Broadcaster e.tv warns: Free-to-air TV in SA is in peril

Broadcaster e.tv warns: Free-to-air TV in SA is in peril

The free-to-air commercial broadcaster e.tv warned South Africa's broadcasting regulator that the free-to-air TV sector in the country is under threat and needs urgent protection from the increasing dominance of pay-TV. by Thinus Ferreira

The Independent Communications Authority of South Africa (Icasa) on Monday started a week-long session of oral hearings in Johannesburg as part of a yet another new inquiry by the regulator about subscription television broadcasting services in South Africa.

THE PURPOSE OF THE NEW INQUIRY:

Icasa wants to try and find out how to possibly better regulate South Africa's pay-TV industry where Naspers' MultiChoice, although not enjoying a monopoly, dominates the market with its DStv satellite pay-TV service with brands like SuperSport and M-Net. Because of the cost of their subscription, the broadcasters have the cash and willingness to scoop up premium international entertainment and local and international sports rights, often with exclusive licensing and broadcasting window contracts.

Icasa already received written presentations from the SABC, South African Rugby, South African Cricket, e.tv, the Premier Soccer League (PSL), Econet Media's Kwese TV, Vodacom, MTV, Liquid Telecom, the Association of Community TV in South Africa (ACT-SA), Cape Town TV (CTV), Deukom, Cell C, Telkom, as well as a joint submission by the Support Public Broadcasting (SOS Coalition) and Media Monitoring Africa (MMA).

Several of these current and wannabe broadcasting sphere players as well as organisations will also be making oral presentations throughout this week, with e.tv that is sceptical that the latest inquiry will yield any results or lead to any real changes.

e.tv says Icasa's processes undertaken in the past to address the question of competition in the subscription broadcasting services sector in South Africa "have yielded little results" and that "we remain skeptical that this process will lead into some tangible and implementable recommendation in the end".

E.TV: FREE-TO-AIR TV HOUSEHOLDS IN SA ARE DECLINING:

In its written submission to Icasa for the inquiry, e.tv says that "there is an urgent need to develop and implement regulatory measures aimed at preserving the viability of the free-to-air (FTA) segment of the television broadcasting industry, which is under threat as a result of the increasing dominance of pay-television in the country".

"This is evidenced by the fact that the fact that the total FTA households decreased by 2,5% from 8.4 million in 2012 to 8.1 million in 2016, whilst pay-TV households increased by 48,4% from 3.9 million in 2012 to 6.2 million in 2016," says e.tv.

e.tv told Icasa that "the weakening of the free-to-air broadcasters will result in a situation where the majority of South Africans will have to rely on pay-TV to access broadcasting services. This will also lead into a situation where the digital divide between the technological have and have-nots will widen further".

E.TV: NEW STREAMING SERVICES ARE A THREAT, A DECISIVE CAP NEEDED FOR PAY-TV AD REVENUE:

e.tv is also warning Icasa over the sudden proliferation of streaming services – so-called over-the-top (OTT) players – like Naspers' Showmax, Netflix, Amazon Prime Video and others.

"Another issue to be considered seriously is the participation of OTT players in the advertising market which is unregulated and is beginning to erode the revenue base for the free-toair and pay-TV."

e.tv told Icasa it wants decisive caps placed on the advertising revenues that pay-TV operators can earn – in order words, players like MultiChoice and StarSat who are supposed to generate the bulk of their income from subscription fees, need to be limited in how much advertising airtime it can sell and the money it can earn from that.

"e.tv believes that stringent caps on advertising revenue share by subscription broadcasters could go a long way towards addressing imbalances in the market," e.tv told Icasa.

"If the subscription provider did not compete with FTA broadcasters for available advertising revenue then it would pose less of a threat to FTA television."

e.tv said that "the advertising cap placed on the subscription television broadcaster is meaningless and vague" and that is is "common knowledge" that MultiChoice "controls almost 100% of subscription revenue in the country and 48% of total television advertising revenue".

E.TV: BETTER CARRIAGE FEES FOR FREE-TO-AIR CHANNELS THAT ARE INCLUDED ON PAY-TV PLATFORMS:

e.tv also wants Icasa to see to it that pay-TV operators pay proportionate carriage fees when they add and run free-to-air channels on their channel bouquets.

The free-to-air broadcaster wants pay-TV operators like MultiChoice to be "required to compensate those broadcasters for the value of their channels as measured by objective factors such as the audience and revenue performance of the pay-TV platform, the content costs of the FTA channel and the contribution each FTA channel makes to the pay-TV platform's viewership".

e.tv told Icasa that the broadcaster believes that the South African TV market "bears many similarities to the market in the United States in 1992".

"A dominant subscription television broadcaster has built a large and very profitable business, in substantial part by re-selling FTA broadcast signals while avoiding the considerable costs of public interest obligations. The subscription television broadcaster now acts as a gatekeeper to its subscribers, making FTA broadcasters dependent on that distribution."

"Yet the subscription service also takes an extremely large and rapidly growing share of the country’s advertising revenue, undermining the viability of FTA broadcasters, even as those FTA broadcasters continue to subsidize growth of the pay television platform."

"Unlike in America though, where there is a strong market for regional and local advertising which FTA broadcasters are in the best position to capture, all television advertising in South Africa is national in scope, so the direct-to-home subscription satellite operators are able to compete with the FTA broadcasters for essentially all advertising revenues," says e.tv.

"That means the erosion in advertising revenue supporting free broadcasting has been especially acute in South Africa."

The local broadcaster told Icasa that currently e.tv is the second most viewed channel on MultiChoice's DStv Premium and DStv Compact bouquets, therefore making a significant contribution to the growth of the platform.

"Also, over 18% of e.tv's audience watches the channel through DStv, as the default system of convenience and choice, meaning e.tv would be in a precarious position if DStv declined to carry it in future."

www.channel24.com


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