Technically insolvent state-owned enterprise collapsing in front of everyone’s eyes

 ·22 Jan 2025

The South African Broadcasting Corporation (SABC) suffers from decreasing audiences, declining revenue, mounting losses, and an ever-weakening balance sheet.

The situation has reached such concerning levels that it cannot invest in technology, and its buildings and other infrastructure are collapsing.

The SABC’s 2024 annual report revealed that it recorded a loss of R200 million over the last financial year.

While this is an improvement over the R800 million loss from the year before, it did not help its desperate financial situation.

The SABC has been operating at a loss for many years. This is partly due to a significant revenue decline in recent years.

In the 2019 financial year, the state broadcaster generated R6.5 billion in revenue. It was mainly derived from advertising and sponsorship income and TV licence fees.

Five years later, revenue declined to R5.1 billion. This decrease resulted from a significant reduction in commercial revenue and TV licence fees.

TV licence evasion rate increased from 69% in 2019 to an all-time low of 86% in 2024, which shows that South Africans refuse to pay this fee.

South Africans have migrated to streaming services and do not want to pay for TV licences as they do not use the SABC’s services.

Many South Africans are also pro-actively avoiding paying TV licence fees as they are tired of funding corrupt and mismanaged state enterprises.

Not paying for TV licences has become so commonplace that many government departments do not pay for this fee.

The SABC’s finances have reached such critical levels that the new Communications Minister, Solly Malatsi, is looking at a new funding model for the company.

Stakeholders are looking at a public interest content levy to create a more sustainable model. This levy will be charged on various devices, including smartphones.

The state broadcaster also wants other companies to collect these fees. This is another contentious strategy.

The SABC is collapsing

The continued losses took its toll on the state broadcaster, which became technically insolvent over the last financial year.

It reported assets of R4.09 billion and liabilities of R4.12 billion, leaving it with negative equity of R37 million.

Negative equity means the company is technically insolvent and cannot settle all its liabilities if all its assets are liquidated.

The SABC said it ‘remains materially uncertain’ whether it will be able to meet its obligations in the next twelve months.

It will require implementing severe austerity measures, including suspending more than 80% of the long-term capital plan and limiting content investment.

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

The state broadcaster’s poor financial state can be seen in numerous reports about its building and technology.

Neglect could be seen everywhere in and around the SABC campus in Auckland Park, and Rapport recently reported that its Radio Park building is in a poor state.

It reported that workers in the SABC’s dilapidated Auckland Park building complex are fed up after years of decline.

“Radio Park’s two service lifts reportedly last worked in 2018, and currently, only one of the regular lifts is operational. The escalators are broken and cordoned off,” it said.

The workers have also complained that outdated toilet facilities are dirty, and the stairs are poorly lit.

The deterioration has been prevalent at the SABC campus for years and included numerous problems, including a fire in 2023.

In 2019, SABC employees in its Radio Park building had to be evacuated after a diesel leak from the generator backup tank on the 15th floor.

What the SABC looks like today

Daily Investor visited the SABC recently, and it was clear that not much money was spent on maintenance, as shown in the photos below.

Show comments
Subscribe to our daily newsletter