SABC technically insolvent, implementing turnaround strategy

Wednesday, August 28, 2019

The SABC is technically insolvent and is struggling to honour payments to service providers and contractual obligations. 

Some suppliers who have won bids at the South African Broadcasting Corporation (SABC) have indicated their unwillingness to take up the contracts due to their financial dire straits. 

SABC Group Chief Financial Officer Yolande van Biljon said on Wednesday that the SABC’s financial position has since worsened and that it ended the previous financial year with a cash balance of only R72 million. 

“There are instances where we are unable to honour payments and even [unable] to adhere to committed contracts, which means we often need to renegotiate because we have been unable to meet the requirements. 

“Currently, the organisation is technically insolvent. We are also under tremendous strain towards being factually insolvent as a result of our liquidity issues. Cash is depleted and the trade and other payables amount to R1.8 billion as at June 2019. 

“There are a number of significant suppliers that make this up, notably Sentech (R554 million), our signal distribution provider; Supersport, Samro and various other content providers (amount to R174 million). We have monthly engagements with all these parties,” she said. 

Van Biljon said several content providers have ceased production and with the public broadcaster relying on fresh content as a way of attracting advertising, the SABC is unable to generate the much needed advertising revenue and in turn, this affects its financial sustainability. 

“The crisis is a matter of urgency and certain terrible scenarios like black on air are a possibility. However, with the support of our shareholder [Communications Department], National Treasury and all stakeholders, we have managed to avoid that to date.” 

Van Biljon said as a result of the public broadcaster’s known financial challenges, service providers who have won tenders have refused to accept the awards, adding that there has been an increased demands of upfront payments. 

Constant threat to non-payment of salaries leaves staff disengaged 

Members of the National Council of Province’s Select Committee on Public Enterprises and Communications were also told by the public broadcaster’s top management of the constant threat of the SABC being unable to pay salaries. 

Jonathan Thekiso, the SABC’s Group Executive for Human Resources, said due to its current financial challenges, the public broadcaster placed a moratorium on recruitments in September 2018. 

“As we speak, we have 257 acting incumbents across the organisation at a monthly cost of R1.8 million. Now, this may look like a saving for the organisation because the organisation is not paying full salaries but paying only acting allowances but these acting assignments are actually impeding the effective implementation of certain strategies within those environments,” he said. 

Thekiso said the impact of this is that employees continuously become disengaged knowing there is a difficulty around the organisation being able to pay salaries. 

“There is a risk that if the organisation is unable to pay salaries, organised labour may take action in terms of approaching the relevant dispute resolution institutions and it might place difficulties across the organisation,” he said. 

SABC working towards meeting the pre-conditions of the National Treasury bailout 

Madoda Mxakwe, the public broadcaster’s Group Chief Executive Officer, said the SABC’s top management was, over and above ensuring that resources are managed prudently, working towards addressing the pre-conditions of National Treasury ahead of receiving a capital injection. 

“We are working on the pre-conditions for the bailout and these would really help to ensure that we deal with all the legacy issues as well as the debt that the organisation has. 

“We have been working very closely with Government Technical Advisory Centre (G-Tech) to look at all the pre-conditions that have been highlighted. Briefly, these also look at the historical issues that led to the collapse of governance as well as the financial processes at the SABC and also enhance the strategy that was developed,” Mxakwe said. –