South Africa’s proposed changes to foreign ownership restrictions on local broadcasters do not go far enough to remove the “red tape” that inhibits foreign direct investment in the country’s broadcasting sector, according to the Free Market Foundation.
Current legislation limits foreign investors’ voting rights to just 20%, even if their economic interest is higher. But a newly revised white paper on audio and audio-visual media services – published by the department of communications & digital technologies last week – proposes raising this limit to 49%.
“Government wants to ensure that there is an enabling policy environment for increased foreign direct investment as a stimulus to the growth and development of the ICT sector as a whole. To this end, the limitations on foreign ownership in respect of linear individual audio-visual content services will increase,” said the white paper.
But Martin van Staden, head of policy at the Free Market Foundation, said laws that place limitations on how foreigners can invest in the local economy should not exist at all.
“If we look at the most successful economies in the world, they only got there because they had open markets for long periods of time. For a developing economy that is also getting poorer, we should be doing as much as we can to remove red tape and make it as easy as possible for foreign investors to do business here,” Van Staden told TechCentral.
The proposed changes to local broadcasting legislation have been in development for years, with the first draft of the white paper making mention of them when it was published in 2020. TechCentral reported on their inclusion then, and in a subsequent 2023 version of the white paper, which also included exceptions for foreign investors from African Union member states. Companies from AU states that hold “reciprocal agreements” with South Africa could be allowed to have more than 50% shareholding and voter rights in a local broadcasting entity. The version published on Friday made no mention of this exception.
Ownership limitations
According to the white paper, the decision to change foreign ownership limitations was in part influenced by changes in technology that have redefined the broadcasting landscape by producing new kinds of content distribution platforms. This is in stark contrast to the days when broadcasting was mostly in the purview of governments.
“Arguments have been raised in relation to ownership limitations, specifically because they are no longer appropriate for a multichannel digital audio and audio-visual content industry,” said the white paper.
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Another factor prompting the changes is the need to keep up with international trends in broadcasting sector regulation.
“Other jurisdictions have been reviewing their ownership limitations to assess their relevance and effectiveness in a converged audio-visual media and content environment, and some regulatory authorities have relaxed or done away with ownership restrictions,” said the document.
Foreign ownership restrictions have been a focal point of the ongoing acquisition of South Africa’s MultiChoice Group by French broadcaster, the London-listed Groupe Canal+. To work around the limitations, the merger parties have proposed splitting MultiChoice’s South African assets out of its holdings in the rest of Africa. The South African portion will adhere to local ownership rules while the rest of the business will be majority-owned by Canal+.
“MultiChoice has historically supported government’s proposal to relax the ownership limitations in order to attract investment into the broadcasting sector,” MultiChoice said in response to a query from TechCentral.
“We believe a relaxation would benefit new entrants and existing broadcasters, promote further competition in the sector and ultimately benefit the public interest. The benefits which arise from foreign investment in the sector include an influx of capital, transfer of technology and skills, and the ability to access foreign expertise.”
William Bird, director of media watchdog Media Monitoring Africa, said easing restrictions makes business sense but this must not overshadow the public interest.
“Relaxing restrictions on foreign ownership is not an unreasonable thing to do, especially considering the globalised environment we exist in and how rapidly business models in the media sector are evolving,” he said.
“What you don’t want is foreign ownership to the extent that you see in other countries, like Zambia for example, where the public broadcaster is completely owned by foreign interests.”
According to the white paper, continuing to restrict foreign ownership in the broadcasting sector is designed to preserve a plurality of perspectives and promote competition in the sector.
Deregulation
Added to this is a concern that foreign-owned media will be less inclined to prioritise the production of original South African content, thus threatening the promotion and celebration of local culture.
Van Staden and the Free Market Foundation do not agree, arguing that such policies are designed to be exploited by the political elite in a similar way to how black economic empowerment has been used to enrich the politically connected.
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“These kinds of policies are used to draw politically connected individuals into businesses they would not otherwise be in on merit. If you want more local content, the only way is through deregulation, which allows competition to flourish,” said Van Staden. – © 2025 NewsCentral Media
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