SABC

CRITICAL ANALYSES OF THE SOUTH AFRICAN BOXING BILL

The SABC supports the establishment of Boxing SA and particularly the provisions of Section 5 which establish Boxing SA as an independent body.

It is not the SABC’s intention to provide broad comment on the Bill but to focus particularly on Section 29 regarding the broadcasting rights of tournaments and other matters ancillary thereto such as the provisions of Section 17 regarding the finances of Boxing SA and the provisions of Section 2.

In order to create the appropriate context for this representation we will also take a brief look at the Constitution, the law relating to competition in South Africa and the Broadcasting Act.

THE CONSTITUTION AND THE BILL

Section 2(a) states that the object of the Bill when it becomes an Act will be to "give effect to the provisions of the Constitution".

The Constitution of South Africa protects property rights within the Bill of Rights. One of the provisions of Section 29 of the Bill provides that Boxing SA may in some circumstances, not grant broadcasting rights to the promoter staging a tournament but may allocate those rights to another promoter or to itself. By undertaking this activity, the SABC submits that the Bill is unconstitutional, for reasons set out below.

Section 25 of the Constitution provides that no one may be deprived of property except in terms of law of general application.

Section 25(2) provides that property may be expropriated only for a public purpose or in the public interest and subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a Court.

Section 25(3) of the Constitution states that the amount of compensation ".... must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected having regard to all relevant circumstances including:

(a) the current use of the property;

(b) the history of the acquisition and use of the property;

(c) the market value of the property;

(d) the extent of direct State investment and subsidy in the acquisition and beneficial capital improvement of the property; and

(e) the purpose of the expropriation.

Nowhere in the Bill is there any mention or justification for the permitted deprivation or expropriation of the broadcasting rights. Furthermore, there is no mention of any limitation on the exercise of the right created.

In terms of the Constitution, Section 36 is clear that the Bill of Rights, into which the rights regarding property fall, may only be limited to the extent that the limitation is reasonable and just in an open and democratic society based on freedom taking into account all relevant factors including:

(a) the nature of the rights;

(b) the importance of the purpose of the limitation;

(c) the nature and extent of the limitation;

(d) the relationship between the limitation and its purpose; and

(e) if there is a less restrictive means to achieve the purpose.

It is the SABC’s argument that for the Act to be passed based on this Bill, that Act in this form will be open to extensive and significant Constitutional challenges, and would result in an Act which would only be in place for a short time before being declared unconstitutional. In the circumstances, it is the SABC’s suggestion that the drafters tasked with reforming boxing in South Africa give proper and due respect to this aspect and prepare a revised Bill which will not be so patently open to Constitutional challenge.

Section 25(4) of the Constitution provides that property "is not limited to land". For this purpose the SABC argues that the provisions of Section 29 of the Bill and the overwhelming powers granted to Boxing SA in terms of Section 29(4) constitute an infringement of the promoter’s Constitutional right to negotiate the broadcast rights granted to it in terms of the Bill at Section 29(1). Furthermore, as will be demonstrated later, section 29(4) creates for the SABC a derogation from the obligations which the SABC has as the public broadcaster in terms of its charter and mandate specified in the Broadcasting Act of 1999.

It is the SABC’s contention that the provisions of Section 29 of the Bill will be considered an expropriation or deprivation of valuable media properties, falling within an area protected by the Constitution.

Section 2(c) of the Bill provides that the interests of promoters are protected. The provisions of Section 29 appear prima facie to detract from this protection in that it provides a right too strongly weighted in favour of Boxing SA which could create an environment ripe for administrative review proceedings, and which contravene the intentions of Section 2(c).

THE COMPETITION ACT AND THE BILL

The SABC does not wish to deal with this aspect in any great detail but wishes simply to put some cautionary remarks before the Committee.

The Competition Act 89 of 1998, binds the State in terms of Section 81. As Boxing SA is a statutorily created body, the Competition Act would also bind Boxing SA. Section 5 of that Act prevents restrictive vertical practices if such practices have the effect of "substantially preventing or lessening competition in a market".

It is obviously unclear and untested as to whether the relationships between Boxing SA, broadcasters and promoters could in any way be construed as vertical relationships. However, the SABC would like to place before the Portfolio Committee, the fact that by implementing the provisions of Section 29, this implementation could possibly be construed to create a vertical relationship and subsequently in certain circumstances, a restrictive practice in the implementation of certain transactions. It is the SABC’s contention that the statute should be constructed in such a way as to lessen any possibility of relationships being determined and construed as contraventions of the provisions of the Competition Act.

THE BROADCASTING ACT AND THE BILL

To establish the context of these representations, the SABC would like to draw this Committee’s attention to certain provisions of the Broadcasting Act of 1999. The Broadcasting Act establishes a charter for the SABC.

The SABC will be divided into a public broadcast service and a commercial broadcast service, although the commercially operated service of the SABC remain public broadcasting services and therefore subject to the mandate under which the public broadcaster must operate [Section 11(b)].

Section 2(d) of the Broadcasting Act states in its objects that the SABC must "ensure a plurality of news, views and .... provide a wide range of entertainment programmes".

At Section 2(l), the "public broadcast service (must) service the needs of all South African society".

At Section 6(2), in terms of the SABC Charter, "it must in the pursuit of its objectives and in executing its powers, enjoy freedom of expression and ... programming independence".

At 8(b) it must "provide programmes of ..... entertainment funded by advertisements ..., sponsorships ...".

At 8(d) it must "provide in its public broadcasting services on radio and television, programmes that entertain".

Perhaps most importantly for the discussion here today, we need to bring together the Bill and the Broadcasting Act. Section 10(1)(i) of the Broadcasting Act states that the public service provided by the SABC must "include national sports programming as well as developmental and minority sports". If one considers the provisions regarding commercial services (other than the SABC’s commercial service), there is no mention of the requirement that those other commercial services provide national sports programming as set out at Section 10(1)(i) of the Broadcasting Act. The SABC’s mandate is clear and different from other commercial broadcasters.

The relevance of this is that the Bill will in terms of Section 29, impact upon the obligations of the SABC as a public broadcaster, while simultaneously seeking to be subject to the provisions of the Broadcasting Act. It will also infringe upon certain constitutional rights and simultaneously create an environment which does not promote free and fair economic activity within our broadcasting environment.

In various countries, statutes exist to protect sporting matters of national interest. The legislative procedures are in place to ensure that all members of the public are able to watch matters of national sporting interest on free-to-air broadcast services. This is the case, for example, in Britain and France. There has certainly been mention of the fact that this type of law could be legislated in South Africa but in the interim, it is dealt with in the Broadcasting Act, of which this Committee must take cognisance.

THE BILL ITSELF

It is to this aspect that we now turn to make what for the SABC are the most pertinent and valuable points regarding this proposed legislation.

It is of paramount importance that Section 29(1) appears to grant rights to a promoter subject to the Broadcasting Act. The Section then derogates from the rights granted to a promoter and therefore could have the effect of derogating from the rights and obligations of the public broadcaster established in terms of the Broadcasting Act, particularly the provisions of clause 10(1)(i).

While the SABC has no difficulty with the promoter which owns the rights obtaining consent to broadcast the tournament from Boxing SA, Section 29(3) grants to Boxing SA an ability to "determine criteria which may be varied from time to time for the allocation of such rights". There is no hint as to how those criteria will be developed or determined but the reason for caution is established clearly in Section 29(4).

In terms of Section 29(4) Boxing SA may grant broadcast rights to a promoter, or not grant the allocation of the broadcast rights to the promoter. If it does not grant the allocation to the promoter it may allocate those rights to another promoter or allocate the broadcast rights to itself. Should it grant the rights to itself, it does so within its own discretion.

Given the ambit and parameters of this Section, obvious administrative abuses are available to Boxing SA and the inevitability of endless administrative law challenges become manifest. We have already submitted that this section may be hit by the Constitution. But there are also contractual and other difficulties which will present themselves for Boxing SA in this event.

The SABC has sought to understand the mechanism for introducing Section 29(4). What seems patently apparent to us is that the provisions of Section 17(1)(e) provides the answer. That section states that along with other funding possibilities, the funds of Boxing SA consist of "money generated from sponsorships and fundraising".

It is not necessarily the aspect of fundraising which is of much concern to us although clarification on the meaning of the word is required. It is the use of the word "sponsorships" which causes the graver concern. It appears as if Boxing SA will be able to raise sponsorship revenue by selling the broadcast rights which it has taken for itself in terms of Section 29(4)(b)(ii) of the Bill.

It has become trite that the SABC as well as all other local broadcasters engage in sponsorship activities to boost revenue. The implementation of Section 17(i)(e) read with Section 29(b)(ii) creates an opportunity for Boxing SA to either fill or supplement its coffers when it determines a need by attracting sponsorship. There is no regulation or other matter in the Bill to specify that the implementation of Section 29(4)(b)(ii) has anything to do with the possible financial requirements sought to be bolstered by Section 17(1)(e). It may have, and this is the danger.

Four further matters remain necessary for discussion.

The first is that there are already long-term agreements which have been concluded between the SABC and various promoters. This Bill contains within its parameters, the possibility that these contracts may be terminated or tampered with. This is clearly unacceptable. It is not only unacceptable to the SABC, but obviously to any broadcaster and may fall foul of many laws.

Secondly, the Broadcasting Act provides an obligation on the SABC to televise sport of national interest and also the developmental aspects of certain sports. This is in terms of its public broadcast service mandate. By imposing a possible limit on the SABC’s freedom to contract (by in turn derogating from a promoter’s ownership of boxing broadcast rights), there is a severe limitation cast upon the SABC’s ability and consequently, its obligation to fulfil its public service mandate.

Section 29, particularly having regard to its proviso, renders imperative, its re-drafting.

While the Broadcasting Act makes particular reference to sports of national importance, the Bill does not differentiate as to how matches might be construed as being of different levels of importance. Without such differentiation, the SABC is unable to make further comment at this time regarding for example, the difference between national and international tournaments.

Thirdly, the broadcast rights in sport are becoming lucrative business. This is an international trend and these media properties are becoming more and more valuable. Section 29 seeks to hit the ability of parties to contract freely by taking away from a promoter, rights which the promoter is given in terms of the Bill. The Bill limits a promoter’s capacity to conclude long-term and multi tournament agreements with the SABC and also creates the possibility that just a month before a tournament, a promoter can have the broadcast rights granted to him retracted. The revenue from the broadcast rights in a boxing tournament may well be the key between a break even and lose situation to a promoter, which will have the effect of reducing the feasibility of promoting the sport of boxing in South Africa. Furthermore, with television and radio scheduling requirements, the SABC will be unable to schedule tournaments given that it will not know whether or not it can afford the rights fee or whether or not it wishes to pay the rights fee sought by a third party because those aspects can move any time up to 30 days before a tournament. The SABC compiles its schedules well in advance of this stipulated time frame. Should Boxing SA be entitled to remove the broadcasting rights from the promoter promoting the tournament, this makes no legal or business sense and should be remedied in the next draft of the Bill.

Finally, while we do not know, it may well be that the intention of this Bill is to address what may be termed "dominance" of certain promoters. In this regard, the SABC submits that while this may be a justifiable activity, it cannot be seen to take place almost exclusively within the domain of Section 29. It may well be that a promoter who has concluded an agreement with the SABC is stripped of his broadcasting rights and sees those granted to another promoter.

Criteria are not set out or established and mechanisms regarding price, negotiation and so on are also not stipulated. In the circumstances, it is not patent or anywhere described by suggestion or implication, how a promoter not involved with the promotion of a tournament might be able to own rights in respect of that tournament and profit directly from it.

CONCLUSION

In conclusion, it is our submission that Section 29 offers no solution to implementing the tenants of the Bill as currently drafted. It creates a myriad of problems. These emanate from the Constitution, the obligations of the SABC as a public broadcaster and finally the inability of parties to trade and contract freely in a free market environment. In the circumstances, it is the SABC’s suggestion that the financial sponsorship provisions of the Bill require significant rethinking in respect of Section 17, and the provisions of Section 29 require input and a complete restructuring to ensure the independence, promotion, development and reputation of boxing in South Africa and the ability of the SABC to fulfil its public service mandate.

Adv R Bracks

Chief Legal Advisor

SABC