SABC PRESENTATION TO THE PARLIAMENTARY PORTFORLIO COMMITTEE ON SPORT Prepared and presented by Sizwe Nzimande

THE CURRENT LANDSCAPE  Sport and the business of sport has experienced monumental shift in the past 10 years  This monumental shift has not been all inclusive and has been prevalent in the so called “Top 10” sports.  These top 10 sports are listed as follows Soccer, Cricket, Golf, Basketball, American Football, Formula 1, Tennis, Boxing, Baseball and MotoGP  The costs related to running and administrating these sports has grown well above the average rate of inflation.  This has had major impact not just on sponsors but on broadcasters around the world 2

THE CURRENT LANDSCAPE  The highest paid footballer in South Africa currently earns just over R a month vs. R32000 a month at his peak 10 years ago  The first Springbok contract in 1994 was for R per annum, today they are over R5.7 million for the same type of contract  TV broadcast rights to the same PSL matches recently got sold for a fee that the SABC could not have afforded on its current funding model.  All in all sport and the broadcasting of sport have become big business and that big business comes at a price tag that is proving very challenging for many public broadcasters across the globe such as SABC, BBC, and ABC.  To ensure that SABC Sport can continue to do its public mandate and deliver deliver sports of national interest to the public, there needs to be a review. 3

THE CURRENT LANDSCAPE KEY CHALLENGES WITH THE BROACASTING OF SPORT OF NATIONAL INTEREST  There are some key challenges that are making the broadcast of sports of national interest even more challenge for the SABC and these challenges if not managed will lead to the SABC not being able to broadcast sports of National interest in future. The current legislation in the ICASA Sports and Events of national interest bill does not offer the SABC any protection against what can be termed as the free market. The SABC must compete equally on commercial terms with all broadcasters in the market. However the SABC carries an added responsibility of carrying our mandate and broadcasting not just the profitable sports but sports that are of key focus to the country. This adds an added cost liability which private broadcasters do not have 4

WHAT DOES THIS MEAN FOR SABC SPORT ? 5

THE CURRENT LANDSCAPE KEY CHALLENGES WITH THE BROACASTING OF SPORT OF NATIONAL INTEREST The SABC is not funded like other public broadcasters in other countries such as the UK and Australia, this means that every public service that the SABC does must be paid for by moneys that the SABC raises from the private sector. 75% of the income that the SABC generates comes from advertisers and sponsors, with the economic down turn in the past 5 years adervtisers and sponsors have reduced their spend with the SABC by up to 50% in some cases. This decline in spend has lead to the SABC not being able to meet as much of its pubic mandate as in the past. In short the cost of sports rights has increased and the SABC’s income has decreased this has caused major cash short falls within the SABC. The planned alcohol advertising ban will make matters even worse 6

THE CURRENT LANDSCAPE KEY CHALLENGES WITH THE BROACASTING OF SPORT OF NATIONAL INTEREST In 2005 the SABC was spending about R360 million on sports rights, in the 2013 to 2014 financial year, we are forecasting that we will need to spend about R850 million on sport. Sport is a very important element for pay broadcasters around the world and in particular the big sports such as Soccer, Cricket and Rugby, pay broadcasters are prepared to spend hundreds of millions to ensure that they buy these sports, these sports lead to subscription and subscription equals profits. With out subscription income it is almost impossible for the free to air broadcasters like SABC to compete with pay broadcasters. This will have a negative effect on the delivery of mandate and public service to the nation. 7

LOOKING FORWARD 8

HOW CAN FIX THIS? THE WAY FORWARD AND PROPOSAL The proposal is therefore that Government review the current ICASA bill on sports of National Interest to ensure that Free to Air broadcasters and in particular the Public Broadcaster is better protected in the drafting so that it can continue to broadcast sports of national interest well into the future. The second option is that Government starts to fund the Public Broadcaster as is done in the UK and Australia so that it can then compete in the open market a lot more efficiently and buy sports of national interest rights with out having to rely on funding from the private sector, through advertisers and sponsors as has been the case. 9

THANK YOU 10