Relaxing broadcast ownership is too little, too late

Karl Marx famously said the first time history repeats itself is tragic; the second is farce. He wasn’t exactly referring to broadcast licensing in South Africa, but his aphorism may apply.

This issue of who owns broadcasting is important for industry growth, for transformation and for democratic pluralism. But South Africa is in danger of missing the boat of legal reforms that balance these three issues.

Way back in 1993, the Independent Broadcast Authority Act set down limits on who may own radio and TV stations. We still have them today:

• No station can have more than 20% of its shares in foreign hands.
• Concentration of radio ownership is limited to no more than four stations, and only two operating in a single broadcast area.
• No company can control radio and television licences if it also controls a newspaper with 20% or more of its circulation in the broadcast area.

These legal provisions were inspired by the fear that a free-for-all would see the emergence of Big Media, with a few corporate giants dominating the airwaves.

In the United States in the past decade, for example, ClearChannel has bought up hundreds of radio stations across the nation. The result: programming became homogenised pap, and the Dixie Chicks pop group was banned from all stations just for criticising the Iraq War.

In one local emergency, there was nobody even at the station to broadcast urgent news — programmes went out on autopilot via computer-link to distant headquarters.

In contrast, broadcast licences in South Africa have always had conditions that prevented any large-scale consolidation within the industry (apart from SABC). That’s been a good thing, but many say this set-up is now holding back vibrant growth and investment, with audiences losing out as a result.

One architect of the South African restrictions was Saki Macozoma, later chair of the parliamentary committee on communications. He subsequently left politics to become a media baron. But the legal limits on becoming a big broadcast player frustrated his ambitions to the point that he pulled out of the media industry altogether.

In 2002, partially in response to how the law thwarted black business interests, the licensing body — the Independent Communications Authority of South Africa (Icasa) — embarked on a public consultation over change. The wheels turned slowly, taking two years to propose three legislative amendments:

• Relaxing the ceiling for foreign shareholding to allow a 25% stake (up from 20%).
• Changing the cap on the number of radio stations allowed, from a fixed figure to a maximum of 35% control of the total market.
• Allowing newspapers with 25% or less of circulation in an area to own a broadcasting license in that vicinity.

Icasa sent these more flexible proposals to the Ministry of Communications, hoping to bring the country’s rules closer to international practice. Tragically, nothing happened. The whole review turned into a waste of time.

The tough original ownership restrictions were then carried over verbatim into the Electronic Communications Act (ECA) in 2005.

Recently, their continued existence is one reason why Telkom Media couldn’t draw enough foreign investment to launch the pay-TV channels for which it had a licence. The outcome left audiences short of what would have been more choice.

However, the ECA did at least grant Icasa a new power to grant exceptions for individual licences — especially in the case of BEE applicants or operators. The problem has been that Icasa to date has not yet developed any criteria for deciding such exceptions.

That’s why, in November last year, the regulator decided to repeat its whole historical consultation process. It issued for public comment an “Ownership and Control Discussion Paper”. Responses were due in last week.

This time around there’s a new minister of communications who may take the exercise seriously and change the law to give Icasa more leeway than it merely making exceptions on an individual basis.

But the government also remains structurally conflicted. Should it allow the rise of private-sector powerhouses that will compete with state-owned SABC? The authorities may like to see more investment (both black and foreign) in broadcasting — but how big an ownership carrot is needed to entice this?

Absent any clarity on this bigger policy dilemma, the action is with Icasa fleshing out the individual exceptions issue. In so doing, the regulator is also canvassing a new matter — ownership issues in signal provision, telephony and internet services. The question here is what ownership limits should apply to these businesses, as compared to broadcasting?

The issue arose last year when Telkom sold its shares in Vodacom to foreign-owned Vodafone, and Icasa could only react in an utterly ad hoc and highly embarrassing way.

Yet while Icasa is now tinkering around ownership, the whole paradigm of limitations has also run into complications, especially in broadcasting.

Historically, technology limited the number of broadcast channels on air, which justified the placing of ownership restrictions on those firms given licences.

Nowadays, frequency scarcity is less of a factor, and especially with digital transmission on the horizon. So broadcasting is less valuable for investors — and there is also growing competition from rivals riding on satellite, internet and cellphones.

In developed countries today, big broadcasters are begging to be allowed to become even bigger, because of business problems caused by the changes. Competition authorities are under pressure to condone new oligopolies, to keep some traditional broadcasters in existence.

Going by the two years that Icasa took to process its consultations last time, the agency is not likely to sort out its “exception” regulations any time soon. It will also take time for the government to decide if it wants to change the wider law. Then add on even more years for this to be effected.

The sector has already lost eight years. Reckon on several more years in which broadcasting will stay relatively deprived of potential investment, compared to other platforms steaming ahead.

By the time then that reforms eventually kick in, the whole matter of who owns broadcasting may therefore have turned into a sideshow.

A farce, perhaps?

RSS feed for this column: http://www.mg.co.za/rss/guy-berger