Policy changes could unlock a new future for radio in South Africa

The Department of Communications and Digital Technologies (DCDT) has proposed several changes to the country's policy, legislative and regulatory framework, which it says have "become out of tune with the rapid technological developments and the inevitable forces of the 4th Industrial Revolution (4IR)".

The department's draft white paper on Audio and Audiovisual Content Services Policy Framework: A New Vision for South Africa 2020 highlights the proposed changes.

The paper was published in October 2020, with industry stakeholders participating in public hearings and presenting submissions in 2021. The paper process stalled in early 2022, but it is understood that the DCDT has included, as a priority, submitting the paper to the cabinet for approval in 2023 / 2024.

From the perspective of the radio industry in South Africa, these proposed changes are, in the main, welcome and necessary if we are to see a more sustainable and competitive sector.

A key proposal in the paper is the removal of limitations on media ownership and control.

The Electronic Communications Act (ECA) currently limits the number of commercial radio and television broadcasting services an entity can control. While arguably necessary at the start of the country's commercialisation of radio, the DCDT notes that the provisions were made in 1993 within the context of a predominantly single-channel analogue broadcast environment.

A review of ownership limitations is necessary for various important and urgent reasons.

Radio as an industry globally is showing considerable resilience and relevance to its audiences and radio brands are adept at strengthening these audience relationships via many different channels.

However, the advertising industry needs more choices for media types, particularly digital media, which offers high reach into aggregated audiences countrywide. We would argue that radio has an unrivalled ability to deliver campaign results compared to other media types. Still, it needs to be able to offer audience 'networks' to advertisers instead of the audiences of one or two individual station brands.

Thus, removing the outdated ownership limitations will enable radio operators to consolidate the market and offer their customers a comparable reach to TV and digital operators.

Market consolidation opportunities will also enable more operational synergies in the sector, allowing for increased investment into innovation and development of its resources and people.

Radio's reach is consistently above 90%; however, the artificial metric of limiting how many stations a single operator can control has been harmful to growth.

We must be mindful that the currently applicable sections of the ECA were adopted when services such as Google Play, Apple Music and Spotify did not exist, and technology advancements over the years have drastically changed how audiences consume media.

Digital players are not subject to the high levels of regulation in the traditional sectors and the largest global players need to re-invest the revenues they make in our local markets back into our economy.

Traditional players must be allowed to compete on a more level playing field for audiences, advertising and investment. This requires a legal framework that recognises contemporary market forces and supports growth into the future.

Revenues in the commercial radio market had already flattened before Covid-19, indicating a strong but mature stage in its evolution. Now, coupled with the notable revenue impact of the pandemic, some urgency is required to introduce these regulatory reforms.

Globally, several countries have made adjustments to abolish or relax ownership regulations.

America made significant changes to its ownership laws in the Telecommunications Act of 1996. Congress eliminated the national cap on station ownership, allowing unlimited national consolidation.

According to the Federal Communications Commission, the act's goal was "to let anyone enter any communications business — to let any communications business compete in any market against any other".

Changes to Slovakia's legislation in 2021 also removed the limitations on the number of national radio stations one entity could own. Companies could previously own just one.

The ownership changes allowed companies such as Bauer Media Audio to acquire two additional national radio businesses.

"Expanding our presence in Slovakia is great news for our company and the local market. Growing our operation will enable us to bring audio innovations, new formats and passion for great content to more Slovakian listeners," Bauer Media Audio's then-president Paul Keenan said.

The ability to buy multiple radio businesses will allow for growth in the South African market and realise value for shareholders of individual brands struggling to sustain their stations. Typically, consolidation enables value creation for audiences, advertisers, staff and shareholders.

ICASA, the Competition Authorities and relevant BBBEE guidelines will ensure that the media sector protects and develops diversity and plurality of voices. Likewise, the radio industry has a proud track record of effective self-regulation of content via the excellent Broadcasting Complaints Commission of South Africa.

The paper also seeks to find ways to resolve the ongoing funding issues within the SABC and this must be seen in parallel with the draft amendments to the SABC Act. As a business interested in the sector, we also welcome these developments.

Whilst the mechanism of securing license revenues from consumers will always attract controversy and while we believe the drafts contain some areas of minor concern, it is critical that the SABC is adequately funded and competently governed. 

It represents a sizeable portion of the South African radio industry and a strong SABC means a strong radio sector overall.

While we are encouraged and generally supportive of the proposed paper, we hope the government does not falter in seeing these proposals through the appropriate channels. It would be important for the changes to be enacted within this calendar year if the benefits outlined above are to be realised for owners and consumers alike.

For more information, visit www.kth.co.za. You can also follow Kagiso Tiso Holdings on Facebook or on Twitter.