Wednesday, August 28, 2019

With 'less that's fresh' the technically insolvent SABC wants to increase SABC TV licence fees.

With "less that's fresh" in terms of content and viewers seeing constant repeats, old content and programmes changing timeslots and channels, the technically insolvent South African public broadcaster wants to increase SABC TV licence fees.

Appearing on Wednesday before parliament's committee for public enterprises and communication, the SABC's top executives admitted that it's stale content is leading to audience declines and that several of its biggest content suppliers have stopped giving the SABC shows and episodes because of the broadcaster's failure to pay or to stick to the payment schedule.

Madoda Mxakwe, SABC CEO, told parliament on Wednesday that the SABC's TV audiences are declining and that "this is largely because of a lack of investment in local content. In our business audience drives revenue and when the audience numbers are low it affects revenue".

He said that the SABC's database has 9.6 million SABC TV licence fee payers but that only a measly 2.2 million people who are still bothering to pay their licence fees, with "455 000 doing it in instalment terms. As you can see the gap is quite huge".

Yolande van Biljon, SABC CFO, told parliament that the South African public broadcaster is "technically insolvent" and that it's ongoing failure to pay local production companies for content "naturally has a significant effect on our local content productions and the creative industry".

"The SABC is technically insolvent," she said. "Cash is depleted. Several of our major content providers have ceased production and they even retain content as a result of us being unable to pay them".

"We rely on these programmes to generate revenue because they attract the eyes and ears that we need. Because we can't pay, we're unable to have the content as fresh. As a result of that, advertising revenue is impacted that affects our financial sustainability."

She said that "service providers that have successfully tendered now no longer want to accept the awards. There's been an increasing demand for upfront payments. With sports rights we're unable to acquire the sports that the South African public is interested in."

Yolande van Biljon said that the SABC is "reducing our investment in content. We are also not investing in marketing as we should. The impact is ultimately that the revenue also reduces".

She explained that SABC viewers "on specific channels see these constant changes in programming and timeslots.A lot of it is as a result of the uncertainty of our financial circumstances. We couldn't invest in a specific programme and go into repeat strategies".

Despite the less fresh content, the SABC however wants viewers to pay more for their SABC TV licence fees.

"We have in the last few months investigated a possible increase in the fee and we have presented it to the department of communications and we are awaiting the outcome of that," Yolande van Biljon said.

She revealed that the SABC on average is supposed to spend R180 million per month on content investment. "We have about R60 million to R80 million for that. So R100 million of that investment cannot take place. I call it we 'preserve the cash' in order to pay salaries or to pay a specific creditor that is under pressure".

By this Friday the SABC will have only R75 million in its bank account, she said. "Effectively we need to be able to issue a notification to our creditors why we are not going into business rescue," she explained. "We are what is defined as 'financially distressed'. In terms of the Companies Act we have to issue these notifications. Or declare liquidation."

As an example of the SABC's delayed capital expenditure she said "We have to replace all the lifts in Auckland Park. That's R160 million. The lifts are 15 years past lifespan. We keep them together by making ad hoc investments and repairs and maintenance".

"On any given day there might be 3 out of 39 working in our buildings in Auckland Park," said Yolande van Biljon.

Jonathan Thekiso, the SABC's HR boss, said that the SABC's bloated personnel number is falling due to a block on hiring new staff. As people are resigning and retiring, the staff count has dropped from 3 200 in February 2019 to 3 083 by June 2019.

Yolande van Biljon said the SABC wants to get back to building up a content inventory instead of making and receiving a programme one day and broadcasting it the next. "We want to build up a little bit of content investment, bring stability, finalise our schedule for a 2-year period [in advance] so that you can give your advertisers comfort in terms of stability".

"The investment they make in our world is also impacted when we move programmes around or move it between SABC channels.