SABC to receive R2.1 billion bailout

Friday, October 4, 2019

The South African Broadcasting Corporation (SABC) is set to receive a cash injection of R2.1 billion to help stabilise the public broadcaster.

Communications and Digital Technologies Minister Stella Ndabeni-Abrahams made the announcement at a media briefing on Friday.

Ndabeni-Abrahams said of the eight preconditions set for the funding allocation by National Treasury, the public broadcaster has fully met five and partially met two, whilst one has not been met.

Based on joint assessments, Treasury and Communications have worked together to facilitate the initial tranche of the R3.2 billion allocation to be transferred to the SABC.

“R2.1 billion will be transferred to the public broadcaster on Monday, 7 October 2019. The remaining balance of R1.1 billion will be transferred once the public broadcaster fully meets the three outstanding conditions or firmly demonstrates evidence to fully comply,” Ndabeni-Abrahams said.

The five preconditions that were fully met include:

  • Determine immediate cash requirements supported by detailed cash flow projections for the next 12 to 18 months;
  • Submit a list of identified initiatives for revenue enhancement and cost-cutting initiatives;
  • Conduct a thorough investigation into what caused the financial collapse of the SABC and why previous turnaround plans have failed to be successfully implemented;
  • Provide an update of how the entity is dealing with the people implicated in the investigation report; and
  • Develop a turnaround plan incorporating measures to prevent the reoccurrence of the identified factors. This must also take into account various reports including those of the Special Investigating Unit, Public Protector, Auditor General and Parliament.

The two preconditions that were partially met include:

  • Produce separate financial reporting for pubic and commercial broadcasting services; and
  • Identify non-core assets for disposal to assist with reducing the recapitalisation requirement from government.

The SABC has not met the condition to develop a comprehensive Private Sector Participation (PSP) strategy, clearly highlighting initiatives to be implemented and the net value to be derived from the partnerships.

However, Ndabeni-Abrahams said that willingness to work on this condition has been expressly provided and this is welcomed by the two departments.

She said the Department of Communications has communicated the SABC funding allocation to the Auditor General to assist in addressing the going concern matter and conclusion of the 2018/19 Annual Financial Statements.

“As a result, the SABC obtained a qualified audit opinion instead of a disclaimer,” Ndabeni-Abrahams said.

The Minister also noted that the SABC turnaround requires more than R3.2 billion short-term funding.

However, she said, the public broadcaster was required to submit a fit-for-purpose turnaround plan, which would respond to short, medium and long-term requirements, and the changing broadcasting landscape.

“The SABC has since submitted a board-approved Turnaround Plan which is currently being reviewed by both departments. The Department of Communications will further continue with National Treasury to source funding through the normal Medium-term Expenditure Framework processes,” the Minister said.

Procuring compelling content

SABC Chairperson Bonginkosi Makhathini thanked National Treasury for the funding, saying the money will encourage and assist the broadcaster in procuring compelling content, which is mostly needed.

Makhathini emphasised that they are not going to take the whole amount and settle debts.

“A portion of the money will pay off the debts, and certain money will go and take care of the other priorities, including procuring compelling content, which is important for us to attract advertising revenue, [and] a certain portion of the money needs to take care of maintenance of our infrastructure,” Makhathini explained. –