Heads roll over secret SABC+ revenue-sharing deal

The South African Broadcasting Corporation (SABC) has fired two senior executives for allegedly hiding a multi-million rand revenue-sharing agreement with an external company appointed to manage its SABC+ service.

In a statement from SABC corporate affairs and marketing head Mmoni Seapolelo, the broadcaster confirmed that chief operating officer Ian Plaatjies and head of video entertainment Merlin Naicker were relieved of their duties because of the contentious deal.

“The SABC board of directors has resolved to terminate the employment contract of Ian Plaatjies, following a disciplinary process,” said SABC corporate affairs head Mmoni Seapolelo in a statement.

“The board has duly considered the findings and recommendations of the report by an independent chairperson and decided to release Plaatjies from his duties as the SABC’s chief operating officer with immediate effect.”

“The SABC can further confirm that the group executive for video entertainment, Merlin Naicker, is also released from his duties with immediate effect, following a disciplinary hearing.”

According to City Press, the dismissals come after an internal audit and independent investigation by law firm Werksmans found that the business plan the executives had tabled during a meeting on 7 November 2022 said that the broadcaster would be entitled to all the revenue generated from SABC+.

The broadcaster appointed Discover Digital to manage the platform on a R35-million contract.

“This version of the business plan was approved by the executive committee, and a resolution was taken giving the green light for the contract drafting process to ensue,” Werksmans’ legal opinion stated.

However, Plaatjies, Naicker, and SABC sales head Reginald Nxumalo allegedly hid the fact that a further 7.5% of the advertising revenue generated on SABC+ would be paid to the company.

“It was only at the commencement of the contract drafting process on 16 November 2022 that the 7.5% advertising revenue share was identified and queried by the SABC’s legal, governance and regulatory department,” Werksmans said.

The SABC projected the streaming service would generate between R150 million and R200 million annually.

On that estimate, Discover Digital would have earned between R11.25 million and R15 million every year.

Plaatjies, Naicker, and Nxumalo signed the contract without SABC legal head Advocate Ntuthuzelo Vanara and the acting CEO Madoda Mxakwe.

Werksmans said the three executives had deliberately hidden the revenue-sharing clause during their presentation to the executive committee and had misled it by stating that 100% of the advertising revenue would go towards the SABC.

Werksman’s legal opinion was also critical of Nxumalo, who resigned from the broadcaster in February 2024.

Following a February report about Nxumalo’s resignation, and Plaatjies and Naicker’s suspensions, Discover Digital told MyBroadband that it never billed the SABC for advertising revenue share.

“All Discover Digital’s Advertising Video on Demand and Adserver service contracts — including its contract with the SABC — contain an advertising revenue share clause,” Discover Digital managing director Stephen Watson told MyBroadband.

“This is to cover the associated technology, resource and delivery costs.”

Watson said the revenue share clause had already been included in the contract wording when TelkomOne still operated the streaming service that would become SABC+.

After relaunching TelkomOne as SABC+, Watson said Plaatjies informed them that the advertising revenue share costs had been ommitted from the internal business plan.

The plan had to be updated and resubmitted to the SABC’s Executive Committee and Board of Directors for approval.

“Discover Digital decided not to bill the SABC for its part of the agreed revenue share until such time as the business plan had been corrected and internally approved by the SABC,” Watson stated.

“By the time the one-year term of our agreement with the SABC had matured in November 2023, the proposed approval and ratification of the revenue share clause had not yet occurred.”

Watson noted that during this period, the SABC had been without a Board of Directors for several months.

“Accordingly, Discover Digital did not bill for, nor did it receive any funds from the SABC pursuant to the revenue share clause,” said Watson.

“Discover Digital is willing to co-operate in any SABC investigation into the issue, whether through Werksmans Attorneys, the SABC’s own internal audit team or the Auditor-General.”

The SABC Plus home page

Two relaunches in eight months

The fallout over Discover Digital’s revenue-sharing could help explain why the SABC has relaunched the service twice over the past year.

The original SABC+ platform was simply a rebranded TelkomOne, which was launched in November 2020 in partnership with the SABC.

It featured all of the SABC’s free-to-air channels and on-demand recordings of popular programmes, very similar to what the service currently offers.

TelkomOne was turned into SABC+ in November 2022 after Telkom handed the service over to the public broadcaster.

It was Telkom that first used Discover Digital to manage the platform and recommended the SABC use the company.

Under Discover Digital, the service infamously suffered significant downtime amid overwhelming demand during the 2023 Rugby World Cup.

The SABC relaunched the streaming service on a new platform in December 2023, roughly a year after the agreement was signed.

That saw the service being migrated to a different URL — sabc-plus.com instead of sabcplus.com.

In addition to slightly increasing the streaming resolution, the new platform also eliminated the requirement to register an account using a cellphone number.

That only lasted for about eight months, as the service was again relaunched in the past week, with registration again becoming a requirement.

Other major feature changes are support for various Smart TV operating systems and the addition of banner and pre-roll ads.

This upgraded version of SABC+ was built and is being managed by the United Arab Emirates-based Mangomolo.

The two companies have also shared that Mangomolo partner Broadsmart is leading project management operations and providing an end-to-end ecosystem for the SABC, while Castoola and Triton Digital integrated the “best-in-class” advertising services for video and audio, respectively.

In a statement in May 2024, the SABC’s acting chief operations officer, Lungile Bizna, said that Mangomolo had been a great partner on the SABC’s over-the-top video journey and supported the broadcaster’s growing digital offering.

“The entire process has been seamless, allowing us to focus on our core of the business while the Mangomolo team takes care of the technology and other managed services,” said Bizna.