Jocelyn Newmarch
2 December 2008
Johannesburg — FREE-to-air broadcaster e.tv has warned that introducing new digital channels without a market study could threaten the viability of commercial broadcasting because of a glut of airtime.
But the success of digital migration -- the process of switching from analogue to digital TV -- depends on a large number of free- to-air channels, said the SABC.
This would incentivise consumers to buy the set-top boxes needed to receive digital signals.
The Independent Communications Authority of SA (Icasa) has issued draft regulations for terrestrial TV owners the SABC, e.tv and M-Net to receive one additional channel for each channel they now broadcast as an incentive for the enormous costs broadcasters incur.
TV stations will broadcast analogue and digital signals until November 2011, a process known as dual illumination. This is costly as broadcasters pay twice to send out the same content with no increase in advertising revenue.
New digital channels were necessary to incentivise consumers to switch to digital services, but these new channels would flood the market at a time when market conditions were not ready for the introduction of new players, said e.tv.
The company wants the SABC to receive five channels for public service broadcasting with limited advertising, and two commercial channels; e.tv would receive four channels in total.
It wants Icasa to limit the number of channels available, and said that it was opposed to M-Net, a pay TV service, receiving additional channels.
Marcel Golding, e.tv CEO, said digital migration was being imposed without the benefit of a detailed market analysis by the regulator to assess how many new players the market could sustain.
"This couldn't happen at a worse time -- we face a recession which will inevitably affect television advertising," he told an Icasa panel yesterday.
Although new channels would be licensed, there would be no growth in advertising revenue.
"This means that, during a period when we face reduced television advertising, we also face the prospect of fragmentation of audiences and revenue which will inevitably result in the decline in profitability of existing services."
For revenue, e.tv relies entirely on advertising.
The new channels would cost more than R300m a year but would not generate any new income. E.tv's annual programming and operational costs are close to R600m.
The broadcaster would also be forced to increase its terrestrial coverage from 80,5% to 100%, which would cost "millions", according to its presentation.
Khalik Sherrif, e.tv's chief commercial officer, said television advertising revenue growth had slowed from 24,8% in the year to September last year to just 7,7% for the year to this September.
Poor growth had been recorded even before the recession affected the industry, and that spend would decline even further for the next 12 months.
But the SABC said Icasa should maximise available capacity and it should give priority to the public broadcaster.
It asked the regulator not to restrict the number of channels available, but rather to refer to video streams.
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