.

2.4 The Board of the public broadcaster should be no fewer that 15 members and no more than 20. We believe the present number of 25 is too unwieldily.

2.5 To ensure their independence, Board members who have meetings with representatives of political parties either officially or informally must be required to issue public statements recording that such meetings took place and the contents of the discussions.

3. Mechanisms of Public Access to the Board of the Public Broadcaster:

The whole rationale of the public broadcaster being independent of government and political parties, and the board being appointed by a public process, means that the Board is accountable to the South African public at large. 

This concept is implicit in the manner the current SABC Bard was appointed, and indeed the SABC emphasises the issue of its public accountability in its advertising. For instance, in the Weekend Star of December 3-4, 1993 the SABC placed a full-page advertisement, entitled "IT NOW BELONGS TO YOU". The advertisement says among others: "The SABC is becoming a different place. It began with the transparent selection of the board... We have vowed to be open, transparent and receptive to the views and opinions of society. Most of all we accept that, as the public broadcaster, the SABC belongs to the people of South Africa.. We're also making it our duty to be accountable to interact with you." Then it lists a telephone number which the public can call to voice opinions and raise issues.

We welcome such devices on the part of the public broadcaster and endorse all the abovementioned sentiments of the SABC. This is precisely our view too. But, there is no mechanism which obliges the SABC to be accountable to the public. In our view this is a serious shortcoming and such mechanisms should be introduced by way of law.

The only way any members of the public can have access to the SABC Board is if the Board agrees to meet them. Nothing compels the Board to do so. An if it does not suit the Board to meet any public group, or within a specific time frame, then it simply does not do so.

We therefore recommend the following:

3.1 That by law the Board of the SABC be compelled to hold four quarterly report- back meetings to the public every year and that in addition it releases publicity minutes of all its meetings. The public report-back meetings must be of sufficient format and duration to enable members of the public to comment and make proposals.

3.2 Further, however, there will be times when specific groups would like to meet with the SABC Board as a matter of urgency, and such requests must also be accommodated. Therefore, again by law, the SABC Board must be compelled to meet with such groups if the party requesting the meeting can submit 100 signatures in support of its request. This will prevent frivolous groups from approaching the Board, and will further show that there is a concerned body of people behind a request for a meeting. Such meetings need not be held with the full Board if this is not necessary or impractical, ad either the executive committee of the Board or a sub-committee of the Board could be authorised to conduct such meetings. We believe that the notion of public petitions is an important democratic device and that such a mechanism should be introduced in respect of the SABC Board.

These proposed mechanisms will help to ensure that the SABC is publicly accountable and responsive to the needs of the public.

4. The viability of Public Broadcasting Services

This is the second part of our submission in which we will deal with the viability of the Public Broadcasting Services "with particular reference to the financing of such services" as instructed by the Act in terms of the "triple inquiry" obligation on the IBA. 

Attention is again drawn to the Primary objects of the Act in Section 2. In addition to the emphasis on "public interest" as outlined above, the FXI draws attention to Section 2 (d) where the IBA is enjoined to "protect the integrity and viability of public broadcasting services". As "integrity" is not defined in the definitions defined in the Act, the natural meanings are assumed as contained in the Oxford Dictionary - "wholeness, soundness, uprightness, honesty".

It is our contention that to meet these requirements - i.e. the paramountcy of the public interest and the uprightness and honesty of public broadcasting services, the financing of the services has to be considered with great care to ensure that these requirements are met and there is no failure in meeting any aspect of them.

In regard to SABC's viability - and the arguments about advertising that we apply to the institution apply equally to any other public broadcasting services - the current method of financing is from licence fees (about 20%) and advertising (about 80%). We contend that the public interest and the integrity of the public broadcaster is not served by financial reliance on advertising. Advertising requires a broadcasting service to "deliver audiences" and while on occasion this practice could coincide with the public interest (providing a programme which meets the obligations of either entertaining, educating or informing viewers) at no time can it meet the obligation of integrity. If a programme has to "deliver audiences" to an advertiser this means that the broadcaster no longer has "wholeness, soundness, uprightness and honesty" as a primary purpose. The primary purpose where there is advertising is the interests of the advertisers.

Because of the requirements to deliver audiences to advertisers, public broadcasters, like any commercial broadcaster, will tailor their services to the requirements of advertisers. And because of their reliance on the advertisers for income, the interests of the advertisers become paramount. We have seen this occur over the years at the SABC which has resulted in a service which is not determined by public interest, but by the interest of advertisers.

Reliance on licence revenue has proved to be impractical in South Africa. Indeed, the farcical situation has developed where more money has been spent on trying to collect revenue and prevent prate viewing than has actually been received in the coffers of the SABC. Circumstances suggest that no matter what methods are tried, there is unlikely to be an improvement in this situation. The actual process of collection is also time-consuming expensive and wasteful.

It is our contention that for both these reasons both advertising and licence fees are unsuitable methods of financing the SABC if it is to be true to its mission.

There is a view that by allowing some services to have a high advertising content there could be cross-subsidisation of programmes which would enable the SABC to carry out its public broadcasting functions. This argument is defective because it implies that the SABC will carry out public broadcasting on a limited number of its TV and radio channels while acting as a commercial broadcaster on the others. One would not be out of place to suggest that if this principle is acceptable, there is no reason why the SABC's commercial stations should not be turned over to authentic commercial broadcasters who could then be required (together with any others to whom commercial licences are granted) to provide the funds to the SABC for carrying out public broadcasting functions on a reduced number of broadcasting channels.

The problem, here, however, is that this could be regarded as inequitable treatment of commercial broadcasters. Another problem is that in drastically reducing the number of channels on which the SABC would be able to operate as a public broadcaster would seriously limit its ability to meet its obligations in regard to language, culture and regional diversification and educational programmes (Section 2(e)). Further, a significant sector of the public may regard SABC assets as public assets paid for with public money over many years and may not agree with proposals to sell them.

Accordingly, our recommendations on this issue are as follows: 4.1 The collection of licence revenue be terminated;

4.2 The principle of no advertising on SABC TV and Radio be accepted;

4.3 That the State meet the financial requirements of the public broadcaster through a multiparty consensus vote. Multiparty agreement would avoid the income being regarded as a gift from government;

4.4 That the State devise an appropriate method of raising money, either as a straight levy on all taxpayers (individuals as well as companies), or by raising VAT by a percentage figure, or by whatever appropriate mechanism can be found. The rationale for the State providing the funds for public broadcasting is that TV and radio broadcasting are essential elements of a modern society. It is no different in principle to the State's obligations in providing roads, water, education and health services.

4.5 If the State provides direct funding, this will further eliminate the need for separate complicated formulations of State funding of educational programmes, since this will be regarded as part of the overall public broadcast funding provided by the State.

4.6 The requirement that the public broadcaster serves the public interest carries with it an obligation on the State which also has to serve the public interest to enable the SABC to carry out that function.

4.7 Arguments that the State does not have the money at this time to finance the SABC cannot override the principle that it is the State's duty to provide this funding. But obviously this situation suggest that transferring SABC funding to the State cannot be done overnight and that this will have to be phased in. It is suggested that this be done by a reduction of advertising content on SABC programmes in stages over three or four years.

In elaboration of recommendation 4.7 it should be noted that since the SABC will not require channels to obtain advertising revenue to cross-subsidise its public broadcasting services, it can reduce its television channels from three to two. Two channels should be adequate for its public broadcasting functions. The third channel can either be sold or amalgamated with the other two, so that only two licences need to be grated to the SABC. The same principle should be applied to the SABC's radio stations.

Financing the SABC is this way will open up opportunities fro the IBA to meet its other obligations such as promoting diversity of TV and radio (Section 2 (a) and (b)), encouraging ownership and control of services by the historically disadvantaged and from a diverse range of communities (Section 2 (f) and (I)), ensuring fair competition between licences by being able to grant sufficient licences to create a competitive environment (Section 2(o)) and encouraging investment in the broadcasting industry (Section 2 (q)). State financing of the SABC will enable advertising revenue to spread among more TV and radio licences than would be the case if the SABC continued to absorb the major share of advertising revenue.

We have referred to the SABC as the public broadcaster. We regard the other public broadcasting services developed under the former "homeland" system as services which in future should be included in the national broadcaster's operations, enabling it to meet its obligations for the provision of regional stations.

We are, however, somewhat concerned that the attitude of citizens of such provinces have not been surveyed in any way as to what their performance would be - for broadcasters in their provinces to be incorporated into the SABC or to be retained as independent provincial broadcasting services in their own right. But from a financial point of view, we cannot see where provincial governments would obtain funds to fund provincial public broadcasters. As far as we are aware all of them are heavily subsidised by the state and/or their provinces at present. Should the state have to carry the burden of funding the national public broadcaster, it is unlikely that it will have further funds to allocate to provinces for provincial public broadcasters. Form this point of view, it appears to us unlikely that these services can be sustained independently on a provincial level and therefore we advocate their inclusion into the national broadcaster.

A further concern is that provincial governments may be sorely tempted to assert control over their provincial public broadcasters. a controversy already exists about the control of the North West government over the Bophuthatswana Broadcasting Corporation. If these services were brought under the independent control of the SABC in the way that we have suggested, i.e. under the control of the independently appointed public board, then these services would also be guaranteed their political independence. We fear that organisations such as ourselves with the support of regional groupings may have to fight one battle after another to secure the political independence of provincial public broadcasters should they fall under separate provincial government control.

What adds fuel to out concern is the inherent conflict in the Constitution and the Independent Broadcasting Authority Act. The Constitution has classified regional public media as one of the areas which can be delegated to fall under the control of provincial governments. In the case of the aforementioned BBC, control of the BBC has already been delegated by the central government of the North West government. There are signs that even provinces who do not have provincial public broadcasters may be interested in establishing these in their provinces.

Given our concerns about the independence of public broadcasters we would, on the balance of things, propose that all such services be incorporated under an independent SABC.

Thus there are further recommendations:

4.8 That all provincial public broadcasters in South Africa be incorporated into the SABC so that there is only one national public broadcaster meeting all its obligations.

4.9. That consideration be given to the inclusion of provincial representatives on the Board of the SABC to ensure that the interest of their regions are served by the national public broadcaster, thus, when the independent selection panel receives nominations from the public for appointment to the SABC Board, it will have to ensure that it includes persons from all nine provinces of South Africa, and that such people are suitably qualified to represent their provinces. Each province could further establish a Commission or regional Board consisting of persons to advise their SABC regional representatives on issues to be raised on SABC Board level. Such Commissions or regional Boards could be appointed by a similar process to that of the SABC board itself.

5. Conclusion

A general point to our remarks about advertising revenue in regard to the integrity of the public broadcaster is that we do not wish for these to be construed as casting aspertions on advertising revenue. The use of advertising revenue as a financial base for commercial broadcasting stations is entirely in accordance with these stations' claims of integrity. They are commercial stations with the stated objective of "delivering audiences" to their advertising clients and this is perfectly proper conduct. 

Finally, in view of our arguments we contend that those sections of the IBA Act which refer to commercial public broadcasters are in conflict with the Primary objects of the Act as outlined in Section 2 and we recommend that the Act be amended to take account of this co

FURTHER REPRESENTATIONS from the FXI to the INDEPENDENT BROADCASTING AUTHORITY on the PROTECTION and VIABILITY of PUBLIC BROADCASTING SERVICES related to the FINANCING OF THOSE SERVICES

In making our representations to the IBA in May we made special reference to the financing of the public broadcaster and pointed out that the current methods were unsatisfactory (the full text of our representations on these issues is attached, marked Annexure 1). 

We stated that reliance on advertising is contrary to the need for the public broadcaster to pay special attention to the "public interest". We contended - and have been supported by numerous other organisations - that in using advertising as a base the public broadcaster is primarily required to deliver audiences to the advertiser. In such circumstances, the "public interest" may be served at the same time, but it would be mere coincidence because the primary object is to sell advertising time to advertisers.

We also pointed out the unsatisfactory nature of other forms of revenue collection: the licence fee system is inefficient and is ignored by large numbers of viewers; it also requires an expensive policing system. The government subsidy for certain types of programmes provides only a fraction of the total revenue required by the SABC and, in any event, provides for programmes which could come to be regarded as government propaganda which is undesirable.

We made several recommendations in our previous statement but having given deeper consideration to our original proposals wish to focus and amplify on the following:

1) The collection of licence revenue be terminated;

2) The principle that there will be no advertising on SABC TV or radio programmes is accepted.

3) That the state meet the financial requirements of the public broadcaster through a mechanism where there is multiparty agreement on the voting of finance to avoid the monies coming to be regarded as in the gift of the ruling party.

4) That the government device an appropriate method of raising the money, either as a straight levy on all taxpayers, individuals as well as companies, or by raising VAT by a percentage figure which will provide the funds required or some other form of taxation. The basis on which this form of revenue-gathering is made is that public TV and radio broadcasting are essential elements of a modern society no different to the state's obligations in providing road communications or education and health services.

We wish to expand on items 3 and 4.

We believe that an efficient and simple method of raising finance for the public broadcaster does indeed lie in the hands of the state acting on a basis of multi-party consensus in the same way that the American Congress votes funds for certain purposes on a bipartisan basis.

The method is to include in the individual taxpayers' Return of Income form a small section devoted to broadcasting which requires the taxpayer to indicate whether he or she has a TV set or does not have one (a simple question with a request to mark an ‘X' mark in the appropriate box). The taxpayer who has a TV set is then required to add a specific amount -- a levy which is determined by the state in a multi-party agreement -- to the tax payable. If no tax is payable the levy is still payable and the taxpayer is responsible for paying it to the Receiver.

If the person indicates that he or she does not have a TV set, the appropriate mark is made on the form and no levy is paid.

For companies a similar routine is followed with an additional question: State how many TV sets are used in your company. The company would then be required to pay a levy of a certain amount, again decided by multi-party decision in the assembly. This amount could be a multiple of the individual taxpayers' levy or a reducing figure depending on the number of sets.

For hoteliers, people who hire out apartments, boarding-house keepers and other providing multi-room accommodation, the form would also request the number of TV sets in the bedrooms in addition to any others in the public or offices of the enterprise and a levy is imposed on the same formula as with businesses, or, perhaps, a separate formula is evolved.

In all there are 4 600 000 to 4 800 000 taxpayers in the country (including businesses and Site tax papers). Say this figure is reduced to 4 000 000 because a proportion of taxpayers do not have TV sets and therefore are not eligible for the levy. The number of hotel rooms in the country is 46 000 and the number of businesses with more than one TV set in their offices should bring the figure to, say, 4 500 000. This figure coincides with the estimated number of TV households in SA at present.

The current licence charge is R187 per year. If this figure were imposed as the TV or broadcast levy, the return on 4.5 million receivers would be R8 400 000. If the levy were increased to R200 (not unlikely given inflation) this would increased revenue to R900-million a year.

The current expenditure budget of the SABC amounts to R1 200 000 000. It is our belief that with advertising no longer the main revenue earner for the SABC, this figure can be substantially pruned by direct savings of costs as are detailed below and by a reduction of channels and radio stations, the number of which is no longer driven by the advertising imperative (which includes having sufficient air time to flight advertisements).

These are the direct savings at the SABC:

Advertising sales:

• Salary costs of the advertising sales management and teams for TV and radio
• Costs of advertising selling operations, etc - presentations to agencies and advertisers, entertainment of agencies and advertisers, etc
• Costs of promotional literature
• Costs of advertising in print media
• Making of TV and print advertising and promotional material

Licence revenue

• Costs of gathering revenue: printing and sending invoices to viewers and payments to post offices for collection
• Costs of staff at SABC administering licence collection (more than 100 people)
• Costs of monitoring homes to prevent piracy - at one stage estimated at R30-m a year
• Costs of advertising and other schemes to remind public to pay by due date
• There is also the incidental cost of answering calls and letters inquiring about licence payments

• Cheque, bank service and postage costs (these now all absorbed in one payment to Receiver which has to be made)
• Car expenses incurred in driving to post office to make payment
• Costs of penalty for late payment

There are no doubt other costs which we have not estimated.

Notes:

We emphasise that the term used should be ‘levy' with no suggestion of the word ‘tax', because use of the term ‘tax' would cause political controversy. 

This scheme should enable the IBA to issue more than one TV licence which we understand the IBA believes it will be limited to if the SABC has to continue to rely on a percentage of advertising support for its financing. This is based on the perception that the advertising cake would not allow a further channel to be licenced.

There may be a number of people who do not pay tax but who have TV sets and these should be requested to apply for payment of the levy. There is no way - apart from expensive monitoring - to determine who these people are, but a proportion of this category of person, one presumes, would be prepared to pay the levy.

Monitoring may still be required, but this system should reduce it to a relatively small and inexpensive operation. The manner in which correct TV answers can be achieved on the Inland Revenue Return of Income Forms is to admonish that if incorrect returns are made (particularly by hotels and businesses) the penalties will be severe and this would be accompanied by a warning that spot checks would be made. But this is an area where reputable business and hotels are not inclined to transgress.

The Inland Revenue's Return of Income form could make provision for a question on whether a householder (or taxpayer) has more than one set in which case a higher fee is paid. We suggest it should.

The government of national unity could easily decide on a figure for the levy and one presumes there need be little disagreement. It will be clearly stated that the figure is one derived on a basis of consensus by all the parties so there is no suggestion that the SABC has to be subject to the dictates or whims of the majority party and become its servant. As the finance comes from the state, as distinct from the majority political party, the SABC's responsibility is to the people of the state, indeed the public interest.

When the debate on the issue of the amount of the levy - and it is the amount of the levy that the multi-party parliamentary decision is applied to, nothing else - the various political parties will have their opportunity to criticise the public broadcaster. It will then be for the public broadcaster to take note of what is being said - measured against its own research of the public's criticisms and the comments and criticisms of civil society and ordinary viewers - ans itself decide what it should do about them. As an independent body it makes its own decisions in accordance with the codes laid down by the IBA but, obviously, there must be opportunities for all sections of the public, civil society as well as politicians to make known their views on the public broadcasters' services. If this is done in a transparent manner and the SABC lives up to its objective of being an independent broadcaster, there cannot be any suggestion that the majority party will be able improperly to influence the broadcaster. There is also little scope for the broadcaster to go off the rails because of the pressure of public and parliamentary criticism and the watchdog IBA and complaints mechanism.

When the government of national unity comes to an end - if indeed this comes about - and the political system reverts to a majority party rule, the multi-party basis for setting the fee must continue to apply. Now the principle of consensus will be even more important. Whatever criticism is then offered of services will continue to be noted by the SABC which must then exercise greater care to ensure that it acts according to its conscience and principles.

We believe that if these procedures are followed the danger of funding from parliament - that is from the ruling party in parliament - is avoided. We emphasise the funding comes from all parties in parliament on the basis of consensus decision and thus it becomes a state decision. We say there is a crucial distinction between the State and the ruling party which has to be cultivated in South Africa - and, of course, it starts with the Speaker's role. This means that the public broadcaster is assured of acting independently of ruling political party influence (as well as that of other parties). To ensure this, the other suggestion that we made that formal and informal contacts between the SABC board and senior management and members of political parties (other than for news and discussion programme purposes) should be reported openly, should further guarantee the independence of the broadcaster. We believe that once the political parties enter into the spirit of such a decision-making process the ability of a party to exert undue influence will cease and the broadcaster will then be subject to criticism of its operations on the basis of professional and technical quality rather than party political bickering.

When it comes to improper influence, we have noted the threat by certain advertisers to withdraw their advertising from the SABC if it did not pursue a certain course of action. We believe that threats of that kind are almost as bad - if not equally as bad - an influence on the broadcaster as that exerted by a ruling political party. We, therefore, add to our previous views about the broadcaster maintaining its independence by suggesting that the way to avoid the possibility of advertising exerting undesirable financial and other treats against the broadcaster and so threatening its independence is to end advertising on the public broadcaster.

By removing commercial advertising form the public broadcaster and funding the institution in the way we have suggested (which should cost the taxpayer no more than he or she is - or should be - paying now) opportunity is created for more TV channels and thus, the other important IBA objective, of creating greater diversity and competition is achieved.

We believe that if the levy remains the same as the present licence cost or in that vicinity there can be no protest from the people that they are being faced with a new financial burden - indeed they might appreciate the savings in time, trouble and cost that the new system envisages.

The multi-party decision on the levy removes the majority party from any possible criticism or opprobrium that it is adding to taxes as the decision is a multi-party decision.

We have not been able to gain access to the SABC's detailed accounts to give financial chapter and verse on this proposal, so we believe that an immediate investigation be conducted with independent auditors into the feasibility of this scheme. We should be pleased to act as consultant or advisers in this process.

Finally, we believe that this simple scheme will obviate the search for other means of financing the SABC - such as an extra percentage on VAT (which we originally suggested) which we believe would be unfair on non-TV viewers or a tax on motorists or on electricity which would have the same serious disadvantages.

Freedom of Expression Institute June 19, 1995.

ANNEXURE 1

In dealing with the viability of Public Broadcasting services the Act requests that "particular reference is made to the financing of such services" should be made.

Attention again drawn to the Primary objects of the Act in Section 2. In addition to the emphasis on the "public interest" as outlined above, the Freedom of Expression Institute draws attention to Section 2 (d) where the IBA is enjoined to "protect the integrity and viability of public broadcasting services". As "integrity" is not defined in the definition contained in he Act the natural meanings are assumed (as contained In the Oxford Dictionary)- "wholeness, soundness, uprightness, honesty".

It is our contention to meet these requirements - i.e, the paramountcy of the public interest and the uprightness and honesty of public broadcasting services, the financing of the services has to be considered with great care to ensure that these requirements are met and that there is no failure in meeting any of them.

In regard to the SABC's viability - and the arguments that we apply to this institution apply equally to any other public broadcasting services - the current method of financing is from licence fees (about 20%) and advertising (about 80%). We contend that the public interest and the integrity of the public broadcaster is not served by financial reliance on advertising. Advertising requires a broadcasting service to "deliver audiences" and while on occasion this practice could coincide with the public interest (providing a programme which meets the obligations of either entertaining, educating or informing viewers) at no time can it meet the obligation of integrity. If a programme has to "deliver audiences" to an advertiser this means that the broadcaster no longer has "wholeness, soundness, uprightness and honesty" as a primary purpose. The primary purpose where there is advertising is the interests of the advertiser.

Indeed, because of the requirement to "deliver audiences" to advertisers the public broadcaster tailors services to the requirements of advertisers and these become paramount. We have seen this occur over the years at the SABC which has resulted in a service which is not determined by public interest but the interest of advertisers.

Reliance on licence revenue has proved to be impractical in South Africa. Indeed, the farcical situation has developed where more money has been spent on trying to collect revenue and prevent prate viewing than has actually been received in the coffers of the SABC. Circumstances suggest that no matter what methods are tried, there is unlikely to be an improvement in this situation. The actual process of collection is also time-consuming expensive and wasteful.

It is our contention that for both these reasons both advertising and licence fees are unsuitable methods of financing the SABC if it is to be true to its mission.

There is a suggestion that by allowing some services to have a high advertising content there could be cross-subsidisation of programmes which would enable the SABC to carry out its public broadcasting functions. This argument is defective because it implies that the SABC will carry out public broadcasting on a limited number of its TV and radio channels while acting as a commercial broadcaster on the others. One would not be out of place to suggest that if this principle is acceptable, there is no reason why the SABC's commercial stations should not be turned over to authentic commercial broadcasters who could then be required (together with any others to whom commercial licences are given) to provide the funds for carrying out public broadcasting functions on the limited channel.

The problem, here, however, is that this could be regarded as inequitable treatment of commercial broadcasters. Another problem is that in reducing the number of channels on which the SABC would be able to operate as a public broadcaster would seriously limit its ability to meet its obligations in regard to language, culture and regional diversification and educational programmes (Section 2(e)).

Accordingly, our recommendations on this issue are the following:

1. The collection of licence revenue be terminated;
2. The principle that there will be no advertising on SABC TV or Radio programmes is accepted.
3. That the State meet the financial requirements of the public broadcaster through a mechanism where there is a multiparty agreement on the voting of finance to avoid the monies coming to be regarded as in the gift of the ruling party.
4. That the government devise an appropriate method of raising the money, either as a straight levy on all taxpayers, individuals as well as companies, or by raising VAT by a percentage figure which will provide the funds required or some other form of taxation. The on which this from of revenue-gathering is made that public TV and radio broadcasting are essential elements of a modern society no different to the State's obligations in providing roads communications or education and health services.
5. As the public broadcaster is expected to provide educational programmes, this method of financing does away with complicated formulations to finance such programmes as they will be regarded as part of an overall public service provided by the public broadcaster.
6. It is contended that the requirement that the public broadcaster serves the public interest carries with it an obligation on the State which also has to serve the public interest to enable the SABC to carry out that function.
7. Arguments that the State does not have the money at this time to finance the SABC cannot override the principles which the government of national unity has laid down for the conduct of public broadcasting. But obviously this situation suggests that transferring SABC funding to the State cannot be done overnight and that this will have to be phased in. It is suggested that this be done by a reduction of advertising content on the SABC in stages over three or four years.

Financing the SABC in this way will open up opportunities for the IBA to meet its other obligations such as promoting diversity in TV and radio and responsive to the needs of the public (Section 2 (a) and (b)), encourage ownership and control of services by the historically disadvantaged and from a diverse range of communities (Section 2 (f) and (I)), ensuring fair competition between licences by being able to grant sufficient licences to create a competitive environment (Section 2 (o)) and encouraging investment in the broadcasting industry (Section 2 (q)). State financing of the SABC will enable the commercial cake to be spread among more TV and radio licences than would be the case if the SABC continued to absorb the major share of advertising revenue. The requirements mentioned above require greater participation by commercial services in broadcasting.