SABC on the edge of collapse: report
The South African Broadcasting Corporation (SABC) is in extreme financial distress and could be forced to apply for business rescue, according to the group’s Chief Financial Officer (CFO).
As reported by the Sunday Times, the broadcaster looks set to announce a loss of more than R1 billion for the financial year ended March 2023.
The SABC said that its financial challenges are due to load shedding, the current economic downturn, and the analogue switch-off.
Group CFO Yolande van Biljon said that if the group cannot sort out its financial situation, it could go into liquidation.
If it did follow the liquidation process, it would become the second institution under the Department of Communications to do so after the South African Post Office (SAPO).
“The business rescue application that [the Post Office] is currently contemplating is going to become a very real consideration unless other sources of funding or support [are] identified and confirmed as a matter of urgency in the medium to longer term, while in the short term, immediate significant interventions that are in the corporation’s control are required,” van Biljoen wrote in a memorandum. in June.
Despite the memorandum coming out last month, the SABC board is yet to intervene on the matter.
In addition, the memorandum said that the available cash to settle the obligations at the end of May was short R60 million, despite the company not paying its monthly instalment to Sentech for roughly a year.
Way of the Post Office
Van Biljoen’s comments about the SAPO follow the group being placed under provisional liquidation.
For a decade, the SAPO has been losing millions in taxpayer money each year, with losses also steadily increasing.
This has forced the group to cut its workforce and close branches nationwide.
SAPO’s liabilities outweigh its assets by R4 billion, and the group’s debt totals R8 billion. National Treasury said the embattled organisation would receive another government bailout of R2.6 billion this year – but this is far from enough.
Amid the group’s financial constraints, it said it must retrench roughly 6,000 workers – 40% of its staff.
It added that the group’s wage bill equates to roughly 68% of its overall costs. At the same time, the business has become unsustainable due to the success of courier companies encroaching on its services, while the government itself does not use its services.
However, to fix the group’s financial woes, the South African Post Office Amendment Bill (2022) was introduced to parliament in May.
The new bill will encourage government institutions – including national and provincial departments – to use services by the SAPO for delivery services.
Some additional proposed amendments include:
- SAPO providing logistics and e-commerce services and serve as a logistics partner for e-commerce and other logistics players, including SMMEs and informal traders;
- SAPO serving as a digital hub for businesses and communities;
- SAPO providing different services at the post office and service points based on the needs assessments for a particular area and to ensure the effective usage and enhancement of the retail offering and services – and charging different fees for different services and areas, subject to the approval of the Authority.
SABC’s plan
The SABC has also recently announced a plan to solve one of its biggest financial problems – the non-payment of TV licenses.
Responding in a parliamentary Q&A, Minister of the Department of Communications and Digital Technologies (DCDT) Mondli Gungubele said there are 9.2 million account holders with outstanding balances for their TV Licences – valued at R44.2 billion.
However, the minister said that the department is working on a new funding model that would eliminate the TV Licence altogether.
“In terms of the South African Broadcasting Corporation SOC Ltd Bill 2022 that was approved by Cabinet on 29 November 2022 for the submission to Parliament for processing, the DCDT is proposing that the television licence model be replaced with the household fee model,” Gungubele said.
As per the group’s annual performance plan in May 2022, the new ‘household’ levy will mean that South Africans who do not have a television set will still be required to pay.
Essentially, the levy will be applied to all households and businesses in the country and will not be based on actual viewing but rather on access to content. Thus, the levy will be payable even if SABC content is not consumed.
The proposal added that part of the levy’s revenue will be collected by the ‘dominant subscription broadcaster’ – DStv and Multichoice – for the broadcaster.
The new levy, however, is still in its proposal stage, and legislative changes still need to be processed before it is enacted.
Thus, non-payment of TV Licences will continue to drain the SABC.
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