Competition Commission urges Icasa to open up pay-TV market
Regulator concludes hearings on proposed regulations to introduce new list of sporting events grouped by level of public interest
The Competition Commission has urged the Independent Communications Authority of SA (Icasa) to press on with its plans to introduce various amendments to open up the pay TV market and to ensure that sporting events of national importance are easily accessible to viewers.
On Friday, Icasa concluded its public hearings on proposed regulations which could introduce a new list of sporting events and codes, divided into three groups according to the level of public interest.
Part of the proposed regulations seek to highlight the national sporting events that must be broadcast on full live coverage on free-to-air (Group A) and subscription broadcasts (Group B) and by both categories of broadcasters (Group C). Group A includes premium and major sports events such as the summer Olympic Games, Paralympics, Fifa World Cup, Africa Cup of Nations, Rugby World Cup and ICC Cricket World Cup, among others, that must be broadcast by free-to-air broadcasters.
This comes as Icasa’s recent decision to publish draft findings following a separate inquiry into subscription TV broadcasting services is set to be challenged in court by pay TV giant MultiChoice. The findings highlight remedies to boost competition and lower subscription prices in the pay-TV market. These include reducing contract duration, specifically for sports rights, splitting content rights and selling them to more than one broadcaster, and halving the number of Hollywood studios with which MultiChoice may enter into exclusive contracts.
Call to halt inquiry
MultiChoice wants the courts to compel Icasa to halt the inquiry process pending the submission of all relevant documents or evidence the regulator relied on to make its draft findings and conclusions. It said Icasa’s failure to provide the documentation is unconstitutional or unlawful because it does not comply with the standard of rationality encompassed in the constitutional principle of legality.
In its written submission concerning the proposed Icasa regulations on the broadcasting of sport, the Competition Commission said it is of the view that the three groups (A, B and C) set out in the amendments are appropriate for the categorisation of premium and non-premium national sporting events.
It said there were applicable remedies that have been measured and applied globally to remedy competition-related concerns in subscription television markets, and these may be equally applied in the South African context. These remedies include shortening the period of exclusivity to between three to five years, which restricts broadcasting agreements and prohibits the automatic renewal clauses, rights of first refusal and rights of first option.
Another remedy is the unbundling of sports rights, which means offering the rights to more than one buyer (as opposed to a winner-takes-all approach). Rights splitting is another remedy, the commission said. The remedy imposes an obligation on the rights owner to split the content rights and sell them to more than one broadcaster, usually in the form of a right per event/game/tournament.
“None of the proposed remedies are sufficient to address competition issues if considered in isolation. Rather, the commission recommends [that] a combination of the proposed remedies can serve to deal with the identified market failures and competition challenges in the market,” it said.
“The commission recommends that broadcasting agreements that require exclusivity based on reasonable justifications should be limited to a period of time of between three to five years. The commission’s investigations of the nature of contracts reveals that new entrants are likely to attain minimum efficient scale that would enable them to enter and compete effectively in a market within a period of three to five years. In addition, this is likely to be a reasonable period of time for a rights holder to recoup its investment.”
However, Icasa’s plans have been opposed by some, including sporting federations.
Last week, SA Rugby CEO Jurie Roux warned that sport could die a slow and painful death in about five years if Icasa goes ahead with plans to implement the draft broadcasting regulations.
“Our doors will close in the next five years if these regulations are implemented‚” Roux told the Icasa hearing.
“Exclusivity is key in sport and the current regulations strike a good balance. But at this rate there won’t be sport in five years and there won’t be the Springboks.”
Roux added that a big chunk of their revenue comes from broadcasting rights because broadcasters are prepared to pay a premium to exclusively access content such as the Springboks and Super Rugby matches.
He said that 57% of their revenue came from broadcasting‚ 26% from sponsorship and 17% from Tests‚ events and grants. email@example.com