Expect Netflix price hike in South Africa

A number of suggestions have been made about how to save the struggling SABC, including a controversial proposal that could lead to consumers paying more for streaming services like Netflix.

Communications Minister Mmoba Solomon “Solly” Malatsi has expressed his intention to reform the SABC’s funding model to ensure its self-sufficiency.

This comes after Malatsi faced questioning in the National Assembly regarding his decision to withdraw the SABC Bill from Parliament at the end of 2024, deeming it ineffective.

“To sustain the SABC while a new Bill is being developed, I am focusing on creating a revised funding model that aligns with modern broadcasting realities,” Malatsi said.

His approach involves overhauling the existing funding mechanisms — such as TV licence fees, which suffer from widespread non-compliance — and exploring new revenue streams that align with digital advancements.

Various proposals have been suggested, including replacing the TV licence fee with a household levy and potentially involving SARS in the collection process.

However, pay-TV giant MultiChoice has opposed the idea of being responsible for collecting funds for a state-owned competitor.

Communications Minister Solly Malatsi explained on Newzroom Afrika that the biggest challenge with the current TV license funding model is low compliance, which is aggravated by a very low collection rate.

As a result, the SABC is not able to generate sufficient revenue from that source.

These challenges are in addition to the hurdles the broadcaster has faced in terms of financial sustainability. For several years, the Ministry has been looking at alternative ways to boost the SABC’s revenue collection from TV owners.

In the last few years, more attention has shifted towards new media services, such as streaming services, that have entered the market.

These services have changed how people consume content. Traditionally, TV licenses applied to physical television sets, but today, many people watch content on their phones, tablets, or computers.

This shift has made it necessary to rethink the funding model for public broadcasting.

Malatsi stressed that he is opposed to any initiative that would introduce new taxation methods to the public since the South African public is already “overtaxed”.

However, he added that since the TV license collection regime has been ineffective, a new method needs to be developed to potentially substitute this revenue stream.

He said that, unfortunately, the recent discussions about a potential levy have distracted from the core issue.

The conversation should focus on two things — finding a more effective alternative to TV licenses that actually works and exploring the role that new media services could play in supporting the public broadcaster.

There are two primary concerns when it comes to possibly regulating the presence of audio and visual media services.

“It has to be one that does not impose additional cost on South Africans because you want South Africans to continue to have access to enjoy these media services,” Malatsi said.

“Secondly, it shouldn’t be one that makes our country a difficult place to be able to do business in.”

This also includes incentivising local content production rather than reducing it.

“That requires us to create an enabling environment for the industry and the sector to thrive while also reducing the cost of enjoying media services for the public.”

For this reason, he said they are currently looking at a contribution towards local content production.

In some countries, audio-visual media services contribute a portion of their revenue towards local content production.

While the ministry is exploring this solution, he noted that no formal proposal is currently on the table.

He noted that the current administration has focused heavily on responsible financial management, ensuring government resources are used prudently, and holding public entities accountable.

This means that the historical culture of thinking that there will always be sufficient money to bail out struggling SOEs is no longer applicable.

To ensure financial sustainability, SOEs, including the SABC, must find ways to generate revenue independently. This means appointing capable leadership, enforcing accountability for underperformance, and reducing reliance on state funding.

This article was first published by Daily Investor and is reproduced with permission.