NBC’s Sixth Amendment: A Review

Vanessa Obioha argues that the proposed alterations to the broadcasting code by the Nigerian Broadcasting Corporation may be considered as purposefully disarming private broadcast corporations

In the broadcasting space, the exclusivity factor is what sets broadcasters apart from each other. But that distinction is about to be reversed in Nigeria. The Nigerian Broadcasting Commission (NBC) wants to yank that factor away from the growing industry with its 6th Amendment on the Broadcast Code. The NBC may have a few cool points for its recent initiative that includes regulation of acquisition of rights, empowering local content creators, and boosting advertising to increase revenue in the sector.

Understandably, the aims and objectives of the commission is a course worth working towards, especially in the promotion of local contents, revenue creation, and affordability for the consumers. For example, the NBC Code gives a broad range of control to local content creators in terms of sourcing resources locally and controlling the narrative of their work, and protection of their intellectual property. This is covered in section 3.15. In another section (5.6.0), it addresses the problems of ‘fake news’ often tied to unconventional reportage in online media platforms that encourage eyewitness report or ‘citizen journalism’. It gives the broadcaster rights to verify the news source to meet specific editorial practices. Away from the ethics to protect content creators and broadcasters, a controversy still plagues the amendment. This stems from acquisition of rights or rights to exclusive contents by broadcasters.

The NBC attempts to justify its position by citing reduction of monopoly and prevention of anti-competitive practices in the broadcasting industry as its primary objective that will give a fair advantage to all, and encourage new entrants in the industry. With further elaboration, it aims to capture this essence by maintaining and promoting fair and efficient market conducts to increase competition, which, in turn, eliminates monopoly. These practices will be guided by certain codes structured to protect rights to content acquisition, sublicensing content rights, and setting technical standards for media services. But, there is a caveat under these codes, where NBC determines the price structure for rights that are issued or sub-licensed despite the free-market structure in the industry. This is the point where most broadcasters raise the alarm that they have become an unfair target by the NBC:

“Nigerian Broadcasting Commission [is] making exclusivity illegal, compelling sublicensing of content and regulating price, are effectively turning private enterprises into government property. Interference distorts market. If implemented, this, 100%, destroys PayTV in Nigeria.” Iroko CEO, Jason Njoku wrote about his rejection of the policy on Twitter.

He continued, “This our champagne socialism and zero input style of policy is the reason Nigeria is stunted in everything. I invest billions [in] naira [on] content, then I am compelled to share with everyone else as NBC sets the price, why? Dark forces or incompetence is at play here. Ridiculous.”

While the idea of setting prices, which NBC deems fair and equitable, appears good on paper, it fails to address certain issues like funding or subsidy in the sector, or how it plans to execute this plan of determining what is fair. Most private entities who kicked off their ventures with hopes of becoming the crème by securing these rights or owning exclusive rights to contents, gained little of no assistance in the form of subsidy or proper funding from the government. Is it now fair that the NBC set prices even when it doesn’t know the nature or how such deals were attained? For instance, in the brokering of rights to broadcast a football championship like the UEFA Championship League or the annual Grammy Awards, there is no presence of the NBC in the process. Is it then fair for NBC to play the arbiter of pricing? The ability of broadcasters to secure these deals on their own, gives them the immunity to set prices they deem appropriate. Save for these private entities, government-owned broadcast houses rarely show interest in bidding for rights to broadcast these live events despite having a much larger audience to service.

NBC’s flawed logic deems it fair competition if both government-owned and privately owned corporations take a piece of the pie through sublicensing. If the new NBC Code is allowed, a majority of private entities will singlehandedly go through all the processes required to get these rights, pay for them, while the others sit back and wait to get spoon-fed through sublicensing? Apparently, the NBC, does not take into consideration any losses incurred by the licensee, as far as anti-monopoly makes the headlines, it is a big win, but the proposed policy fails to address so many other issues. This trend is also seen in the ways it has failed to address failed broadcasters the broadcast regulatory agency was eager to bill a license fee.

Another aspect that is not being considered is the investors’ interest. While NBC poses as Robin Hood of the masses, it discourages investors with its one-pronged approach of only seeing to the needs of the consumers. Sooner than later, the investors will withdraw their support, and eventually, no rights will be secured, and no one gets access to premium contents. Does NBC see this happening in the future, and what are some of the plans it has to contain these problems if it eventually happens? Except the NBC plans to buy these rights and sublicensing them, this may very well end in a cul-de-sac.

A key player in the creative industry, Femi Odugbemi, expounds on how these measures will negatively affect broadcast in an environment that isn’t ambient for investors. He also touched on area of focus the commission should be concerned with:

“Regulation should expand consumer choice but it must always be careful to protect investor confidence. It is how you grow the economy of any endeavour – you reward its investors and do your best to police the value chain so that the consumer derives maximum value. In principle, the intention of this regulation is ostensibly to discourage monopoly of high value content by insisting on sublicensing, but it ignores current capacity and previous trend. Will NTA for instance pay market rate to sublicense the premier league? Are they going to be appropriately funded to compete in the bid processes of high value global live broadcasts?”

Furthermore, he explains why broadcasters who acquire these rights should have the discretion of setting prices in order to recoup their investments.

“The concern will be the impact on high value content distribution rights and how it relies on exclusivity clauses to enable the investing broadcaster recoup either the cost of production of the content or the cost of its licensing for a particular territory. On the face of it, this regulation is basically asking a broadcaster of the premier league for instance, who pays millions of dollars for broadcast rights, to share those rights compulsorily. It makes nonsense of their investments and capacity to recoup their outlay. That will create less exciting content especially in premium sports and high value drama. Regular Nollywood content may not be as severely impacted because there is already a glut of that programming across many platforms and channels locally. It won’t fill the void if those investing in varied bouquets of programming in international entertainment and sports are forced to withdraw. Nollywood won’t be enough. We need all the international platforms to be active in our market to expand opportunity for our producers and deliver top global content to our audiences,” he concluded.

Although NBC lays emphasis on acquiring rights to premium international sporting events or shows, it specifically provided an article that mandates securing rights to local contents if any broadcaster still wants to remain in the business of broadcasting foreign contents. Article 6.2.10 says: “No Prime Foreign Content shall be transmitted in the Nigerian territory unless the owner of such content has also acquired Prime Local Content.” It also details that such broadcaster must acquire Prime Local Content at the value of 30% of acquired Prime Foreign Content. For instance, a broadcaster acquires foreign contents at N1 million, they are required to pledge N300,000 to acquisition of local content. To this effect, the NBC request for all original copies of contracts be submitted for proper analysis. Question is: will broadcasters comply? And when they do, how does one verify the authenticity of their documents?

Assuming the plan of sublicensing goes through, and each broadcaster acquires content, this will translate to each broadcaster’s programme bouquet looking quite similar – there will be a dearth of variety, and consumers will ultimately switch to other platforms that won’t generate revenue for this government. This lack of appeal that arises from dearth of bespoke contents is what blurs each brand’s unique identity. If they all look similar, how will this promote competition?

If everyone has a majority of similar contents on their catalogues, advertising rates will also fall flat to its face due to lack of aforementioned appeal across all brands, effectively negating the goals of section 7.8 that aims to boost advertising whilst protecting broadcasters’ interest. The domino effect this presents in the broadcast industry will be the devaluation of advert rates and that will directly impact pay rates for employees. There is a reason CNN is different to FOX News: they have their core audience who look forward to their premium content; these unique audiences are what make them visible and valuable.

Undoubtedly, many broadcasters are in the business for the profit. This is not a negative attribute, after all, broadcasting is business. However, the return on investment for local content only or largely local content will attract will pale profit in comparison to their foreign counterpart. While this measure is good for the sustainability of local content, there will be hesitation from broadcasters to comply since their audience don’t crave such contents to begin with. And because they feel left out of the decision-making process with some even calling it a plot to sabotage the effort of privately owned broadcast houses, more broadcasters will voluntarily leave the business.

On the other hand, creativity across the industry will plummet. After all, there are so many similar contents everywhere as no one owns exclusive rights to any content. Those hitching a ride through sublicensing will never find a good reason to venture into producing original contents. Not to sound redundant: Content is king, and that’s what makes Netflix’s catalogue different to what is obtained on Disney+.

Filled with ambiguity, many terms or conditions on the proposed amendment fails to clearly define some of its own code. For instance, article 6.29 states warehousing of sports rights (acquiring rights and not using them) is prohibited. What this clause doesn’t reveal is: how much rights must one acquire, or for how long such rights must be kept inactive before it is termed ‘warehousing’? What happens if the acquirer of such rights is not a broadcaster, does the rules apply to them? In several other articles where it mentions Prime Local Sports or Prime Foreign Sport content, it doesn’t reveal what level or type of sport falls into this category. Does the Principal Cup, a football competition at secondary school level, fall here too?

Speaking under anonymity, an insider in the broadcast industry opined that the commission has failed to do its research to ascertain whether or not monopoly is a current scourge in the industry.

He said: “Every good piece of regulation starts from determination of a problem, how big the problem is, its causes and impact, including adequate definitions of the situations, factors, and players, and their role or status within the problem/situation; and then moves to explain how the intended regulation would act to resolve the problem, indicating its impact on the players, the industry, and possibly the cost of compliance and enforcement.”

He continued. “The NBC is clearly over-reaching itself here. Whilst we agree that there can be sectoral standards for how regulated entities must operate in a particular sector, the way NBC has acted is dangerously over-reaching in a sector that is also dynamic and evolving given impact of digital and convergence. Furthermore, there is now a specific broad competition regulatory body with the knowledge and particulars who can resolve such issues.”

From another angle, the commission relegates the role of promoting local sports content to individual broadcasters. Here is how it does it: adopting the umbrella term of ‘promoting national unity’, NBC projects the broadcaster as a sports promoter of national unity. It also charged them to acquire rights of local sports contents upholding best practices of equity and fairness. The NBC doesn’t define what ‘fair’ or ‘equity’ truly entails.

Generally, the NBC’s argument to counter monopoly is a weak one that will be hard to enforce judging from the fact that most of its terms aren’t clearly defined. Any loose clause can be manipulated in favour or against certain broadcasters. When this is the case, the NBC’s reputation will be called to question. Purposefully disarming private corporations is not the way to go, it directly discourages entrepreneurship – a principle the government encourages in its citizens to help provide more job opportunities for it large population – thus leading to loss of job opportunities in this sector.

Instead, the more practical way should be to invest in government avenues that will directly compete with these already established private channels of broadcast, and not lump them all into one category. It will be left to the consumer to make the informed choice of either watching premium contents for free on terrestrial television or proceeding to buy from a Pay TV provider.

Introducing a cheaper alternative with premium contents through government-owned channels will boost competition, and cause prices to drop for the consumers. This strategy allows consumers to spend at cheaper rate with an increased demand. As of now, the NBC is yet to ascertain if there is lack of competition in the broadcast industry in any of its publication. With the COVID-19 pandemic in full swing, private firms are cutting cost through furloughs and layoffs to make ends meet. If NBC truly wants a market with free and fair competition, now is the time to revive government-owned broadcast corporations, and not take scarce resources from private firms.

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