Distress signal: The SABC’s Auckland Park headquarters in Johannesburg. Picture: FINANCIAL MAIL
Distress signal: The SABC’s Auckland Park headquarters in Johannesburg. Picture: FINANCIAL MAIL

The SABC, which is struggling to pay some of its bills, says it is still engaging the Treasury in a bid to secure a R3bn government guarantee, which it hopes will keep it afloat.

The financially hamstrung public broadcaster has failed to raise funding from financing institutions while it awaits the outcome of its appeal to the Treasury. It has sunk deeper into financial crisis and is unable to pay some of its service providers and producers.

The SABC has been waiting for a government guarantee since mid-2017, but its request has yet to be approved by the Treasury. It is understood that the Treasury is reluctant to accede to the SABC’s request because it is concerned about increasing government contingent liabilities.

These are in the form of guarantees, which are of concern to credit ratings agencies in particular because of the precarious status of several state-owned enterprises.

According to the budget review, Eskom, independent power producers and the Road Accident Fund account for the majority of the government’s contingent liabilities, which total about R475bn at present.

The Treasury is said to have urged the public broadcaster to consider other options, such as reducing its head count and selling off nonstrategic assets. In an official response to questions, the Treasury said it was aware of the SABC’s liquidity crisis, but "will not comment on any part of the guarantee process".

SABC spokesman Kaizer Kganyago said on Sunday the broadcaster was facing "liquidity challenges" and was still in talks with the Treasury. "We are doing what we are supposed to do … as the [SABC] CEO said, we are looking at a turnaround strategy and alternative revenue streams," he said.

SABC CEO Madoda Mxakwe confirmed last week that the public broadcaster was not in a position to meet some of its financial obligations.

Licence fees

"We are in a situation now where we are not even able to pay some of the content providers and I think it is important to note that we are looking [to ensure] … that we spend the limited resources we have responsibly to ensure that we keep the boat afloat," Mxakwe said.

The broadcaster was looking at immediate and long-term measures including aggressive cost containment and diversifying revenue streams, to improve its financial situation, he said.

The SABC is heavily reliant on advertising and revenue from licence fees to stay afloat. It recorded a loss of R977m after tax in 2016-17. This was mainly attributed to declining advertising revenue across all platforms, coupled with deteriorating TV licence fee collection. The SABC receives 85% of its revenue from advertising, sponsorships and other commercial partnerships, 3% from the government and 12% from TV licence fees.

In a reply to a DA question in parliament earlier in 2018, Communications Minister Nomvula Mokonyane said the SABC was owed R25bn in unpaid licence fees and had written off R4.5bn from "invalid" accounts in 2016-17. Less than a third of those with TV licences were paying annual fees, she said.