Trying To Achieve Free-To-Air And Pay Tv Balance

According to the South African Broadcast Corporation (SABC) corporate plan for the 2019/20 to 2021/22, the purchase of sports rights was budgeted at R404 million. Sport sponsorship revenue was estimated to come in at R66 million with classic advertising revenue of R100 million – loss of R238 million. Over the years, the public broadcaster has had to balance the quest for operating profit with the public service mandate which informs, educates and entertains all citizens.

But how could this be achieved when the public broadcaster has not made a profit for eleven of the last fourteen years? Competing with other broadcasters has become increasingly challenging and it’s largely due to trying to maintain the profit and public service paradox. Nowhere has this been more apparent than in sport.

Until the early 1990s, the SABC monopolised all sports coverage.

When rugby turned professional in 1995, a deal was struck between the newly formed SANZAR and Rupert Murdoch’s News Corporation. In South Africa, SuperSport was awarded exclusive broadcasting rights of the Super 12 competition, as well as the Tri Nations. Following this deal, rugby gradually ceased broadcasting on the SABC, while SuperSport became a carrier of live rugby broadcasts.

In 2007 the Premier Soccer League created an Invitation to tender and when SABC did not to respond, the tender was opened up to the rest of the market. Until that point, the SABC paid the league a reported R120 million a year. Prior to the tender, Advocate Dali Mpofu, then Group Chief Executive of the  SABC, had advised the SABC Board that there was a need to commence negotiations with the PSL for the renewal of the contract.

There was an indication of a possible agreement on the principle of the matter, and Adv Mpofu had been given the authority to negotiate on the price. There had been negotiations back and forth. A stumbling block was that the PSL had never said what they wanted, but had rather asked the SABC what they were prepared to pay for broadcast rights.

In 2008, seemingly unbeknownst to the SABC, SuperSport made an offer for the rights which was accepted by the League. This formed the basis of their relationship culminating in the 2018/22 deal which granted SuperSport “exclusive” access to their tv rights.

A similar shift from public broadcasting happened in cricket in 2012. Cricket South Africa had sold production rights for home internationals to SuperSport, but still controlled the broadcast rights. The package it sold to SuperSport excluded the free-to-air rights and these were held back for the SABC. Despite this, the SABC decided it would only air Twenty20s and ODIs and show highlights packages of up to two hours from the upcoming Tests against New Zealand citing financial constraints. There has effectively been a blackout of cricket broadcasts on SABC channels ever since.

Battles Over Sub-Licensing

By 2008, the SABC had a sub-licensing arrangement with SuperSport to broadcast rugby matches. The SABC was allowed to show all Test matches in South Africa provided that transmission was delayed until after the final whistle. Currie Cup and Super 14 highlights could be shown 72 hours after the match and news clips of a maximum of three minutes could be used provided that SuperSport was credited as the source. The Currie Cup final could be shown with the same delay as Test matches and the same applied to the Super14 final provided that a South African team was playing. The same restrictions did not apply to matched aired live on radio.

Last year a dispute arose over the flighting of the British and Irish lions Tour on SABC channels. At the heart of the issue is that the broadcasts would be limited to SABC 1, 2 and 3 and would exclude flighting on its other platforms such as Openview and via mobile and OTT services including the SABC’s online sports offering.

These types of restrictions are not unique to South Africa but free to air broadcasters like SABC and ETV believe these agreements puts them at a financial and commercial disadvantage because they not only restrict the times when the events can be broadcast. They also restrict their ability to sell valuable advertising and sponsorship slots in the “lead up times” to the events resulting in a significant loss of revenues and viewership numbers.

ICASA Intervenes

Over the past few years the Independent Communications Authority of South Africa (ICASA) has tried to put a stop to SuperSports dominance. ICASA wants football and rugby in particular to hand over its rights to free to air broadcasters so that those sports are broadcast free to air. Sporting events and codes were split into three categories with each category having its own broadcasting requirements as follows:

Group A: These are compulsory national sporting events in the public interest which must be broadcast on free-to-air channels with full live coverage. These include the Olympics, FIFA World Cup, Rugby World Cup, and the ICC Cricket World Cup.

Group B: National sporting events which are offered to a subscription broadcasting licensee on a non-exclusive basis under sub-licencing condition, including: Super Rugby, the Premier Soccer League and the All Africa Games.

Group C: Minority and developmental sporting codes to be broadcast by both subscription broadcasters and free-to-air broadcasters. These events include; Tennis, Water Polo, Volleyball, Indigenous Games, Chess and Gymnastics. Subscription and free-to-air broadcasters must broadcast at least two of the listed sports codes per annum.

Other sports could be added to or removed from this list at a later date and will be actively reviewed on a five-year basis. It also proposes strict fines for broadcasters who do not abide with the regulations once they are in force.

Sports Federations Cry Foul

Sporting federations vehemently objected to the draft regulations as they would have direconsequences on the way they would be able to operate. The Premier Soccer League said that if the remedies proposed in the Draft Findings are implemented, there will be dire consequences for the PSL and the development of soccer in the country. In the words of the PSL, “not only would consumers be worse off, but the rights would be rendered valueless and it would not be attractive or sustainable for broadcasters to in fact broadcast PSL content”.

They went on to say that, The PSL relies on the revenue that it receives from the sale of broadcasting rights to provide financial support to its clubs. Without this support from the PSL, most clubs would not be able to participate in professional soccer at all. They would not be able to meet the financial burdens of running a professional club.

Ultimately the intervention led to nothing as ICASA conceded that the sports industry relies on the sale of broadcast rights and that competition sport would suffer without the pay-tv broadcasters. In the end, ICASA required that exclusive rights must not prevent or hinder the free-to-air broadcasting of national sporting events and that parties need to conclude their commercial agreement regarding the actual time periods and scheduling of advertisements of national sporting events on fair, open and non-discriminatory terms.

What About The Consumer?

Football remains the beacon of hope for sports fans who cannot afford subscription television as there are some games still broadcast on SABC. The same cannot be said for cricket and rugby, where there is a blackout in domestic competitions and only glimmer when national teams play at home. Springbok games are shown “delayed live” rather than broadcast in real time.

Ultimately, a solution has to be found to ensure the general public get to watch as many live games as possible. Not only would this lead to increased engagement in sport, a greater audience reach and better value for sponsors, it could also be more lucrative for many sports. At present, more affluent consumers who can afford SuperSport are some ways better off than those in other so-called developed nations where watching sport through the year requires multiple subscriptions and license fees which cost a lot more than the 800 or so rand that premium access to DSTV costs.

What’s the Latest

The latest push to try and change the broadcast landscape comes from the ruling African National Congress (ANC). While there are several changes being pushed by the party, the most important amendments will see a ban being instated on selling exclusive broadcasting rights for sporting matches, with the party also planning to make matches involving national teams, such as Rugby world champions the Springboks, available for free, or at reduced cost, on the country’s public broadcaster. The SABC reportedly also lodged a complaint against SuperSport and various sporting organisations in South Africa, accusing them of “anticompetitive and exclusionary behaviour” and asking that punitive fines be imposed.

There may be no way of reversing the move away from free-to-air sports coverage. Subscription packages are the most profitable revenue streams available in sports broadcasting today but the current state of things leaves consumers worse off. A middle ground needs to be found.