SA urged to lower broadcast barriers

TOPTV, now known as StarSat, is not yet out of trouble and its heavyweight international shareholder, StarTimes, says its ability to bail out the business has been constrained because of limits on foreign ownership. by Asha Speckman

StarTimes chairman Xinxing Pang said that although crucial progress to stabilise the holding company, On Digital Media, had been achieved through a business rescue process, the broadcaster had lost subscribers and the lengthy business rescue was still under way.

He said last week while on a visit to South Africa, that one of the reasons business rescue was protracted was that, by law, foreigners could hold only a 20% stake in South African broadcasting firms.

As a result, StarTimes could not be as hands-on as it would have wanted to be in the recovery of ODM. StarTimes does, however, hold a 65% economic interest in the company.

Pang called on the government to amend the cap on foreign shareholding.

StarTimes has not taken over. We are working as consultants. We've tried our best, he said through a translator.

But even though content had been expanded to include international sport and Indian and Chinese programming, and the quality had been enhanced, subscriber numbers had dropped, Pang said.

We've suffered a little bit ... We really hope we can change it when we go out of business rescue, he said.

We believe this [foreign shareholding cap] was made 20 years ago. We fully understand at that time it was to protect sovereignty and independence of this country. But as time has gone by there's been a lot of change in the industry.

Pang suggested that with digitalisation a new market entity which focuses on signal distribution could be created. He said content distribution could be owned by a local firm and the signal distributor could have foreign shareholding. This would introduce more capital into the country and help with digitalisation of the industry.

The government can continue to protect independence and have full control but capital and technology is necessary to speed up the development of the industry, Pang said.

Louis de Jager, a senior manager at PwC, said many countries capped foreign investment in the broadcasting sector to avoid abuse of platforms.

Pang said that elsewhere StarTimes was making strides, despite some interference from competitors, and had gained strong brand recognition in Tanzania. It operated in 13 countries.

About two months ago, StarTimes announced the construction of a $78-million (about R860-million), 20 000m centre in Kenya, which will house the group's Africa headquarters and a dubbing centre for film and TV. It will also offer digital TV research and development, film production and training.

The centre will be completed next year and will train recruits from South Africa once the business rescue was complete and StarTimes began hiring, Pang said. To date the group has invested more than $400-million in Africa and employs more than 3 000 people on the continent. It has more than four million subscribers, which is still about four million short of rival DStv, which is owned by MultiChoice, a Naspers subsidiary. Pang said StarTimes would invest in content and offered consumers set-top boxes with built-in high definition.

However, the pay-TV market was intensely monopolised , he said. Some sport content has become a luxury for the population.

About a year ago ODM and an individual consumer filed complaints with the Competition Commission against MultiChoice for snapping up exclusive multiyear rights to premium sports and other content. The commission has yet to finalise its investigation.

We hope legislation can assist to break the monopoly, Pang said.

Kate Skinner, an independent analyst, said competition regulations should be passed as soon as possible to ensure that the broadcasting landscape is more conducive to the surviving and thriving of new players .

The Independent Communications Authority of South Africa has started to address this with hearings into competition across the telecoms, broadcasting and information technology sectors.

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