The South African Broadcasting Corporation ("SABC") hereby presents its submissions on the Broadcasting Amendment Bill ("the Bill"). To the extent that the Bill does not amend the Broadcasting Act, No. 4 of 1999 ("the Broadcasting Act"), and where the SABC believes that the Bill should amend the Broadcasting Act, proposed amendments to the Broadcasting Act are provided. In each case it is clear from the context whether the submission relates to the Broadcasting Act as amended by the Bill, or the Broadcasting Act in its unamended state.

In providing the submissions set out hereunder the SABC has, where appropriate, given brief reasons for its suggested wording.

The SABC’s submissions on the Bill have been divided into the following categories:

1. Corporate Governance

Under this category the SABC deals with the proposed introduction or deletion of, or amendment to sections 6(2), 10(3), 11(2), 13(11), 13A and 14(1) of the Broadcasting Act and items 11 and 15 of Schedule 2 thereof insofar as they affect corporate governance.

2. Independence of the SABC

Under this category the SABC deals with the proposed introduction or deletion of, or amendment to sections 6(2)-(5), 10)(3)(c), 10(4), 11(2) and 13(11) of the Broadcasting Act, insofar as they relate to the independence of the SABC.

3. Internal re-organisation of the SABC

Under this category the SABC deals with the proposed introduction or deletion of, or amendment to sections 7, 10(3) and 11(2) and (3) of the Broadcasting Act and items 10-15 of Schedule 2 thereof insofar as they affect the internal re-organisation of the SABC.

4. TV licence fee allocation

Under this category the SABC deals with the introduction of sections 27(6)(d) and (g) of the Broadcasting Act.

5. Constitutional Issues

Under this category the SABC deals with constitutional issues raised by the deletion of section 6(2) of the Broadcasting Act, proposed amendments to sections 6(4), 11(3)(c) and 12(2)(c) and the introduction of section 32A.

6. Major non-constitutional legal concerns

Under this category the SABC deals with the definitions of "broadcasting licence", "business" and "lessor", the conversion of the SABC under section 7(1) of the Broadcasting Act and items 1-9 of schedule 2, SABC licences upon conversion and internal re-organisation (s22(1)), the maintenance of a national data base of sales of television sets (s 27(6)(f)), the establishment of two regional television services (s 32A) and the commencement date of the Bill (s 31).

7. Drafting and other legal issues

Under this category the SABC deals with the definitions of "free-to-air-services" and "multi-channel distribution services", licences for broadcasting services (s 4), the omission in section 5 of a reference to the IBA Act, drafting errors in items 1, 5 and 6 of schedule 2, the deletion of the existing subsection 14(2) which makes the Group CEO of the SABC the "accounting officer" of the SABC, the deletion of the proposed section 24(4), the amendment of the proposed section 25(1) dealing with the preparation and auditing of financial accounts, the deletion of the existing sub-sections 26(3)-(7) dealing with the treatment of employees after transfer, the amendment of the proposed subsections 27(1), (3), (4), (5) and (6) which deal with TV licences and TV licence fees, the deletion of the proposed subsection 28(3) dealing with the preparation and submission of annual reports and the amendment of the proposed section 31 dealing with inquiries by ICASA.

Each category will be discussed in turn below.

1. General

The SABC is concerned that a number of the proposed amendments to the Broadcasting Act are in conflict or potential conflict with current best practice in corporate governance, most recently articulated, on a policy level, in the King Report on Corporate Governance in South Africa 2002 and the draft Protocol on Corporate Governance in the Public Sector, and reflected in legislation such as the Companies Act, 1973, and the Public Finance Management Act, 1999 (the "PFMA"). Most of the SABC’s concerns relate to the way in which the Bill envisages the role of the Board of Directors of the SABC, and the requirements in the Bill for Ministerial approval of SABC policies.

2. Role of the Board of Directors

The SABC is concerned about what appears to be a major shift, in the intended role of its Board of Directors. This is manifested in a number of provisions of the Bill, most notably in its proposed amendments to sections 13 and 14 of the Broadcasting Act, as well as its insertion of a new section 13A.

The SABC’s view is that the proper function of the Board is to control the affairs of the SABC and to protect its role as public broadcaster, and that this function is adequately expressed in the existing Broadcasting Act, as well as in the PFMA and the law of companies, once the SABC becomes SABC Limited. There is no need therefore to make changes to the management structures and functions of the SABC currently set out in the Broadcasting Act.

Our detailed submissions on those provisions of the Bill adversely affecting the functions and powers of the Board, are set out below.

1. Ad section 13 of the Broadcasting Act

In the SABC’s view, the existing subsection 13(11) of the Broadcasting Act, which provides that the Board controls the affairs of the SABC and must protect the matters referred to in the current section 6(2) of the Broadcasting Act, should remain as is, as it represents an appropriate formulation of the Board’s role (although retaining section 13(11) of the Broadcasting Act obviously depends on the simultaneous retention of the current section 6(2). In this regard see 3.1 below). The SABC believes therefor that the proposed amendment to subsection 13(11) of the Broadcasting Act (set out at 14(b) of the Bill), which refers to the role of the Board as being the overall determination of policies of the SABC, is inappropriate and should be deleted.

The proposed subsection 13(11) will have a drastic impact on the current structure of the SABC, as it has the effect of eliminating the "control" function of the Board, and relegating the role of the Board to one of mere policy-making. This would be inconsistent with the proper functions of a board, as established in company law and encapsulated more recently, in relation to the public sector, in the PFMA, and would create conflicts with these laws. The proposed subsection 13(11), when read with the proposed deletion of subsection 6(2) of the Broadcasting Act, also raises significant concerns about the maintenance of the SABC’s independence and freedom of expression. More detailed views on this issue are set out below at 3.1.

2. Ad the proposed section 13A of the Broadcasting Act

The SABC’s view is that the proposed section 13A of the Broadcasting Act, which is set out at paragraph 15 of the Bill, should be deleted in its entirety for the following reasons:

1. The proposed section 13A constitutes "micro-management" of the SABC. There is no need for an additional management structure to be imposed by legislation on the operations of the SABC. In fact it would be detrimental to the effective running of the SABC if the Board together with its Executive Committee were to cease being the organ through which the SABC is run. If the SABC requires internal bodies other than the Board and the Executive Committee, it will create them in such a way that its needs are met – and it needs the flexibility to be able to do this if required. In fact the SABC Board has created a number of sub-committees to deal with matters such as human resources and staffing, programming, audit and finance, and remuneration. These sub-committees are created as and when required and operate under a system of delegations from the Board. To have new structures imposed by law, which may not be practicable or achieve their objects and cannot be changed, will merely make it more difficult for the SABC to operate efficiently.
2. The notion of management boards, which has been used in a number of statutory instruments in South African law (but has no settled legal meaning in South African company law), is one that is generally used where the control and management of the business and affairs of an entity are performed by one entity. However, in the case of the SABC this role is split between the Board and the Executive Committee, and control is vested (rightly) in the Board, while the day-to-day management function is carried out by the Executive Committee as set out in section 14 of the Broadcasting Act. There is no need therefor for a further management body within the SABC.
3. If there were to be management boards staffed by non-executive members of the Board, the latter would have to be employed on a full-time basis by the SABC. The current non-executive members of the SABC Board are all experts in their fields, with considerable commitments outside the SABC, who meet from time to time for purposes of Board meetings and committees. It would be impossible for those individuals to fulfil the role envisaged by this proposed section of the Broadcasting Act. The current members of the Board would therefore be forced to resign from the Board or their appointments would have to be terminated, and others appointed. This will undoubtedly result in legal and morale problems for the SABC, and will have enormous cost implications if these new structures are to be accommodated.
4. The current Broadcasting Act contemplates (especially in subsection 13(4)) a Board made up of individuals with a diverse, complementary range of skills who, when working together, constitute a body with the required knowledge and experience to control the affairs of an organisation such as the SABC. The current Board includes persons with skills in finance, programming, gender and other matters. If the Board is split into two management boards, the benefits of the combination of skills and experience that vests in the existing Board will be lost. In practical terms, the management boards will be inter-dependent because of the various skills of their members, so they will be forced to create sub-committees to assist each other, in order to spread those skills. The consequence of this will be that the objectives of separate management for the public and commercial service divisions will be undermined.
5. Any attempt to interpose a management body between the Board and the Executive Committee would result in the Executive Committee’s role becoming redundant (unless all the powers of the management boards are delegated to the Executive Committee, in which case the management boards will be redundant).
6. The proposed subsections 13A(3) and 13A(4) set out in general terms the powers and authorities of the proposed management boards. However, the powers and authorities set out in those subsections are – it appears – the powers and authorities of the Corporation itself, which in terms of company law means the powers of the Board. In other words, although the management boards are intended to perform management functions, their powers are control powers appropriate to the Board.
7. Because the management boards will have exactly the same powers as the main Board of the SABC, it is not clear what role the Board will play, and the SABC is concerned that the Board will become redundant as a controlling body.
8. Also, the relationship between the proposed management boards and the Board as a whole is not clear.
9. The SABC believes that the creation of management boards will be divisive and create a sense of competitiveness between members of such boards, the main Board and the Executive Committee, and that this will adversely affect morale and unity within the organisation as a whole.
10. The proposed section 13A of the Broadcasting Act is an attempt to fundamentally change the structures of control and management of the SABC. However, this fundamental change has not been maintained throughout the Broadcasting Act, the remainder of which continues to refer to "the Board" as a single body controlling the SABC. This will create serious interpretive and practical problems.
3. Ad section 14 of the Broadcasting Act

In the SABC’s view, the proposed subsection 14(1) of the Broadcasting Act (which deals with delegations by the proposed management boards) should be deleted, along with the proposed section 13A. The existing subsection 14(1) should remain. It sets out in clear terms what the role of the Executive Committee is, and provides it with primary powers rather than merely the delegated powers in terms of which it would operate if the management boards were in place. It is not clear to the SABC how the proposed delegation system would operate in practice. The persons to whom powers may be delegated , being in effect the Executive Committee, will, if the proposed system of management boards is implemented, operate within the context of at least three sets of delegations – one from the Board itself, one from the public service management board, and one from the commercial service management board. This appears to the SABC to be an impractical way of operating its business.

3. Ministerial approval of SABC policies

There are a number of provisions in the Bill which require the SABC to obtain Ministerial approval. These relate to certain policies and codes of conduct of the SABC, and budgets and business plans (in this regard see the proposed subsections 10(3) and 11(2)), as well as the approval of the inventory of SABC assets, liabilities, rights and obligations (Item 11 of Schedule 2), and of the "deemed market related consideration" upon which goods and services are to be made available as between the public and commercial service divisions of the SABC (Item 15 of Schedule 2). While the SABC has provided detailed comments on each of these sections below, it wishes to reiterate its serious concern about three general aspects of the requirement for such approvals.

 

1. Firstly, the SABC’s view is that it is inappropriate for the Minister to have the power and duty to approve the relevant matters referred to in the Bill. Approval by the Minister of such matters amounts to "micro-management" of the SABC’s internal affairs, which will hamper its operations and undermine the role of the Board of the SABC, as well as the independence of the SABC as a public broadcaster.
2. Secondly, there is a concern that the discretion afforded to the Minister in these provisions is completely unbounded. No criteria or guidelines are set out as to how such discretion must be exercised, and the factors that must be taken into account by the Minister in the approval process. The factors to be taken into account are not self-evident, nor is the expertise of the Minister in all the matters in relation to which discretion is to be exercised, guaranteed. If Ministerial approval is required for various operational aspects of the SABC’s business, criteria for the grant of such approvals should be set out, along with the consequences of refusal, and mechanisms for remedying a situation where approval is refused. The constitutional difficulties raised by these matters are dealt with in section 6 below.

There is no mechanism provided for the resolution of disputes concerning the content of the budgets, business plans, policies and codes of conduct which are required to be submitted to the Minister.

There is also no indication in the new section 10(3) as to what is to occur if the old Corporation fails to, or is unable to, submit the relevant budgets, business plans, policies and codes of conduct for approval prior to the date fixed by the Minister for conversion of the Corporation in terms of the new section 7(1). Since the old Corporation will be converted into "the Corporation" with effect from the conversion date, it will no longer, as from that date, be able to comply with the provisions of the new section 10(3).

3. Thirdly, from a practical perspective, the SABC is concerned that the process of obtaining Ministerial approval, especially in relation to the internal workings of the public and commercial service divisions, will be cumbersome and will hamper the ability of the SABC to carry out its day-to-day operations in the most efficient manner. There is no mechanism set out relating to the manner in which approvals should be sought, nor the time-frames within which this should occur. It is also not clear what the status of the SABC’s policies or operations will be pending approval by the Minister.

1. Proposed amendments to section 6 of the Broadcasting Act

The effect of the proposed deletion of subsection 6(2) of the Broadcasting Act is to eliminate the express protection in the Act of the SABC’s freedom of expression, and the values of creative, journalistic and programming independence of the SABC. Read with amendments to subsection 13(11) of the Act, the Board’s role in protecting those values, which are the hallmarks of a public broadcaster in a democratic society, is also destroyed. The proposed deletion of subsection 6(2) of the Broadcasting Act is a matter of grave concern to the SABC. The SABC, like any other person or entity, has a right to freedom of expression, and thus the deletion of subsection 6(2) will raise the question of whether it is Parliament’s intention to eliminate the freedoms and values set out in 6(2), values which in the SABC’s view are essential to the robust functioning of a public broadcaster in our constitutional democracy. Deletion of this important provision of the Broadcasting Act will undoubtedly raise a damaging national debate about limitations on freedom of expression, which is entirely unnecessary, as there are appropriate and sufficient sectoral restrictions on potential abuses of freedom of expression, in the context of journalistic ethics and principles, all of which the SABC is committed to. The SABC would therefore strongly recommend that the current subsection 6(2) of the Broadcasting Act remain in place.

The proposed new subsections 6(3), 6(4) and 6(5) of the Broadcasting Act are, in the SABC’s view, both a cause for concern, and inappropriate. A brief summary of our reasons follows:

1. the requirement in subsection 6(3) that the Board must ensure "accurate, fair and accountable reporting", is unnecessary. There is sufficient sectoral regulation of journalistic ethics and principles, both domestically and internationally, all of which the SABC is committed to. Also, the SABC already has, or will have, a code of conduct and policies applicable to reporting, which will provide for these values to be implemented by its staff, and there is therefore no need to include references to these values in the legislation itself;
2. the proposed subsections 6(3) and 6(4) provide that reporting by the SABC must "advance the national and public interest of the Republic". The reference to "national and public interest" is unintelligible as well as undermining of the SABC’s independence. "National interest" is defined in relation to Chapter 1 of the Constitution, but the definition does not make matters much clearer. Certain sections of Chapter 1 of the Constitution, such as section 3 (Citizenship), section 4 (National Anthem) and section 5 (National Flag) are not self-evidently relevant to the operations of the SABC. The meaning of the term "public interest" in relation to the SABC, is also unclear, as it has different meanings in different contexts. A provision obligating the Board of the SABC to perform its reporting function in a manner which advances the national and public interest would, in the SABC’s view, be impossible to interpret and enforce. As a whole, the term used in subsections 6(3) and 6(4), "accurate, accountable and fair reporting … in order to advance the national, and public interest of the Republic" is not one with a clear meaning. Some reporting, especially world news, will have no relevance to the Republic, and there may be circumstances in which the national interest and the public interest differ. Also, reasonable people will differ as to the nature of the national interest and the public interest in any particular instance;
3. the requirement in subsection 6(4) that such policies will be submitted to the Minister for approval, is inappropriate and in the SABC’s view unconstitutional, an issue which is dealt with more fully in section 5.2.4 below. At most, such policy should be made available to the Minister in accordance with the Shareholder Compact to be concluded between the SABC and the Minister. It is not the proper role of the Minister to approve the particular policies of the SABC, which should be determined by the Board after consultation within the SABC and the broadcasting sector. The SABC is bound by the objectives of the organisation as set out in the Broadcasting Act and these will guide its policies. But as long as its policies are compliant with applicable law, the Minister should not play any role in their determination;
4. with regard to the proposed subsection 6(5), the manner in which the Board regulates and monitors reporting by its journalists should, in the SABC’s view, rather be determined with reference to existing mechanisms for regulation of reporting by the media generally, such as the Code of Conduct for Broadcasting Services (as referred to in the Independent Broadcasting Authority Act), the National Association of Broadcasters Code of Conduct, as well as the Constitution, the common law and the SABC’s internal policies, which are guided by international precedent applicable industry-wide. The terms "accurate", "responsible" and "fair" in relation to journalism/reporting, are all terms that are used in international and local documents relating to journalistic ethics, and the inclusion of them in this legislation is inappropriate;
5. the reference in subsection 6(5) to the Board and journalists having to "exercise care and skill and act in the best interests of the Corporation" will also cause confusion. Journalists are subject to a common law duty to exercise care and skill in the execution of their professional responsibilities, and members of the Board have numerous responsibilities in terms of the PFMA, company law, and the Broadcasting Act. To impose another layer of (unclear) responsibilities on the Board would be both overly burdensome and counter-productive.
2. Ad sections 10 and 11 of the Broadcasting Act

The SABC’s view is that the proposed subsections 10(3)(c) and 10(4) (relating to the public service division) and 11(2)(c) (relating to the commercial service division) of the Broadcasting Act, should be deleted in their entirety. These provisions, which are set out in paragraphs 11 and 12 of the Bill, provide for Ministerial approval of the SABC’s policies on news, programming, local content, education, universal service and access, and language. The reasons for the SABC’s views are as follows:

1. the determination of the SABC’s policies on news and other matters should be within the discretion and area of responsibility of the SABC Board. Those policies must comply with relevant law and sectoral policies and ethical guidelines but they should not be subject to approval by the Minister;
2. as with other proposed provisions requiring the Minister’s consent, it is questionable whether subsection 10(3)(c) will withstand constitutional scrutiny, as no criteria for the exercise of the Minister’s discretion in approving the policies are provided in the Bill. (This issue is dealt with more fully in section 5.2.4 below);
3. the proposed subsection 10(4) is confusing, as it links the concepts of "policies" and "codes of conduct". The clause provides that each of the policies referred to in the proposed subsection 10(3)(c) "must include a code of conduct of SABC services and personnel" that reflects the values set out in the proposed subsection 10(4). The SABC does not understand either the objective of this provision, or its intended outcome. Policies are different from codes of conduct, and while the SABC may have one or more codes of conduct, such codes of conduct will not be incorporated within its various policies;
4. the values referred to in the proposed subsection 10(4), such as the constitutional principles of fairness, equality and equitable treatment of all segments of the South African population, equality of languages, the right of all South Africans to both receive and impart information, a full range of audience interests, beliefs and perspectives, and standards of accuracy and impartiality in news and programmes that deal with matters of public interest, are relevant and applicable to certain of the required policies, but will not all be relevant to all the policies;
5. further, as with the proposed amendments to section 6 of the Broadcasting Act, the SABC questions why such matters as the values that underlie various policies should be dealt with in primary legislation when the SABC is constrained and bound by its objectives as set out in the Broadcasting Act, as well as by the Bill of Rights;
6. values may change over time, and to entrench certain values and not others in legislation will cause interpretive problems if anybody ever attempts to enforce these provisions of the Broadcasting Act. Already, the objectives of the SABC are set out in detail in the Broadcasting Act, and the SABC is bound by the provisions of the Constitution, as well as any number of sector-wide ethical standards. The imposition of these further values on the policies of the SABC is unnecessary and confusing;
7. further, the policies referred to in subsection 10(3)(c) are available to the Treasury and the Auditor-General if required, through the PFMA, and access thereto by the Minister would more appropriately be regulated by the Shareholder Compact to be concluded between the SABC and the Minister, rather than through an approval process set out in the Broadcasting Act.

1. General

Section 9 of the Broadcasting Act envisages certain internal restructuring of the SABC in order to create two divisions: public broadcasting service and commercial broadcasting service. A number of further amendments relating to such internal restructuring have been proposed in the Bill. In general, the SABC is of the view that it is not necessary or appropriate, in primary legislation, to provide for anything other than the framework of the internal restructuring of the SABC, as is done in section 9 of the Broadcasting Act. The detail thereof, and the best method of managing such internal restructuring, should be left to the SABC and, where required, could be dealt with in the Shareholder Compact, or in consultation with the Department. The SABC’s more detailed comments on proposed amendments to the Broadcasting Act that deal with the internal re-organisation, are set out below.

2. Ad the proposed Schedule 2 to the Broadcasting Act
1. The proposed Section 7 of the Broadcasting Act deals with the conversion of the SABC to a public company, and the proposed subsection 7(4) refers to certain transitional provisions set out in a new Schedule 2 to the Act. Certain of the Items in Schedule 2 relate however not to the conversion of the SABC to a company, but to the internal re-organisation of the SABC as described in section 9 of the Broadcasting Act. The SABC is of the view that all of these (Items 10 to 15) are problematic and inappropriate for primary legislation.
2. The proposed Item 10 of Schedule 2 is unnecessary as a legislative provision, and should be deleted. The SABC has already undertaken a substantial due diligence exercise for the purpose of ascertaining whether there are any risks attached to its incorporation, and has made the findings of that exercise available to the Department. The SABC is committed to completing this task to the extent that it has not already been done, and is committed to working with the Department in order to address any of its concerns. If there is concern about any particular information, it can in any event request access thereto before conversion, as the determination of the date of conversion is within the discretion of the Minister.
3. With regard to the proposed Item 11 of Schedule 2, the SABC’s view is that while it has no objection in principle to providing the Minister with information as to its assets and liabilities, the Item provides for regulation of an issue that need not and should not be prescribed in legislation. The proposed subsection gives the Minister the power and the duty to approve an inventory to be prepared by the SABC of all its assets, liabilities, rights and obligations. This creates a number of problems for the SABC.
1. Firstly, the Item sets out no criteria for approval of the inventory. The Minister is accordingly given an unlimited discretion whether or not to approve the inventory. The factors that the Minister must take into account are not obvious or spelt out. Nor are the consequences of non-approval, or any mechanism to remedy any defect. The SABC is not given any indication in advance whether the form or methodology chosen by it for preparation of the inventory will be acceptable to the Minister.
2. Secondly, it is not practicable for the SABC to allocate all rights, obligations, assets and liabilities to the public and commercial broadcasting service divisions respectively. A large number of its rights, obligations, assets and liabilities have arisen in the context of a single corporation, are used by both public and commercial broadcasting service divisions and cannot be divided up without constituting a breach of various obligations of the SABC.
3. Thirdly, while the SABC has prepared a detailed asset register of all its movable and immovable property, which is used on an ongoing basis as the supporting documentation for preparation and review of its balance sheet (which is an annexure to its annual financial statements, submitted to the Minister), it does not have, nor does it know what is understood by, an "inventory of all its …rights [and] obligations…". Without further information as to exactly what is envisaged by such an inventory, it is impossible to know whether the SABC will be able to comply with such a requirement.
4. Fourthly, the SABC’s view is that the information currently held by it, which is available to the Minister upon request, should be sufficient for purposes of conversion of the SABC to a public company, Apart from the asset register prepared by the SABC, it has also procured independent valuations of over 92% of its movable and immovable assets, and all of its intellectual property rights. Those valuations have already been made available to the Minister. The SABC reiterates that it is committed to co-operating with the Department on all these matters, but it strongly believes that these are not matters that should be the subject of legislation.
4. To the extent that the Parliamentary Portfolio Committee nevertheless considers it necessary to include a provision relating to the SABC’s assets and liabilities in the Bill, the SABC suggests that a provision along the following lines be substituted for the proposed Item 11 of Schedule 2:

"11(1) The old Corporation must, before the date of conversion, prepare and submit to the Minister an inventory of all its assets and liabilities.

(2) The inventory referred to in subsection (1) must be in a form deemed appropriate by the Board, having regard to the principles of transparency and practical feasibility and the resources available to the old Corporation."

5. The purpose of the proposed Item 12 of Schedule 2 is not clear to the SABC. Because the Board of SABC Limited will not be in existence until the date of conversion, it will not be possible for the Minister to submit the inventory to such Board "upon receipt" thereof. Therefore, we suggest that if this Item is to be retained at all (and our view is that it is unnecessary), it be amended to read as follows:

"12. The Minister must, on or as soon as is reasonably possible after the date of conversion, submit a copy of the inventory referred to in Item 11 to the Board of the Corporation, the National Treasury and the Auditor-General."

6. The proposed Item 13 of Schedule 2 will also cause grave problems to the SABC, and should be deleted.
1. As a preliminary point, the SABC believes it would be useful to understand exactly what the Department’s policy objective is in relation to this subsection. Once that is clear, it may be possible to determine a method of achieving such objective which will not unduly interfere with the operations of the SABC.
2. Secondly, the term "holder" of assets and rights has no accepted legal meaning when used in addition to the concept of "owner" and the purpose of the reference thereto is unclear.
3. Thirdly, it is not practicable for the SABC to allocate all of its assets and rights exclusively to the public service division as many of the assets and rights serve a group function.
4. Fourthly, the subsection refers only to the "assets and rights" of the SABC, not to its "obligations and liabilities". It will not be possible to ascertain the "true income and expenditure incurred by the Corporation" without investigating its obligations and liabilities as well as its assets and rights. It is not clear from this clause where it is envisaged the SABC will allocate its obligations and liabilities.
5. Fifthly, there are a number of other ways in which "the true income and expenditure incurred by the Corporation in rendering a public broadcasting service and the commercial broadcasting service" can be ascertained. The financial reporting obligations of the SABC in terms of the Companies Act, the Broadcasting Act and the PFMA, are sufficient. Also, section 54 of the PFMA permits the Treasury to obtain such "information, returns, documents, explanations and motivations" as it requires, from a public entity.
7. It is also not feasible to implement Item 14 of Schedule 2, as it would require the elimination of all group functions currently engaged in by the SABC, and the notional performance of such functions by the public service division, as services to the commercial services division. These functions include, as mentioned elsewhere, sales and marketing, legal services, group finance, research, resource management, human resources, technology division, corporate communications, corporate strategy, news, sport and education. Many of these functions are indivisible.
8. As with the previous Items referred to above, Item 15 of Schedule 2 cannot practically be implemented by the SABC, for logistical reasons. The practical implications of this provision, which requires the approval of the Minister for every notional transaction between the SABC’s public and its commercial broadcasting services, are monumental. It is also not clear what happens while the SABC is awaiting approval by the Minister. Must approval be sought prior to making available any asset, right or service by one division to another? What happens if the Minister does not approve such considerations? How must the SABC operate in the interim? All of the SABC staff performing group functions divide their time between public and commercial broadcasting services, on any particular day. If all of those people had to seek approval for every act that relates to one or the other, it would be impossible for them to carry out their functions. For example, the Chief Legal Advisor at the SABC may have five or six meetings in a day, some of which relate to the SABC’s public broadcasting services, some to its broadcasting commercial services, and some to overall legal issues within the organisation. How is it envisaged that Item 15 of Schedule 2 would operate in relation to the legal advisory services provided by such person? Further, as with the proposed Item 11 of Schedule 2, the criteria "for approval" of the "deemed market related considerations" to be (deemed) paid by one division to another are not set out in the Bill, which would give the Minister unlimited discretion to approve, or not approve, such matters. This is problematic as the factors that the Minister must take into account, and the consequences of non-approval, are not clear. It is in any event unclear what a "deemed" market consideration means.
9. In summary, the SABC strongly believes that the proposed Items 10 to 15 of Schedule 2 to the Broadcasting Act must be deleted. If not deleted in their entirety, the SABC urges the Parliamentary Portfolio Committee to consider our suggestions in regard to Items 11 and 12 of Schedule 2, and to delete Items 10, 13, 14 and 15.
3. Ad section 10 of the Broadcasting Act

The SABC’s view is that the proposed new subsections 10(3)(a) and (b) of the Broadcasting Act, which deal with approval by the Minister of the budget and business plan of the public service division of the SABC, should be deleted. The obligations set out therein are already covered by section 52 of the PFMA in respect of the SABC / SABC Limited as a whole. There is therefore no need to repeat them in the Broadcasting Act.

With regard to the SABC’s comments on the proposed subsections 10(3)(c) and 10(4), see 3.2 above dealing with the SABC’s independence.

The proposed subsection 10(5) of the Broadcasting Act is also unnecessary and should be deleted. Subsection 10(5)(a) is already covered by subsection 9(2) of the Broadcasting Act. Subsection 10(5)(b) is unnecessary as the Corporation as a whole will have audited financial statements. Subsection 10(5)(c) does not make sense, as it provides for audited financial statements to be submitted to auditors of the Corporation. Subsection 10(5)(d) is covered by section 55 of the PFMA.

4. Ad section 11 of the Broadcasting Act

The SABC’s view is that the proposed subsections 11(2) and 11(3) of the Broadcasting Act suffer from the same defects as the proposed subsections 10(3) and 10(4), and should be deleted.

The existing section 11 of the Broadcasting Act, which will become subsection 11(1), makes the SABC’s commercial broadcasting services subject to the same policy and regulatory structures as other commercial broadcasting services (see what will become 11(1)(a)). Subsection 11(1)(b), however, also forces the SABC to comply with the values of the public broadcasting service, in the provision of its commercial broadcasting service. The SABC is concerned that there may be conflicts between the "policy and regulatory structures" for commercial broadcasting services, referred to in what will be subsection 11(1)(a) of the Broadcasting Act, and the "values of the public broadcasting service" referred to in what will be subsection 11(1)(b) of the Broadcasting Act. The SABC’s view is that one of the two should be stated to prevail in the event of such conflict. This amendment would reflect the fact that the SABC’s commercial broadcasting service is not "purely" commercial in the same sense as is e-TV’s commercial service.

1. Allocation to public broadcasting service

The proposed subsection 27(6)(d) of the Broadcasting Act (set out at paragraph 21 of the Bill), provides that all television licence fees collected by the SABC must be used by the SABC solely for purposes of its public broadcasting service.

The SABC is concerned that this provision fails to acknowledge that the SABC is structured, and will continue to be structured, in such a way that despite there being a public and a commercial broadcasting service division within the SABC, there are numerous SABC "group" functions that service both the public and commercial broadcasting service divisions. That portion of those functions that is dedicated to the public broadcasting service division, will require funding from licence fee revenue. Therefore, the proposed subsection 27(6)(d) of the Broadcasting Act should be reframed to provide that the allocation of licence fee revenue will be to the public broadcasting service "and all related administration and functions".

Further, the obligation to furnish the Minister annually with full details of all television licence fees collected duplicates a number of the Corporation’s existing financial reporting obligations, and should be deleted from the proposed subsection 27(6)(d).

2. Ministerial policy directives

The proposed subsection 27(6)(g) of the Broadcasting Act provides that the Minister must issue policy directives on the use of the television licence fees.

The SABC’s strong view is that this proposed subsection should be deleted, for the following reasons:

1. the Minister approves the SABC’s annual corporate plan and budget, submitted in terms of the PFMA. There are therefore opportunities during the course of a financial year for the Minister to engage with the SABC on the manner in which the SABC intends to make use of its television licence revenue. Those opportunities should be sufficient;
2. the Minister is not conversant with the day-to-day financial affairs of the SABC, and if policy directives are issued by the Minister that have the effect of amending the corporate plan and/or key objectives as set out in the shareholder compact, the SABC’s financial planning and operations will be compromised;
3. the legal status of the "policy directives" referred to in this proposed subsection is not clear;
4. the SABC recommends that if any person or entity should have control over the particular uses of television licence fee revenue, it should be the Board.

1. Sections 16 and 192 of the Constitution
1. Section 16(1) of the Constitution entrenches the fundamental right of freedom of expression and states that this right includes:

"(a) freedom of the press and other media;

(b) freedom to receive or impart information or ideas".

As the public broadcaster, the SABC is vested with the fundamental right of freedom of expression and both the SABC and Parliament carry the duty under section 7(2) of the Constitution to "respect, protect, promote and fulfil" the fundamental right of freedom of expression.

2. Section 192 of the Constitution states the following:

"192 Broadcasting Authority

National legislation must establish an independent authority to regulate broadcasting in the public interest, and to ensure fairness and a diversity of views broadly representing South African society."

3. Section 192 expressly obliges Parliament to establish an independent authority to regulate broadcasting. In execution of this constitutional obligation, Parliament has enacted the Independent Communications Authority of South Africa Act 13 of 2000 ("the ICASA Act") which establishes the Authority as the independent regulator of broadcasting.
4. It is clear that section 192 of the Constitution operates to guarantee the independence of the Authority in so far as it is responsible for broadcast regulation. Any legislation or executive conduct which encroaches on the independence of the Authority in this regard is accordingly unconstitutional and invalid.

New National Party of South Africa v Government of the Republic of South Africa and Others 1999 (3) SA 191 (CC) at para 96

Independent Electoral Commission v Langeberg Municipality 2001 (3) SA 925 (CC) at paras 27 to 31

5. One of the aspects of this constitutional guarantee of independence is that ICASA is not subject to executive direction or interference in its regulation of broadcasting. In this regard, the judgments of the Constitutional Court in relation to the constitutional guarantee of independence for the Electoral Commission have clear implications for ICASA:

"The second factor, 'administrative independence', implies that there will be control over those matters directly connected with the functions which the Commission has to perform under the Constitution and the Act. The Executive must provide the assistance that the Commission requires 'to ensure (its) independence, impartiality, dignity and effectiveness'. The Department cannot tell the Commission how to conduct registration, whom to employ, and so on; but if the Commission asks the government for assistance to provide personnel to take part in the registration process, government must provide such assistance if it is able to do so. If not, the Commission must be put in funds to enable it to do what is necessary."

New National Party of South Africa v Government of the Republic of South Africa and Others 1999 (3) SA 191 (CC) at para 96

6. So, whatever else may be embraced by section 192, the constitutionally entrenched independence of ICASA means that it must have full control over the regulation of broadcasting. ICASA cannot be told by government how to exercise any material aspect of its regulatory function in respect of broadcasting.
7. Section 192 of the Constitution does not state expressly that organs of state other than the independent authority are precluded from participating in the regulation of broadcasting. Nevertheless this is implicit in the section. To give effect to the manifest purpose of the provision, it is necessary to interpret section 192 as tacitly providing that the function of broadcast regulation is to be reserved exclusively for ICASA.
8. In this regard there is a clear analogy to be drawn between the provisions of section 192 of the Constitution and those of section 155(3)(b) which state that "National legislation must … establish criteria and procedures for the determination of municipal boundaries by an independent authority". Although section 155(3)(b) does not provide expressly that organs of state other than the independent authority it contemplates are precluded from influencing or participating in the determination of municipal boundaries, the Constitutional Court has held that this is implicit in the section. Thus legislation which indirectly constrained the local government delimitation process was held by the Court to be unconstitutional because it usurped aspects of a power that section 155(3) reserved for an independent authority, the Local Government Demarcation Board.

Executive Council, Western Cape v Minister of Provincial Affairs and Constitutional Development and Another 2000 (1) SA 661 (CC)

By analogous reasoning, section 192 of the Constitution vests the function of regulating broadcasting exclusively in ICASA and precludes the legislature or the executive from usurping any material aspect of this regulatory function.

2. The Bill and Sections 16 and 192 of the Constitution
1. The Bill proposes to insert new sections 6(4), 10(3)(c) and 11(2)(c) of the Act which would oblige the SABC to submit to the Minister for her prior approval its broadcasting policies on matters as diverse as accurate, accountable and fair reporting, news and editorial matters, local content, programming and language.
2. The SABC submits that the relevant provisions of the Bill are unconstitutional because they violate section 16 and section 192 of the Constitution. The policies covered by the proposed sections 6(4), 10(3)(c) and 11(2)(c) touch issues lying at the core of freedom of expression. For the purposes of freedom of expression, SABC, as the only public broadcaster, has an identity that is separate from its owner, the State. To subject SABC to state control over these areas of policy therefore limits the freedom of expression not only of the SABC but also of the public which has the fundamental right under section 16 to receive information and ideas which the public broadcaster desires to broadcast. It is unlikely that the State could justify such a limitation of freedom of expression within the requirements of the Constitution:
1. Not only do the proposed amendments limit core features of the fundamental right to freedom of expression, they do so by means of a completely unguided discretion which is vested in the Minister. The limitations clause of the Bill of Rights, section 36 of the Constitution, does not allow the legislature to delegate to the executive this sort of unconstrained power to limit fundamental rights. Thus in Dawood v Minister of Home Affairs the Constitutional Court stated the following:

"It is an important principle of the rule of law that rules be stated in a clear and accessible manner. .... If broad discretionary powers contain no express constraints, those who are affected by the exercise of the broad discretionary powers will not know what is relevant to the exercise of those powers or in what circumstances they are entitled to seek relief from an adverse decision .... If rights are to be infringed without redress, the very purposes of the Constitution are defeated."

Dawood v Minister of Home Affairs 2000 (3) SA 936 (CC) at para 47

2. Furthermore, if there is any constitutionally acceptable function to be performed in the regulation of the SABC’s policy with respect to the matters identified by sections 6(4), 10(3)(c) and 11(2)(c) of the Act in their proposed amended form, it is one which the Constitution vests exclusively in ICASA as the independent regulator of broadcasting. Indeed, quite apart from the violation of section 16 of the Constitution, the attempt by the Act to vest the Minister with these powers which the Constitution reserves exclusively for ICASA is inconsistent with section 192 of the Constitution and independently invalid for that reason.
3. The Bill proposes to delete the existing section 6(2) of the Act which confirms that in the exercise of its powers under the Act SABC enjoys "freedom of expression and journalistic, creative and programming independence." The SABC submits that this proposed amendment would unconstitutionally limit the freedom of expression of the SABC and its viewing and listening public. It is not clear what purpose the proposed deletion of section 6(2) could serve other than to limit the freedom of expression in this way. A legislative amendment with this sort of unconstitutional purpose simply cannot be justified under the limitations clause. Moreover, such an amendment is clearly inconsistent with the constitutional duty imposed on the State by section 7(2) of the Constitution and would be unconstitutional for that additional reason.
4. The Bill also proposes to insert into the Act a new section 32A which would establish two regional television services, determine the areas within which they are to operate and their obligations relating to the language of broadcasting and direct the Authority to license them. The SABC submits that the proposed section 32A would be unconstitutional because it is purports to exercise functions relating to the regulation of broadcasting in a manner inconsistent with section 192 of the Constitution. The issue of television licences is a central element of the function of broadcast regulation. The questions whether to license regional broadcasters, and if so, how many regional broadcasters should be licensed, in respect of which regions and with what obligations relating to the language in which they broadcast are all questions to be answered in the performance of a function which section 192 of the Constitution reserves for ICASA. Should Parliament enact the proposed section 32A it would either be:
1. purporting to decide these questions directly in legislation in a manner which usurps a function which is constitutionally reserved for ICASA, or

Executive Council, Western Cape v Minister of Provincial Affairs and Constitutional Development and Another 2000 (1) SA 661 (CC) at paras 37 to 53

2. purporting to issue directions to ICASA in respect of a function which the Constitution contemplates will be performed by ICASA independent of legislative or executive direction of this nature.

1. Definition of "broadcasting licence"
1. The SABC believes that the proposed definition of "broadcasting licence" (section 1 of the Broadcasting Act), set out at paragraph 2(d) of the Bill should be amended so that the inserted words "or the IBA Act" are placed earlier in the definition, so that it reads as follows:

"broadcasting licence" means a licence granted and issued by the Authority in terms of this Act or the IBA Act to a person for the purpose of providing a defined category of broadcasting service, or deemed by this Act to have been so granted and issued.

2. The reason for this is that the effect of the definition should be to preserve the validity of broadcasting licences validly granted either under the Broadcasting Act or the IBA Act, or deemed by the Broadcasting Act to have been so granted and issued. All the broadcasting licences held by the SABC and by other broadcasters were granted and issued in terms of the IBA Act, and it is obviously not the intention of the Bill to invalidate those licences.
2. Concept of "national interest"

The SABC’s view is that the proposed definition of "national interest", set out at section 2(r) of the Bill, is both unnecessary and unintelligible, therefore will lead to problems of interpretation. Its use in the proposed definition of "national sporting events" (which is set out at section 2(s) of the Bill) does not give meaningful interpretive guidance to the term, as it is not obvious how Chapter 1 of the Constitution is relevant to the categorisation of particular sporting events, and in fact we submit that some aspects of Chapter 1 of the Constitution are wholly irrelevant to the concept of "national sporting events". For further detail on the SABC’s view in regard to the use of the term "national interests" in the Bill, please refer to section 3 of these submissions, dealing with section 6 of the Broadcasting Act.

3. Concept of "lessor" in relation to television licence fees
1. The SABC has, over the last year, proposed certain amendments to section 27 of the Broadcasting Act, dealing with television licence fees, and certain consequential amendments to section 1 of the Broadcasting Act. The amendments proposed by the SABC were intended to create four categories of television licensees – end users (referred to as "persons" in the amendments), businesses, dealers and lessors. The term "business" is intended to cover entities such as hotels, bars and conference centres, and the term "dealer" covers television sales companies, while the term "lessor" was intended to cover entities whose principal business activity is renting out television sets (such as Teljoy). The Bill incorporates some parts of the amendments to section 27 and section 1 proposed by the SABC, but not all. In particular, although the Bill now includes a definition of "lessor, it fails to integrate and apply that definition consistently.
2. In that regard, the definition of "business" in section 1 will have to be amended to specifically exclude "lessor" (in the same way that it excludes "dealer"). Further, the concept of "lessor" must be inserted into subsection 27(1)(b) (so that it reads, "No business, dealer or lessor may use…"), as well as into subsections 27(1)(b)(i) and 27(1)(b)(iii) (so that they read, "such business, dealer or lessor…"), and subsection 27(6)((b)(v) (so that it reads, "require a business, dealer or lessor to produce …").
3. Please have reference to 8.10 below for the SABC’s further comments on other aspects of the proposed section 27 of the Broadcasting Act.
4. Conversion of the SABC
1. The proposed subsection 7(1) of the Broadcasting Act provides that, "With effect from a date determined by the Minister …, the Corporation must be converted into a public company…" (our emphasis).
2. The SABC is deeply concerned about the legal impact of the wording used in this section. The SABC proposes that wording along the following lines be inserted into section 7: "With effect from a date determined by the Minister …, the Corporation is deemed to be a public company…" (our emphasis).
3. The reason for the use of the "deemed conversion" concept is that there is no provision in the Companies Act, 1973, for the conversion of a statutory corporation to a public company. Therefore, it is necessary for such conversion to be deemed to happen. The term "deemed" has well-established legal meaning and has been used in a number of other conversions of statutory corporations to companies, such as Eskom. The legal effect of a deemed conversion is that the structure of the entity changes, but its corporate existence / juristic personality remains the same, and there is no need for a transfer of assets and liabilities. Therefore, the risk to the Government (as shareholder) is minimal, consent of third parties is not required, and the conversion can occur without complicated transactional agreements.
4. The problem with the currently proposed subsection 7(1) of the Broadcasting Act is that there is no provision made for the manner in which the SABC is to be converted to a public company. The subsection states that such conversion must happen, but does not provide any mechanism for it. As far as we are aware, there is no statutory precedent for this formulation, and its legal effect is unclear, except to say that its common-sense consequence would be that the actual conversion cannot be effected merely by means of a statement that such conversion must happen.
5. The absence of a reference to "deeming" in the Bill appears to be accidental, as the rest of the Bill – especially Schedule 2 – appears to assume that the conversion to a public company will be achieved by means of a conversion by law, ie a deemed conversion.
6. The SABC therefore strongly recommends that the proposed subsection 7(1) be amended to read as follows:

"7. (1) The old Corporation is, with effect from a date determined by the Minister by notice in the Gazette, which may be a date prior to the commencement of this Act, deemed to be a public company incorporated in terms of the Companies Act, to be known as the South African Broadcasting Corporation Limited."

7. Further in regard to section 7 read with the proposed Schedule 2 to the Broadcasting Act, the SABC’s view is that Items 1 to 9 of the proposed Schedule 2, should be in the main part of the Act, as they are crucial to the conversion of the SABC to a public company in the same way as are the proposed subsections 7(1) to 7(3) of the Broadcasting Act, and not all of them are "transitional" provisions. We understand that being in Schedule 2 does not necessarily affect the legal status or validity of the relevant provisions, but in the SABC’s view there is no self-evident difference between the importance or relevance of those provisions that have been made part of section 7 of the Act, and those referred to above that have been made part of the Schedule. This could cause interpretive problems and confusion. In particular, Item 6, which remedies the problem caused by the Broadcasting Act (which accidentally omitted to preserve the SABC’s status as a juristic person on repeal of the 1976 Broadcasting Act), should be in the main part of the Act as it is of continuing relevance to all aspects of the SABC’s operations.
8. Section 7(3) provides that the Minister "must determine the memorandum and articles of association of the Corporation". In terms of section 52 of the Companies Act, the memorandum of a company must state the purpose for which it is to be formed and its main business. If the company is to have a share capital, the memorandum must state the amount of the share capital with which it is proposed to be registered and the division thereof into shares of a fixed amount or the number of shares if the company is to have shares of no par value. In addition the memorandum must state the number of shares which each subscriber undertakes to take up. There is no indication in section 7 what the proposed share capital of the Corporation will be and how many shares the State intends to take up.
9. Although section 7(4) provides that the applicable transitional provisions relating to the conversion of the Corporation into a public company are set out in Schedule 2, the latter schedule does not deal with these issues.
10. More importantly, no provision is made for what is to be contained in the articles of association of the Corporation. Despite the fact that the articles of a company are subordinate to its memorandum, it is the former document which has more practical importance. Although the articles deal largely with internal machinery relating to control and administration, they may and ordinarily do deal with other matters of considerable substance. Thus for example the articles of a company will generally provide for the creation of different classes of shares, the rights between different classes of shareholders, the transfer of shares, the issue of share warrants, the alteration of capital, the holding of general meetings and special meetings, the votes of members at such meetings, the powers, duties and remuneration of directors, the borrowing powers of the corporation, the appointment by the directors of a manager or managers, the delegation of powers by the directors, the manner in which meetings of directors are to be conducted and the payment of dividends and the holding of reserves.
11. Item 1 of schedule 2 provides that the Registrar of Companies must on the date of conversion register the memorandum and articles of association of the Corporation. On the face of it, the Minister is given carte blanche to include in the articles of association such matters as she pleases, provided that nothing so incorporated is contrary to the Broadcasting Act as amended. It is in principle undesirable that such unfettered powers be conferred upon the Minister.
5. SABC licences upon conversion and internal re-organisation
1. The Bill proposes certain amendments to section 22 of the Broadcasting Act.
2. The proposed title of the amended section 22 (as set out in section 18 of the Bill) refers to transfer of the SABC’s current licences, to SABC Limited. The notion of a "transfer" mechanism is continued in the section by reference to section 74 of the IBA Act. However, the deemed conversion of the SABC to a public company means that there will be no transfer of any rights or obligations, as a new entity will not be created – there will merely be a change in the structure of the existing entity. Therefore, there is no need to transfer the SABC’s licences, and indeed, there is no possible transferee.
3. The SABC’s view is that all that is required on conversion of the SABC, to SABC Limited, if anything, is an amendment of the SABC’s current licences, in order to reflect the change of structure of the SABC to a public company and, to the extent appropriate, the internal separation into the public and the commercial service divisions. Therefore, the reference in the proposed subsection 22(1) to the broadcasting licences to be "issued" to the Corporation, is misleading. If it is necessary to refer to the process of amendment of the SABC licences at all in the Broadcasting Act, there should be a simple provision to that effect. The manner and scope of the application for amendment, and the process of adjudication of such application by the Authority, is adequately set out in the IBA Act. Renewal of the SABC’s television and radio licences will also take place in accordance with the provisions of the IBA Act.
4. In any event, in the proposed new subsection 22(1) of the Broadcasting Act, the reference to subsection 4(2) of that Act is inaccurate – subsection 4(2) of the Broadcasting Act applies only to persons broadcasting without a licence at the commencement of the Bill. The SABC does not fall into that category.
5. The rest of section 22 of the current Broadcasting Act, as well as the proposed subsection 22(2) should, for the reasons stated in 7.5.2 above, be deleted in their entirety.
6. Database of television set sales

The SABC’s view is that the proposed subsection 27(6)(e) of the Broadcasting Act, if implemented, would cause enormous problems for the SABC, for the following reasons:

1. the SABC will be burdened with the obligation to create and maintain a national database register of all sales of television sets, without being equipped with the financial and regulatory resources to do so;
2. the SABC does not have access to all the information that would be required in order to establish such a database, and the regulations dealing with information regarding television set sales are not drafted with such a database in mind;
3. the creation and maintenance of such a register is not a core function of the SABC, and will detract from its ability to achieve the objectives set out in the Broadcasting Act;
4. the intention of this provision is unclear. Considerably more thought is required before a provision such as this one can become a workable statutory provision. In the SABC’s view, this kind of database would only be feasible if a separate entity were set up to deal solely with television licensing, and this would require separate legislation.
7. Regional Television Services

The SABC is concerned by the proposed insertion of section 32A of the Broadcasting Act, dealing with regional television services to be established by the Department. In that regard:

1. the SABC’s view is that the proposed provision is constitutionally invalid. This aspect is dealt with more fully in section 6 above;
2. apart from the constitutional concerns, the SABC is particularly concerned about the followingaspects of the proposed regional television services:
1. the timing of the establishment of regional television services;
2. the financial viability of regional television services;
3. how such regional television services would be funded;
4. the impact of the establishment of regional television services on the SABC and on the concept of a national public broadcaster generally;
5. the envisaged nature and scope of the mandate of such regional television services;
6. the category of licence that would be held by such regional television services; and
7. the envisaged relationship between the SABC and such regional television services.
8. Commencement date of the Bill

The SABC’s view is that the proposed section 31 of the Bill, "Short title and commencement", should make provision for those sections of Bill that relate to the continuation of the SABC’s juristic personality, and for its powers to levy and enforce payment of television licence fees, to be deemed to have come into effect on 30 June 1999. The reason for this is that since the date of commencement of the existing Broadcasting Act, (on 30 June 1999), both the juristic personality of the SABC and its power to levy licence fees have been questioned. The SABC is therefore in the invidious position that its right to take legal steps to enforce payment of television licence fees is doubtful, and there is a serious risk that persons and entities that have indeed paid their television licence fees during the relevant period, could claim a refund if a legal challenge exposes the defect in the law to the public. There is also a risk that a legal challenge may be mounted to a decision made by the SABC during this period, on the basis that the SABC has not been properly constituted by statute. The only method of mitigating these risks is for those provisions of the Bill that relate to juristic personality and television licence fees, to be deemed to have come into effect on 30 June 1999.

1. Ad section 1 of the Broadcasting Act
1. The SABC’s view is that the definition of "free-to-air service", which is subsection (1)(xxiv) of the Broadcasting Act and referred to in paragraph 2(j) of the Bill, should be further amended so that it reads as follows:

"free-to-air service" means a service which is capable of being received without payment of a subscription fee by the end user to the broadcaster.

2. The reason for the SABC’s proposed further amendment to this definition is that its satellite signal, which is capable of being broadcast on an encrypted basis, although at no cost to the end user, requires the use of receiving equipment. The SABC distributes its signal by means of satellite to increase coverage throughout South Africa – such distribution forming an important part of the SABC’s universal access plan. The current definition of "free-to-air service" has already caused problems for the SABC, as its right to distribute its signal by means of satellite has been challenged in litigation. It is therefore important, from the perspective of universal access, for the definition of "free-to-air service" to cover distribution of the SABC signal by means of satellite – which necessitates the use of receiving equipment.
3. The proposed new definition of "multi-channel distribution services" raises a number of important issues which, in the SABC’s view, are not clearly dealt with in the Bill or the Broadcasting Act.
1. Firstly, the definition should refer to the term "distribution service" in the second line, rather than "broadcasting signal distribution service", as the former has been defined in paragraph 2(i) of the Bill.
2. Secondly, it appears from the definition that the Department has decided to bring pay satellite services into the regulatory framework by means of licensing them as "multi-channel distribution services", on the basis that they constitute a distribution platform rather than a content-provider that would constitute a broadcasting service. However, it is not then entirely clear what is meant by occasional references in the Bill (such as in the proposed section 31 of the Broadcasting Act, set out at paragraph 24(c) of the Bill) to "broadcasting services broadcasting more than one channel".
4. If it is intended that pay satellite services will obtain broadcasting licences, then it would be preferable for a definition to be inserted in the Bill which is the broadcasting equivalent of "multi-channel distribution service", which definition should make it clear that the SABC is excluded from that category. If not, then it is not clear to whom the term, "broadcasting services broadcasting more than one channel", is intended to apply. As currently used, it is wide enough to cover the SABC as well as pay satellite services. This would cause serious problems for the SABC in contexts such as that described in the proposed section 31 of the Broadcasting Act (which deals with limitations on control of commercial broadcasting services, and on cross-media control of commercial broadcasting services).
5. The proposed definition of "radio station" set out at paragraph 2(r) of the Bill is, in the SABC’s view, both inaccurate (because a radio station will not always constitute an "establishment"), and unnecessary. The term "radio station" has a common-sense meaning, which is sufficient for the purposes for which the term is used in the Bill, and there is a definition of "radio" in the IBA Act which will assist in interpretation.
6. The definition of "television licence" should be amended by the insertion of the words "by the Corporation" immediately after the word "issued". There will be consequential amendments to section 27(1)(a)(i).
2. Ad section 4 of the Broadcasting Act
1. The SABC’s view is that section 4(1) of the Broadcasting Act should be further amended by the deletion of the word, "signal" in the first line, as the term "distribution service" has now been defined in the Bill. This change should be made throughout the Broadcasting Act.
2. In order to be consistent with subsection 4(2) of the Broadcasting Act, subsection 4(5) of the Broadcasting Act should read as follows:

"Subject to subsection (2), no person may provide a broadcasting service or a distribution service unless such service is provided in accordance with a licence issued to that person by the Authority."

3. The SABC’s view is that the proposed subsections 4(6), 4(7) and 4(8) of the Broadcasting Act, set out in paragraphs 4(c) and 4(d) of the Bill, defeat the objects of the proposed amendments to section 4. The SABC’s understanding of the proposed amendments to section 4 (read with the definition of "broadcasting licence" as amended in accordance with the SABC’s proposal set out in 7.1.1 above) is that they are intended to preserve the integrity of the licences already issued to broadcasters (such as the SABC), but to force those persons operating broadcasting and signal distribution services without a licence to make applications and to be brought within the regulatory umbrella created by the Broadcasting and IBA Acts. However, the consequence of the proposed subsections 4(6), 4(7) and 4(8) as currently drafted, is that the SABC, which has been issued with broadcasting licences that define particular channels and radio stations, but which does not have authorisations given "by the Authority in terms of subsection (8)" (as is required by the proposed subsection 4(6)), will be obliged to make application for such authorisations in terms of the proposed subsection 4(8) once the regulations referred to in that subsection have been promulgated, and shall therefore only be deemed (by the proposed subsection 4(7)) to have such authorisations until such time as application for such authorisations has been made and a decision taken by the Authority. The SABC’s view is therefore that the proposed subsections 4(6), 4(7) and 4(8) should be amended to make it clear that the authorisation process is applicable only to those multi-channel operators that have not been issued with licences that define their various channels and/or radio stations. This could be achieved by ending subsection 4(6) immediately after the words, "broadcasting or distribution licence and authorised by the Authority."
4. The reference in the proposed subsections 4(6) and 4(8) of the Broadcasting Act to "station" should be to "radio station".
5. The reference in the proposed subsection 4(8) of the Broadcasting Act to "the Independent Broadcasting Authority Act, 1993 (Act No. 153 of 1993)" should be a reference to "the IBA Act", which has been defined in section 1 of the Broadcasting Act.
3. Ad section 5 of the Broadcasting Act

It is unclear to the SABC why certain sections of the IBA Act have been referred to in the proposed subsection 5(3) of the Broadcasting Act, whilst others, such as sections 33, 34 and 38A, 49, 50 and 53 of the IBA Act, have been excluded. The SABC suggests that instead of this provision, a more general provision would be appropriate, along the following lines:

"The provisions of the IBA Act shall mutatis mutandis apply to applications for broadcasting or distribution licences under this Act."

4. Ad the proposed Schedule 2 to the Broadcasting Act
1. The proposed Item 1 of Schedule 2 to the Broadcasting Act should be amended by the deletion of the words, "appointed in terms of section 7 of the Companies Act, 1973 (Act No. 61 of 1973)", as the term "Registrar" has already been defined in section 1. Also, all references to the "Companies Act, 1973" must be amended to refer simply to the "Companies Act", as the term has been defined in section 1 of the Broadcasting Act.
2. It is the SABC’s view that the proposed Item 5 of Schedule 2 should be amended by the deletion of the words "the legal nature of", as these words might cause confusion as to the effect of conversion on the SABC.
3. For the sake of completeness, the proposed Item 6 of Schedule 2 should be amended to refer to "rights, obligations, assets or liabilities", rather than "rights, liabilities or obligations".
4. For the SABC’s other comments about the proposed Schedule 2, please refer to 4.2 above.
5. Ad section 14 of the Broadcasting Act

Section 14(2) of the Broadcasting Act should be deleted. It states that the Group Chief Executive Officer of the SABC is the "accounting officer" of the Corporation. However, the term "accounting officer", which is drawn from the PFMA, is used there in relation to government departments and constitutional institutions, not to institutions listed in Schedule 2 to the PFMA, such as the SABC.

6. Ad section 18 of the Broadcasting Act

Subsection 18(4) should be amended by substituting the words "such accounts as are necessary and appropriate", for the words "an account", in order to make it clear that the SABC can operate more than one bank account.

7. Ad section 24 of the Broadcasting Act

The proposed subsection 24(4) of the Broadcasting Act is unnecessary and should be deleted. The Board has, in any event, an obligation under the PFMA to ensure that the SABC / SABC Limited complies with the provisions of that Act in relation to accounting procedures and every other matter regulated by that Act applicable to the SABC. The proposed subsection is therefore superfluous, as well as being confusing in its selective reference to certain obligations under the PFMA and not others. This kind of selective duplication of provisions of the PFMA may cause interpretive problems.

8. Ad section 25 of the Broadcasting Act

The proposed amendment to subsection 25(1) of the Broadcasting Act is confusing since it implies that the SABC has an obligation to ensure the preparation of annual financial statements not only in terms of the Companies Act and the PFMA, but also in terms of the Broadcasting Act. The SABC’s view is that, in fact, the whole of section 25 of the Broadcasting Act has become redundant since the coming into effect of the PFMA, and should be deleted. However, if the Department insists on retaining the section, the SABC proposes that section 25(1) be amended to read as follows: "In addition to the annual financial statements to be prepared in terms of the Companies Act, the Corporation must comply with relevant provisions of the Public Finance Management Act, 1999 (Act No. 1 of 1999) relating to annual audit of its books and accounts."

9. Ad section 26 of the Broadcasting Act

The SABC believes that the existing subsections 26(3), 26(4), 26(5), 26(6) and 26(7) of the Broadcasting Act must be deleted by the Bill. Since the SABC will be converted from the existing SABC to a public company, SABC Limited, and such conversion is explicitly stated not to affect the terms and conditions of service of its employees, there will be no need for a "transfer" of staff to SABC Limited, and the provisions referred to are therefore unnecessary and inappropriate. The staff of the SABC will retain their existing terms and conditions and their employee benefits upon conversion, which matters are explicitly dealt with in the proposed Schedule 2. Anything further in the Broadcasting Act relating to the impact on staff of the conversion of the SABC, will cause confusion. For example, subsection 26(3) of the Broadcasting Act refers to the "transfer date", which definition will, in terms of the Bill, be deleted from the Broadcasting Act.

10. Ad section 27 of the Broadcasting Act
1. We have commented at 7.2 above about the SABC’s concerns at the exclusion from the Bill of the concept of a "lessor" as a category of television licensee, and as mentioned therein, are of the view that such concept should be inserted into the Bill as proposed by the SABC. What follows hereunder are the SABC’s comments as to other aspects of the proposed section 27 of the Broadcasting Act.
2. The proposed subsection 27(1)(a)(iii) of the Broadcasting Act creates an exemption from the obligation to have a television licence, for all persons who have written confirmation from the owner of the television set that such set has been rented or otherwise made available in terms of the Broadcasting Act (our emphasis). The SABC’s previous suggestions referred to a lessor rather than an owner. The SABC is concerned that the use of the term "owner" creates a far wider category of exemptions than the use of the term "lessor" would have done. Also, it is almost impossible for the SABC to ascertain in any particular situation, who the legal owner of a television set may be. This provision will therefore create enormous enforcement problems for the SABC, if implemented. The reference in this section to an "owner" should therefore be replaced with a reference to a "lessor".
3. As indicated in 7.2.2, the proposed subsection 27(1)(b) should incorporate the concept of a "lessor", as well as a business and a dealer. Also, if the definition of "television licence is not amended as suggested in 8.1.5 above, the words "by the Corporation" should be inserted in subsection 27(1)(b)(i) between the words "issued" and "in terms of…". For purposes of consistency with subsection 27(1)(a)(i), the words "against payment of the prescribed fee" should also be inserted in subsection 27(1)(b)(i), immediately before the words "in terms of this Act".
4. The proposed subsection 27(1)(c) should be amended, for purposes of clarity, to read as follows:

"A user who is required to be in possession of a television licence must possess all the categories of television licences as prescribed, which pertain to such uses."

5. Previous suggestions made by the SABC provided for the criminal offence of failure to pay licence fees under the Broadcasting Act to be an additional consequence of non-payment, over and above payment of the licence fee and a financial penalty in terms of the Act. The Bill, on the other hand, provides in the proposed subsections 27(3) and 27(4), for the financial penalty to be in lieu of prosecution of a criminal offence. The circumstances in which a financial penalty is payable, as opposed to criminal prosecution, and vice versa, are however not spelt out in the proposed section 27. The SABC’s view is that it is not competent for provision to be made in the Bill for financial penalties and criminal prosecution to be alternatives in the manner provided. Either both must be applicable or the circumstances in which either one is applicable, must be set out. The SABC’s preference is for both to be possible, in which case subsection 27(3) must be amended by the deletion of the words, "in lieu of prosecution and", and subsection 27(4) must be amended by the deletion of the words "in lieu of prosecution". In that case, subsection 27(5) must be amended so that it commences as follows: "Notwithstanding subsections (3) and (4), any person… ".
6. In order to make the criminal offences section applicable only to television licence fee offences, subsection 27(5) should be further amended so that 27(5)(a) reads as follows: "(a) contravenes of fails to comply with any provision of this section or any regulations pertaining to television licence matters; or".
7. The numbering of the proposed section 27 should be amended so that the proposed subsection 27(6)(c) becomes subsection 27(7), as it deals with a new issue, and 27(6)(d) becomes 27(8), and so on.
11. Ad section 28 of the Broadcasting Act

The SABC’s view is that the proposed addition of a new subsection 28(3) of the Broadcasting Act is unnecessary, as it duplicates obligations that exist in any event in terms of subsection 51(1)(f) of the PFMA. The proposed subsection 28(3) should therefore be deleted.

12. Ad section 31 of the Broadcasting Act
1. In paragraph 24 of the Bill it is proposed that subsection 31(1) of the Broadcasting Act be deleted. It is not however replaced by any other provision. The numbering of the subsequent subsections of section 31 should therefore be amended accordingly.
2. Presumably the title of section 31 of the Broadcasting Act should be amended by the deletion of the word "television", in order to correspond with amendments to section 5 of the Broadcasting Act.
3. The proposed subsection 31(3) refers to the inquiry referred to in subsection 33(1) of the Broadcasting Act (which is an inquiry into signal distribution including multi-channel distribution services and convergence). It is not clear to the SABC why and in what manner the inquiry referred to in subsection 33(1) will assist in the formulation of a recommendation as to whether sections 49 and 50 of the IBA Act should apply to "broadcasting services broadcasting more than one channel". Also, presumably the provisions of section 31 are not intended to apply to the SABC, but only to subscription services. However, the term "broadcasting services broadcasting more than one channel" does not serve to distinguish between the SABC and other multi-channel broadcasters, and should be replaced by such other term as is ultimately used to describe multi-channel broadcasting services other than the SABC (eg "multi-channel distribution services", if that is the term intended to cover pay satellite services).
4. It is the SABC’s view that it is not competent for the Minister to decide to what extent sections 49 or 50 of the IBA Act will apply to "broadcasting services broadcasting more than one channel". In the case of section 49, the IBA Act itself specifies the extent to which that provision is applicable, and unless the Broadcasting Act explicitly overrides that section of the IBA Act, only an amendment to the IBA Act would be competent to vary the application of that section. In the case of section 50 of the IBA Act, the provision states that cross-media control of broadcasting services shall be subject to such limitations as are determined by the National Assembly, and goes on to set out in absolute terms certain further limitations. The Minister cannot, therefore, take on those powers unless the Bill explicitly amends those sections of the IBA Act.
5. The SABC’s view is therefore that these proposed revisions to section 31 are insufficient to achieve their purpose, which is presumably to bring multi-channel services within the licensing framework. A more consistent approach, applied throughout the Broadcasting Act, is required in order to achieve this objective.