Communications & digital technologies minister Solly Malatsi has opened the door to sweeping media consolidation, unveiling plans to lift cross-ownership limitations in what could be the biggest overhaul of SA’s media laws in 25 years.
Under the mooted changes in a white paper, SA would abolish rules that prevent any single entity from owning newspapers, TV stations and radio licences in the same market, and raise the foreign equity ceiling from 20% to up to 49%.
If accepted, the proposals have the potential to split public opinion, with backers of the reforms likely to hail foreign investment and scale as the cure to the sputtering sector, while critics could see it as a neoliberal giveaway that prizes profit over diversity of voices.
The government, which has long frowned on cross-media ownership for fear that it could undermine media pluralism, said there was merit in relaxing the ownership regime in an era of digital convergence and the rise of on-demand platforms.
SA is not alone in reviewing its media ownership rules.
In the UK, regulators have already eased cross-media limits on local broadcasters and dropped barriers on non-EU investors. The US media watchdog long ago scrapped caps on radio ownership, gutted its cross-media rules and expanded TV stakes.
In Australia, regulators maintain only a public log of controlled groups, but no historical caps on ownership, while New Zealand has repealed foreign-ownership limits, trusting only competition law.
Limitations
“These developments require re-evaluation of the current ownership limitations. Over time, arguments have been raised in relation to ownership limitations, specifically because they are no longer appropriate for a multichannel digital audio and audiovisual content industry,” the policy states.
In addition, the current restrictions in the Electronic Communications Act may have a detrimental impact on the growth of the industry, particularly for small and medium-sized enterprises, it said. “Print media companies are no longer by default the largest media companies, and there has been a proliferation of on-demand content services, meaning that access to online news has multiplied tenfold. The cross-media ownership limitations are also obsolete, and section 66 in its entirety may be removed.”
Section 66 of the act deals with limitations on cross-media control of commercial broadcasting services to ensure media diversity and prevent monopolies from forming in the broadcasting landscape.
The section reads: “No person who controls a newspaper may acquire or retain financial control of a commercial broadcasting service licence in both the television broadcasting service and sound broadcasting service.
“No person who is in a position to control a newspaper may be in a position to control a commercial broadcasting service licence, either in the television broadcasting service or sound broadcasting service, in an area where the newspaper has an average ABC circulation of ... (20%) ... of the total newspaper readership in the area.”
Foreign ownership
Malatsi is looking to increase the cap on foreign ownership of media assets in SA. The current legislative framework prohibits a foreigner from exercising control over a commercial broadcasting licensee by limiting financial interest, interest in voting shares or paid-up capital to a maximum of 20%. Similarly, not more than 20% of the directors of a commercial broadcasting licensee may be foreigners.
The white paper says the regulatory environment for foreign direct investment is one of the key factors that are likely to influence the location decisions of foreign investors. “Foreign direct investment has a significantly positive impact on employment, productivity, growth, prospects for stronger integration with international regional and markets as well as the transfer of skills and technology,” it reads.
“What is needed is an enabling policy environment for increased foreign direct investment, as a stimulus to the growth and development of the ICT sector as a whole. The limitations in respect of foreign ownership of linear audiovisual-visual content services (broadcasting services) may be increased with consideration of a maximum of 49%.”
SA has several commercial TV operators and one public broadcaster, the SABC. SA’s traditional TV landscape has been transformed by the impact of streaming services, economic developments and technological shifts.
The policy says the current approach of specifying a minimum percentage of total broadcasting time per TV channel will be revised by the Independent Communications Authority of SA so that this is measured across the total bouquet of channels offered by a broadcasting service licensee.
“Where it is not possible to meet the SA content quota due to the nature of the service, the licensee may choose to pay a specified sum of money or minimum percentage of gross revenue into a fund which supports the creation of audiovisual SA content.”
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