The SABC's Auckland Park headquarters. Picture: FINANCIAL MAIL
The SABC's Auckland Park headquarters. Picture: FINANCIAL MAIL

The loss-making SABC says no lender is prepared to do business with it amid a severe cash crunch that could result in the public broadcaster failing to pay salaries and service providers in the coming months.

The broadcaster said this was owing to its disclaimer audit opinion and the fact that the auditor-general had raised doubts about its going-concern status.

The broadcaster told members of parliament’s communications portfolio committee on Tuesday that retrenchments are unavoidable, despite objections by the government, labour and MPs. The planned job cuts are likely to affect close to 1,000 permanent employees and 1,200 freelancers.

The SABC says it needs a cash injection of at least R3bn to stay afloat and possibly avert retrenchments. In September, the public broadcaster, which recorded a staggering loss of R622m in the financial year ended March, was granted borrowing powers and a borrowing limit of up to R1.2bn by the Treasury, in line with the Public Finance Management Act.

“The SABC was successful in obtaining a borrowing letter from the minister [of communications] to obtain [a loan] funding from banking institutions. Owing to the SABC’s disclaimer audit opinion [going-concern status], banks are not willing to take the risk of lending money,” said SABC CEO Madoda Mxakwe.

SABC CFO Yolande van Biljon said the broadcaster is aiming to reduce costs and increase revenue.

Consultations are still ongoing with organised labour in terms of minimising job cuts, said board chair Bongumusa Makhathini.

Earlier in 2018, the auditor-general raised doubt about the broadcaster’s ability to continue as a going concern, as it continues to struggle to meet most of its financial obligations.

In the 2016/17 financial year, the SABC recorded a loss of R977m. The broadcaster spends more than R3bn a year on the salaries of slightly more than 3,000 permanent employees. It has R1.3bn debt and generated R7.2bn in revenue in the financial year that ended in March. It expects a net R805m loss in the 2018/19 financial year, should drastic cost-cutting measures not be implemented.

“It does not matter what the cause of this may have been in the past, as the current reality is that unless drastic measures are taken to try to restore the financial viability of the SABC, it would as an organisation simply not be financially viable going forward,” said Van Biljon.

“The SABC has already embarked upon several cost-cutting measures, but there is simply no manner in which a complete organisational-wide restructuring and reduction of positions can be avoided, and with it, the issue of possible retrenchments are regrettably contemplated,” she said.

The SABC had also entered into various payment arrangements with service providers. It said service providers are now refusing to provide services or content if not paid upfront. The broadcaster is also receiving letters of demand on a daily basis, with others launching court applications.

Committee chair Hlengiwe Mkhize said the committee was unimpressed with the SABC’s drive to retrench staff. MPs also called for a full skills and salary audit before retrenchments are contemplated.

“The committee’s view is that the SABC should retract the retrenchment notices issued to staff members, in order to allow negotiations with stakeholders to take place. The committee does not appreciate that the SABC is proceeding with retrenchments, against the advice of the committee two weeks earlier. The committee has resolved to meet with organised labour to hear their views on the matter,” said Mkhize.