Friday, October 13, 2023

SABC 'at breaking point' as South Africa's public broadcaster racks up another staggering R1.13 billion loss.


by Thinus Ferreira

After promising to break even the beleaguered South African public broadcaster is once again finding itself on the edge of a financial cliff with the country's SABC racking up yet another annual loss of R1.13 billion as board chairman Khathutshelo Ramukumba warns its reached "breaking point".
 
In addition, South Africa's Auditor General slapped the SABC with an unqualified audit, noting that there's uncertainty over whether the broadcaster remains a company with going concern status.
 
The SABC, battling falling ratings and continuing to shed 5 million viewers annually, has tabled its latest dire financial report for the year until April.
 
It comes as the broadcaster battles the growing popularity of streamers like Netflix and Disney+, competition from pay-TV in the territory in the form of MultiChoice, coupled with underperforming ad sales and the country's debilitating ongoing electricity blackouts.
 
While the SABC's TV licence fee evasion rate once again ticked up to another record high of 87.1% over the past year with only 13% of TV households on its database of 10.8 million licence-owning homes still bothering to pay this annual fee, the public broadcaster is begging the South African government to urgently move in the direction of countries like France and the United Kingdom, to scrap the licence system and replace it with a new and sustainable funding model.
 
Three years after a R3.2 billion government bailout that did little to improve the finances of the largest public broadcaster on the African continent, the past year at the SABC was once again marked by ongoing irregular spending and other financial concerns.
 
While the broadcaster owes local producers millions in outstanding payments it was back to getting its first unqualified audit opinion in 10 years as it continues to battle poor record-keeping.
 
The country's AG concluded that the benefits of the bailout and the SABC's latest turnaround strategy failed to materialise and that there is such massive pervasive uncertainty over the broadcaster's ability to maintain its going concern status, that it issued a disclaimer opinion.
 
According to Ramukumba, the SABC's liquidity and solvency risk has now "escalated to breaking
point". 
 
In the annual report he notes that "with the continued unfunded cost of the SABC's public mandate and the high TV license payment evasion rate, it is now more than ever critical that the funding model for the SABC is overhauled".
 
He told parliament that "the current funding model of the SABC is simply not working and it's not working for the future. At the moment the ailing revenues that we are making from the commercial side of the business are used to cross-subsidise the public service mandate and that is not sustainable".
 
He revealed that the broadcaster is also no longer paying and has cut back on crucial expenditure needed to keep the SABC broadcasting. 

"The SABC is in a situation, where now - as a short-term intervention - we're even deferring certain critical expenditure programmes that are critical to keep the SABC on-air".
 
Nada Wotshela, acting SABC CEO, said the performance of the broadcaster's SABC+ video streaming platform launched in mid-November "is not quite what we had expected". 
 
She said that "SABC+ hasn't grown to the levels we had anticipated" blaming the cost of data in South Africa and noted that "a lot of the audiences that we are targeting cannot afford data to watch the programmes."
 
In the annual report she notes that "declining audiences and advertising revenues, as well as the cost of the unfunded mandate continue to cripple the business of the SABC. The introduction of on-demand digital media platforms has also put the SABC's video entertainment division under tremendous pressure as viewers' consumption patterns are rapidly changing".
 
Nada Wotshela says it has "has further fragmented advertising revenues and the SABC has not been spared."
 
The broadcaster notes in its annual report that it remains concerned about "significant audience losses" and didn't anticipate the "aggressive and audience eroding approach" that continues to wipe millions of SABC viewers from the country's TV ratings system as analogue signals are being turned off in the switch to digital terrestrial television.