The 70% local TV content directive will stifle industry

By Tony Glencross

I read with interest that Uganda Communications Commission Executive Director, Godfrey Mutabaazi, has issued a statement that all free to air television stations will air 70% local content.

This is indeed an admirable stance and he should be commended for his good intentions. However, I think he also needs to look at the current realities on the ground and perhaps understand the industry better.

The UCC has supposedly looked at other countries for guidance and set the standard based on those countries. These countries are SA, Australia and the UK, among others.

I would like to take a step backwards first and look at the Uganda TV media industry. Free to air TV in Uganda is expected to fund itself, entirely from advertising. There are no government grants, incentives or special payments for TV stations.

In fact, UCC levies hefty license fees on all TV stations and the UBC, the controllers of most of the towers and broadcast sites also charges high fees for use of towers, electricity and other services. The TV stations are already hamstrung.  Then there is the ad spend.

The majority of ad spend in Uganda still goes into radio (Around 65% at the Ad Index measures from IPSOS 2012 Jan to Dec).

Ad Index measures the entire ad industry at 576** Billion shillings per annum (Jan to Dec 2012) split as follows: Radio at 65% (sh377b), TV at 21% (sh120b) and lastly print at 14% (sh77b). Now, for the purposes of reality again, Ad index measures everything at rack rates, so in order to create a real picture, we need to bring the discounts into account, plus packages and in house advertising (Media owners promoting themselves and programming). Let’s then knock 50% off this figure.

That then translates into a total of sh288b and a TV share of sh60b per annum, sh5b per month. That sh5b per month should then be split amongst the free to air TV stations. Taking just the main ones into account, you have NTV as the biggest, then Bukedde 1, followed by UBC, WBS, Urban then NBS, Record, TOP TV, Channel 44, TV WEST  and lastly Bukedde 1 / SPORTS TV (there are some other stations, but their spends are small).

That makes up 11 stations. If we split the ad spend according to the market share (again using Ad Index), the shares are as follows, NTV 23%, UBC at 16%, WBS at 16%, Bukedde 1 at 16%, NBS at 15%, Record 4%, Top TV 2%, Channel 44 at 3% and Urban at 4% and TV WEST, Bukedde 1 and SPORTS TV at 1%. The top four stations are each getting on or around sh1b per month.

Let’s now look at the 70% share of local content.

Each station is on air for 24 hours per day. 70% of 24 hours is 17 hours per day. So each station would need to broadcast for 17 hours per day local content. Let’s assume that each station broadcasts news for two hours per day; that cuts the local content down to 15 Hours. Then they all do some kind of talk shows, local fashion, out and about etc. – say that another three hours, we are now at 12 hours.

Then we can assume that all local content will be repeated on each station on several occasions, so we can cut another six hours, leaving six hours of local content, per day, per station. As is stated in the beginning, TV stations rely on advertising to make money (that sh5b per month)  so each station would need its own unique content that attracts audiences that in turn can be sold to advertisers. So based on this, we can assume that there will be no sharing of local content.

This means that each of the 11 stations will require six hours of “drama, comedy and reality programmes” per day, 42 hours per week  and 168 hours per month. All 11 stations would require 1,848 hours of content per month.

Local content is expensive, when compared to international content, where economy of scale reduces the cost. The comparison between the two is roughly $400 per hour for international content compared to around $2,000 (or more) dollars per hour local content.

Now when we look at the 70% requirement, the 11 stations will need to fork out $3,696,000 million per month for local content. This equates to just on sh9,5b at today’s rates. In effect, this means six hours of each station’s content is going to cost the industry the more than the entire value of the local advertising income.

What about the other hours of content, each station must broadcast, the infrastructure charges, the hefty levies and license fees? What is obvious, is that the advertising cannot fund this content – so who is going to? In Australia and the UK, the government and national lottery schemes all fund local content production and stimulate the industry – who will do that in Uganda? Do we have a lottery? Our citizens are already heavily taxed? Does UCC have the money to finance the local content, I doubt? So where will this money come from? The other side of the coin – can Uganda’s local content industry even deliver 1,000 hours of content per month, let alone the full quota? Again, this I doubt!

 My conclusion on this matter: It is great to look at Australia, South Africa and the UK and then apply their standards in Uganda, but in real terms, those economies are many, many times the size of ours and frankly, a directive like this will kill the industry before it stimulates it, as most TV stations will go out of business.

Local content is driving TV audiences; this can be seen from the success of Citizen in Kenya. Local content will also drive audiences in Uganda, but the industry need to grow within its own time and space, within the budgets that allow it to operate.

UCC should look to find ways of stimulating the industry and allowing it to grow within the boundaries that the economy can manage. Looking at a child growing up, imagine the implications, if we forced a two year old to walk around, dress and feed himself – surely he will die.

** IPSOS does have some minor anomalies that don’t add up, but gives a good indication of general share and value

The writer is New Vision's Chief Commercial Officer

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