Netflix and DStv levy explored for South Africa

Communications minister Solly Malatsi says he is considering imposing a levy on local and international streaming services to fund the ailing SABC, from which TV licence holders would be exempt.

Malatsi was responding to a written Parliamentary question from IFP MP Khethamabala Sithole, who asked what alternative funding sources Malatsi was considering for the public broadcaster.

This comes after Malatsi withdrew the controversial SABC Bill before its second reading in Parliament, sparking a skirmish in President Cyril Ramaphosa’s Government of National Unity (GNU).

Malatsi said the bill did not address the SABC’s immediate funding crisis and gave the minister undue control over the public broadcaster’s board of directors.

Shortly after Malatsi quashed the bill, the Presidency clipped cabinet ministers’ wings, issuing a new rule that they may not withdraw bills without permission from Ramaphosa and Deputy President Paul Mashatile.

This led to a battle in the GNU about whether the new rule could be retroactively applied to block Malatsi from withdrawing the SABC Bill.

National Assembly Speaker Thoko Didiza has not gazetted the withdrawal, leading to criticism from Malatsi that she is violating the parliamentary rules she is meant to uphold.

The fight about withdrawing the SABC Bill threatens to further delay the urgent intervention the public broadcaster needs to stave off collapse.

Since the 2019/20 financial year, the SABC’s revenue has declined from R5.7 billion to R5.2 billion.

While the broadcaster has begun decreasing its annual losses, it still recorded a R198 million loss last year — an improvement from the R746 million loss from the year before.

However, the SABC also took on more debt, with its total liabilities now exceeding R4.1 billion. Since the 2019/20 financial year, the SABC’s liabilities have skyrocketed from R3.2 billion.

This has left the public broadcaster in an overall worse financial position, slipping into technical insolvency last year. Its net equity is now -R36.7 million.

The SABC’s cash flow has also worsened, with its cash and cash equivalents on hand at year-end declining from R2.1 billion in 2019/20 to R401 million last year.

Despite the urgency of its predicament, the SABC Bill included no amendments to its funding model.

Instead, it gave the Minister of Finance and Minister of Communications and Digital Technologies three years to develop a new funding model from the moment the bill went into operation.

This, as the SABC’s once proud office building in Auckland Park is falling apart, with lifts that are beyond repair, forcing staff and freelancers to climb the stairs daily.

The main reason for the SABC’s dire situation is that South Africans have staged a quiet tax revolt by refusing to pay their TV Licences.

According to the SABC, only 13% of registered TV Licence holders are paying their bills. This excludes households who have never bought a TV licence, despite owning a TV.

SABC levy proposals

Malatsi’s spokesperson, Kwena Moloto, said it was important to note that a levy on international and local streaming services was only being explored along with several other funding options.

He said there was a big difference between something being explored and it being proposed.

“The Department is exploring several funding models, none of which have been adopted as a proposal at this stage,” Moloto told MyBroadband.

Regardless, Malatsi’s suggestion to collect an SABC levy from commercial video entertainment companies is not new.

The SABC itself has previously proposed this during various public comment sessions, suggesting that the dominant pay-TV platform in South Africa helps collect its TV Licence revenue.

MultiChoice, which operates DStv, baulked at this suggestion. It said it was unreasonable to expect a private sector competitor to assume responsibility for collecting revenue on a government entity’s behalf.

Malatsi’s suggested solution differs in that it does not single out one pay-TV operator but instead requires all local and international streaming services to collect a government levy.

He argued that this would modernise the SABC’s funding and improve compliance through automatic collection. He also acknowledged this would raise subscription costs and require regulatory alignment.

In addition to a levy on streaming services, Malatsi said they were still considering a household and business levy to be collected by the South African Revenue Service and maintained as a ring-fenced SABC fund.

He said this would offer stable revenue and lower collection costs, but could face public resistance as an added tax and would require legislative amendments and affordability safeguards.

Malatsi also previously said he would consider collecting TV Licences through mechanisms like vehicle licence disc renewals, which also happen annually.

In the interim, Malatsi said they were looking into a conditional Treasury grant to sustain the SABC while a long-term funding model is finalised.

Malatsi said this would provide immediate relief, but was unsustainable and could affect the SABC’s independence.

“Additionally, the SABC has requested that the department reapply for a government-backed loan guarantee, now supported by its recent unqualified audit outcome,” he said.

Last year, the SABC achieved an unqualified audit for the first time since the 2009/10 financial year.

Malatsi said a loan guarantee would enable the SABC to secure an overdraft facility and fund critical infrastructure.

“While this provides immediate financial flexibility, the SABC must still repay the loan, making long-term revenue stability essential,” he said.

Malatsi said he had approved the final terms of reference for a feasibility study that would develop a clear business case for the SABC’s funding model.

The study would assess current revenue streams, explore new funding options and consult stakeholders to ensure a practical and sustainable solution.