South Africa’s state broadcaster is technically insolvent

The South African Broadcasting Corporation’s (SABC’s) latest annual report revealed that the state-owned enterprise is technically insolvent.

The SABC tabled its 2023/24 annual report in Parliament, revealing that it suffered a loss before interest and tax of R192 million.

The state broadcaster said it had reported negative equity in its Statement of Financial Position as of 31 March 2024.

This means it is technically insolvent and cannot settle all its liabilities if all its assets are liquidated.

The SABC’s chief financial officer Yolande van Biljon said it remains a “material uncertainty” whether they will be able to meet their obligations in the next twelve months.

It will require the ongoing implementation of severe austerity measures at the state-owned enterprise.

These measures include the suspension of more than 80% of the long-term capital plan and a limitation of investment in content.

“It must be noted that virtually no funding is currently available for any capital investment in innovation, infrastructure and technology,” the SABC said.

The SABC explained that its audience share has been impacted by the migration of audiences to global streaming platforms.

“A decline in audience share from a high of 46% in FY2016 continues to negatively impact the SABC’s ability to grow its revenue streams,” it said.

“This is illustrated by the R2 billion decline in revenue since FY2016, whilst revenue year on year has remained mostly flat since FY2021.”

The SABC also experienced a significant decline in TV license fee revenue. This continues the downward trajectory despite numerous initiatives.

“As audiences migrate to consuming content across a range of screens other than television screens, the relevance of this form of license fee continues to be questioned,” it said.

Levels of license fee non-compliance have continued to decline as households afford it a low priority in times of economic hardship.

The reality is that compliance cannot be enforced, which caused the non-compliance rate to increase to 85.60% in FY2024.

“Going forward, focused attention will continue to be directed towards new equitable financial models for funding the SABC’s public interest mandate,” it said.

The broadcaster added that securing government funding to fulfil its mandate remains an important priority.

Despite its dismal financial state, the SABC highlighted many of the positive aspects of its latest financial results.

These include a 7% increase in advertising revenue, a 4% decrease in operating expenses, and a 77% decrease in its loss before interest and tax.

“Despite financial sustainability challenges, the corporation executed its mandate diligently and passionately,” Van Biljon said.

The SABC has also achieved its first unqualified audit opinion from the Auditor General of South Africa since 2009/2010.

“Achieving an unqualified opinion, a first in 14 years, reflects the strategic journey the SABC has undertaken to strengthen its internal control environment,” she said.

Van Biljon added that they have focussed on their compliance with legislation, expenditure management, governance, and oversight.

SABC CEO Nomsa Chabeli also highlighted positives, including their election coverage and the relaunch of the SABC+ streaming platform.

“The SABC is an iconic broadcast media asset in South Africa, with the largest audience and geographic reach,” she said.

“We continue to be South Africa’s most trusted media brand as we entertain, educate, inform, and empower our audiences.”