In an attempt to keep the South African Broadcasting Corporation (SABC) afloat, the National Treasury has granted the embattled company a loan of R1.2 billion.
All of South Africa’s state-owned enterprises are struggling to make ends meet, but the SABC may be the biggest failure of them all.
Not because it’s an endless pit, into which the government keeps on throwing taxpayer’s hard earned money. Not because it’s antiquated broadcasting regime has alienated advertisers and sponsors.
It’s because the rot surrounding former Chief Operating Officer, Hlaudi Motsoeneng, still infects the broadcaster, despite serious treatment in the form of a renewed board of directors, and a rejuvenation policy which has been adapted to ensure recovery.
Still, the stench left lingering by Motsoeneng stifles the SABC’s growth. It begs the question, is incompetence so ingrained into the framework of the national broadcaster that real expertise is regarded as a foreign enemy?
Let’s find out what brought SABC to its knees, and if the broadcaster could ever be taken seriously again.
We’ll start with the head honcho himself. While the national broadcaster teetered on the brink of failure, Motsoeneng’s rule by dictatorship pushed the company off the cliff of sustainability into the doldrums of corporate malaise.
Motsoeneng’s tenure at the helm of SABC was marred by allegations of corruption, nepotism, gross mismanagement, unfair dismals and a host of other nefarious dealings. With this in mind, it’s no surprise that former president Jacob Zuma was one of Motsoeneng’s closest allies.
It took a few long and painful years, from 2011to 2015 for Motsoeneng to ruin the broadcaster. Somewhere along the line, he increased his salary from R2.8 million to R3.7million, this despite the company reporting an annual loss of R395 million.
Motsoeneng effectively bankrupted the SABC and alienated staff with his delusions of grandeur. Motsoeneng was forced to back his bags following former Public Protector, Thuli Madonsela’s, 2014 report into his conniving ways.
The last we heard, he was in the running to be the next President of South Africa.
Following the millions of rands spent in back-to-back court cases, the SABC attempted to steady its ship in 2017. The company scrapped methods implemented during Motsoeneng’s rule and approached the treasury with a billion rand request.
Earlier this year, Madoda Mxakwe was appointed as new SABC Group CEO, along with the appointment of Yolande van Biljon as new SABC CFO. These deployments were welcomed by the Organisation Undoing Tax Abuse (OUTA), which said:
“The appointment of well-qualified professionals with experience in large organisations is an encouraging sign for SABC’s future.”
While the issue of incompetency was being redressed within the company’s structures, profits became more elusive, with hard losses dominating the financial books.
In August, the SABC had just R26 million in its accounts – unable to pay service providers, and once again, teetering on the brink of complete financial collapse. The SABC’s annual financial report from 2016/17 revealed that the broadcaster sustained a net loss after tax of R977 million, stating:
“Cash and cash equivalents as at the end of the 2016/17 financial year were R82m, compared to the previous year’s R881m.”
Not only is the SABC not making money, it’s currently downing under the weight of exorbitant debts.
In August, the company’s total debt stood at R694 million – almost 27 times more money than they have.
Board chairperson, Bongumusa Makhathini, was forced to approach parliament, cap in hand, saying:
“We still have financial challenges. The situation is very dire. If you look at what we’ve been able to do, we prioritise salaries and freelancers. But we struggle to meet a lot of our monthly financial obligations.”
Minister of Communications, Nomvula Mokonyane, put the blame squarely on the shoulders of TV-license defaulters. According to the minister, the SABC is owed a whopping R25 billion in licensing fees.
The Democratic Alliance (DA) Shadow Minister of Communications, Phumzile van Damme, argued that South Africans had lost faith in the broadcaster, which was resulting in reduced license payments, saying:
“Advertisers also withdrew their business by not wanting to advertise with an SABC in turmoil. One of the biggest tasks of the new board is to look at new sources of revenue and start moving away from licence fees.
The bulk of their funding is from advertising. The SABC board should continue to restore confidence and vigorously attract advertisers back to the public broadcaster in order for it to stay afloat.”
Besides the much-loved local soapies, most of SABC’s views come from its broadcasting local soccer derbies. In an attempt to maximise its reach the company inked a deal with English Premier League (EPL), with the general manager for TV channels commenting:
“SABC 3 is going to provide South Africans who love sports and in particular, soccer, the opportunity to access some of the greatest teams in the world in one of the biggest leagues globally for free. The Premier League has a strong brand equity that we believe will contribute towards the building of the SABC 3 brand.”
This deal couldn’t have come cheap – so where did the broadcaster scrape the cash from?
The company has been mum on the finances involved with the deal, saying only:
“Given the SABC’s current funding model, the corporation has to find commercially viable products to invest in, in order to realise returns which it will reinvest into its public service mandate content.
The low investment into the English Premier League will allow a greater return on investment which will go some way into SABC being able to meet its non-financial viable investments, particularly sports of national interest and news.”
As reported by 702 Talk Radio, the SABC is still on the brink of financial collapse, and as a result, has secured another government bailout, further adding to its seemingly endless debt. The broadcaster reported a loss of R622million in the financial year ending in March.
Dr Mashilo Boloka, Director-General of the Department of Communications, explained the R1.2 billion loan extension, saying:
“What we are talking about is not necessarily a government guarantee but the power of the SABC to go and borrow money, consistent with Section 23 of the Broadcasting Act.
The idea is that the SABC should be able to do two things. Upon getting that money, they should be able to prioritise the payment of the independent producers – Sintech, Safa, and others, and then also acquire content. That is the basis on which we have agreed.”