Broke SABC on brink of collapse
The public broadcaster’s executives told MPs they are not sure the company will be able to pay employees’ salaries at the end of March
The SABC is on the verge of collapse with executives telling MPs on Tuesday that the company cannot guarantee it will be able to pay its employees’ salaries at the end of March.
The broadcaster, which remains the only source of news and commentary for millions of South Africans, has requested R6.8bn from the government to stay afloat, but its bid for funding has so far been unsuccessful.
However, communications minister Stella Ndabeni-Abrahams confirmed on Tuesday that the National Treasury had agreed to grant SABC interim relief. The amount of money to be granted was yet to be confirmed, the minister said.
Briefing parliament’s communications portfolio committee on Tuesday, SABC CEO Madoda Mxakwe said the broadcaster’s cash flow is depleted, so it cannot honour payments to service providers, adhere to its committed contracts and commission local content productions.
“The SABC cannot guarantee that it will be able to pay its employees’ salaries at the end of March 2019. Should this crisis not be addressed as a matter of urgency, the SABC would be unable to operate and the ‘black-on-air’ scenario is a real and highly possible threat,” Mxakwe said.
He said several major content providers of key programming, including soapies, have ceased production and are retaining content until outstanding payments have been received. The public broadcaster relies heavily on these programmes to generate advertising revenue and the inability to invest in content negatively affects the financial sustainability of the SABC and the local production industry, said Mxakwe.
In December 2018, the Companies and Intellectual Property Commission (CIPC) issued a notice to the SABC in terms of the Companies Act to show cause regarding alleged reckless trading or trading under insolvent circumstances.
The SABC’s projected figures show factual insolvency by March 31 2019. Forecasts indicate that the public broadcaster will end the financial year with a net loss of R568m against a budgeted loss of R288m and trade and other payables are expected to be R2bn.
Mxakwe said that government funding will be used to recapitalise the SABC.
“The funds would be used to alleviate the SABC’s solvency crisis and allow the corporation to honour its committed and overdue contracts, embark on local content procurement strategy, ensuring the fulfilment of its public broadcast mandate, as well as to procure and upgrade critical technology and infrastructure for broadcasting that is past its useful life and that has become expensive to maintain.”
Ahead of his budget speech in parliament in February, finance minister Tito Mboweni suggested that the cash-strapped broadcaster should seriously consider restructuring its operations, including merging radio stations and selling off some of its assets.
Treasury director-general Dondo Mogajane is still engaged in talks with SABC executives, Mboweni said at the time.
“If you grant the [funding] request, the money will have to come from somewhere, from another budget allocation,” Mboweni said at the time.
The SABC sank into a deeper crisis late in 2018 when four directors resigned, leaving the board without the quorum required to make decisions. They quit after a scathing letter by Ndabeni-Abrahams in which she accused the nonexecutive directors of not acting in the best interest of the public broadcaster as they pressed on with retrenchments.
The SABC has since halted the retrenchments pending a skills audit. Parliament hopes to fill in the vacant board positions before the end of March.
Mxakwe told MPs that cost-containment measures are in place and year to date the SABC has realised savings of R785m.
“This amount is unfortunately not enough to elevate the current and projected losses of the corporation. Additional cost-saving initiatives are being reviewed for implementation,” he said.
The SABC spends more than R3bn a year on the salaries for its 3,000 permanent employees.
Meanwhile, MPs agreed on Tuesday that disgraced Independent Communications Authority of SA (Icasa) chair Rubben Mohlaloga be removed from his position with immediate effect.
In February, Mohlaloga was sentenced to an effective 20 years behind bars for money-laundering and fraud linked to a R6m Land Bank scam. His lawyers successfully applied for leave to appeal his sentence, and he was released on bail pending the outcome of that appeal process.
The Icasa Act prohibits anyone convicted of fraud from serving as a councillor of the communications industry regulator.