Sustainable Funding Model

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Sustainable Funding Model The Foundation of
Delivery 11 March 2005

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FINANCE
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GLOBAL INDUSTRY
Public broadcasting service Three broad
strategies

• Focus on distinctiveness over market share.
• These PBS (often forced into this position by
  their remit or funding model) have had little
  impact on the main broadcast networks, as they
  pose no meaningful financial threat
• Focus on market share over distinctiveness.
• While these PBS have the potential to
  significantly influence their market, in practice
  there is little to differentiate them from
  commercially funded operators. The majority of
  PBS in this grouping depend heavily on
  advertising funding
• Some form of equilibrium between the two.
• These PBS have held a significant audience
  share while maintaining a distinctive approach
  and fulfilling their public service remit

Source McKinsey 1999
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GLOBAL INDUSTRY
Public broadcasting service Characteristics of
an ideal funding model

• Substantial enough to create true competition to
  commercial channels
• Independent from undue influences commercial or
  otherwise
• Predictable over the medium term
• Growing at a similar or faster pace than the PBS
  costs
• Simple and equitable

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FUNDING MODEL
SABC funding model
Revenue analysis (R million)
Source SABC Finance 2003
Net commercial after deducting mainly agency
commission Net TV licence after deducting
collection costs
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FUNDING MODEL
SABC funding model (cont)
Expressed as a of total revenue
Source SABC Finance 2003
Net commercial after deducting mainly agency
commission Net TV licence after deducting
collection costs
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TV LICENCE INCOME
Processes and Legislative mechanisms
Process executed by SABC
Issue and renew television license
Collect television license fees
Monitor Compliance
Enforce Compliance
Usage of TV license fees
Section 27(1)(a) of the Broadcasting Act as
amended state that no person may use a television
set unless a person is in possession of a TV
license.
According to Broadcasting Act No.4 of 1999 the
corporation may delegate the collection of the
payment of television license fees to other
persons.
Section 27(6) of the Broadcasting Act as amended
state that the Corporation may appoint any person
as an authorized inspector to check compliance.
Section 27(5) of the Broadcasting Act as amended
state that any person who contravenes or fails to
comply with provision of any regulations
pertaining to television license matter is guilty
of an offense.
Section 27(8) of the Broadcasting Act as amended
state that all TV fees collected by the
corporation must be used by the corporation
solely for the public service to be provided by
the corporation.
Corresponding legislation
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TV LICENCE INCOME
Strengths and Weaknesses

• Strengths
• Ubiquitous distribution
• Advertising
• Regulations
• Value for money
• Exclusion of people receiving state aid
• Weaknesses
• Data systems
• Cost of collection
• Access
• No increase for 4 years
• Devaluation as consequence of no increase in 4
  years before January 2004

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FUNDING REQUEST
Funding Requirements included in MTEF 2004/05
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FUNDING REQUEST
Strategic supplementary funding to enable
delivery of mandate
- The preparations for the local elections
2005/06 are under way. Estimated costs are R29.4m
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