Cursory Look At The 6th Amendment Of The NBC Code
In July 2019 (2020), the NBC ratified the 6th amendment to the Nigerian Broadcasting Code. The amendment makes provisions for the qualification of local content in broadcasting. It also makes provisions for effective administration of advertising revenue for local broadcast stations and content producers.
While certain sections of the amendments have become a magnet for controversy about a year after and upon the commencement of enforcement by the commission, this should not detract stakeholders from the fact that the amendment seeks to promote a conducive atmosphere for local content producers to thrive whilst restricting anti-competitive practices.
Sharp practices in advertising are neither new or exclusive to Nigeria. In 2015, MediaCom a subsidiary of GroupM and Australia’s biggest TV airtime buyer was embroiled in a high profile scandal that led to widespread outrage at perceived irregularities in billing practices and accusations of manipulation by MediaCom. This led to increased scrutiny by regulators of a plethora of questionable practices by Ad agencies in Australia.
In 2018, there was a tussle between TV broadcasters and advertising agencies in India over discounted rates being offered to advertisers. The broadcasters claimed they were not consulted when agencies discounted ad rates while pitching for business to clients (advertisers) and this resulted in the stagnation of advertising rates and consequently, affected many businesses negatively.
These all point to a pattern of exploitation that usually occurs when there are evident loopholes in a system with negative repercussions for broadcasters and content producers.
The hard truth is that it is difficult to blame Ad agencies for attempting to make profits in a free market system. What would be foolhardy however, is to let the status quo continue even when it points to a rapid decline in Advertising Revenue and the ability of industry producers and broadcasters to churn out content. Despite having a population more than three times that of South Africa, Nigeria’s Television Adverting Revenue in 2016 was US$309 million compared to that of South Africa, which was US$1,301 million as contained in a report titled “TV Market Revenue in Nigeria by PWC, Ovum: 2014-2016 and published by Amy Waston, Nov. 2019 on www.statista.com.
When seen in this light, NBC’s determination to clean up advertising in Nigeria becomes justifiable. Afterall, the government is always tasked with the responsibility to make business environments conducive but yet get indicted for the lack of political will to protect the masses against capitalist monopolies and/or indigenous organisations.
Let us consider the amendments to section 7 (Production of advertising for local goods and services). The NBC’s stated intent is to increase the Production Industry’s share of Ad spend (the amount of money spent by advertising agencies on advertising for a product or activity).
How does NBC intend to achieve an increase in revenue for the broadcast industry?.
1. By ensuring that all adverts produced for broadcast are made in Nigeria and by Nigerians
2. By ensuring that in creating adverts, most of the production personnel are Nigerians .
3. Developing technical skills in the broadcast space as this will boost investments in the technology used to increase and implement advertisements.
4. By further encouraging investments in existing or emerging local enterprises to stimulate growth
5. By ensuring all stakeholders(producers, etc) involved in advert production get their fair share of ad spend (amount of money spent by advertising agencies on advertising for a product or activity).
If an advertising agency or advertiser defaults on its payment to broadcasters, NBC has the broadcasters covered as well. Let’s take a look at some measures the NBC has put in place to ensure broadcasters are no longer owed what is due to them:
1. If an advertising agency places an advert with a broadcaster, and refuses to pay, after 45 days, the broadcaster may report the matter to NBC. The NBC will then notify all other licensed broadcasters to refuse any advert coming from that particular advertising agency.
2. The advertiser is granted a 60-day grace period to pay its debt to the broadcaster, after which NBC will demand that all licensed broadcasters refuse all adverts coming from that particular advertising agency or advertiser.
3. Any broadcaster that disobeys NBC’s instruction shall face the consequence of its action.
If implemented, the advertising amendments have the potential to impact not just the industry but the Nigerian economy as a whole. A look at the impact of Advertising to the European Economies shows the following areas of impact:
– A boost in the economy: A seven-fold increase in GDP for European countries on every euro spent on advertising. In simple terms, the economy experiences significant growth with every penny in the advertising sector accounted for. The reason is attributed to various channels through which advertising influences buying decisions amongst customers and the competition it allows in various industries. This incentifies advertisers, manufacturers and service providers to innovate and create solutions that drive content and grow the economy.
– Employment Opportunities: Advertising accounts for about 3% of jobs in the European Union. It might seem like a small number but when you realize this is almost 6 million jobs, it puts things in perspective. Advertisers need personnel in the production of advertising, media personnel in the TV and print industry needs personnel in various areas to product content or function in various capacities and when you consider how much the advertising industry has grown, it can only get better.
– Social Benefits: Funds made from advertising account for lots of free services that are enjoyed around the continent. Product updates, new releases and lots of information we are currently armed with, are as a result of advertising. The impact of advertising is also felt in various aspects of media as without advertising, various media outlets will be handicapped in terms of content and revenue.
In light of this, the EU Ad industry called for a moratorium in 2017 on further restrictions on advertising. This was to ensure that the impact of new rules and other regulations were fully assessed.
In Nigeria, the current practice is for producers to obtain loans to buy airtime from broadcasters to air productions and then fund the actual production, at times at rates as high as 30% per annum. Producers then have to wait for eight months to one year to get paid at discounted rates, for already run Ads and sponsorships of the broadcast production.
Alleged reports all around the industry claim that even when payments are due, the producer is forced to relinquish as much as 50% by the “system”. This places an unfair burden on the producers; a burden NBC is trying to lift through amendments.
The 6th amendment helps the industry to fight serial debtors that have crippled the operations of indigenous broadcasters and production houses (especially MSMEs) in Nigeria and ensures timely payment of invoices by advertisers and agencies. Producers of content have up till now been financing Advertisers. It is time for the producers to reap what they have sown.
It’s indeed a new dawn in our country!