SABC goes ahead with plans to lift TV licence fees, despite objections
The SABC is technically insolvent: falling revenue means it is unable to service debt of almost R2bn, and it has requested a R3.2bn bailout
The SABC is pushing ahead with plans to lobby the government to increase TV licence fees as it battles to boost revenue.
Executives at the cash-strapped public broadcaster told MPs on Tuesday that the current TV licence tariff of R265 per year, which translates to about 72c a day, had remained unchanged since 2013. SABC board chair Bongumusa Makhathini said he believed more South Africans could afford to pay at least R1 a day, a remark that prompted objections from various MPs.
“We have 10-million people unemployed ... it is incorrect to say the TV licence [fee] is cheap,” said one MP.
Recently DA MP Phumzile van Damme said the party was opposed to any additional taxation of already overburdened South Africans.
“We call on the public broadcaster to find new revenue streams to stay afloat instead of imposing increases to TV licence fees,” Van Damme said.
The SABC is heavily reliant on advertising and revenue from licence fees to stay afloat. It receives 84% of its revenue from advertising, sponsorships and other commercial partnerships, 15% from TV licence fees and the rest from the government.
The SABC posted a R192.3m loss in the first quarter of the 2019/2020 financial year. It recorded an unaudited loss of R483m in the previous year. A year earlier it incurred a loss of R622m. Over the past decade it has made a profit in only three years, from 2011 to 2013.
It has mainly attributed its losses over the years to declining advertising revenue, coupled with deteriorating TV licence fee collection. The broadcaster has also complained that it is underfunded by the government.
As it stands, the SABC is technically insolvent. Its declining revenue means it is unable to service debt of almost R2bn. It has requested a R3.2bn government guarantee to stay afloat and pay off some of its debt, but its bid for funding has so far been unsuccessful, largely due to its failure to meet some of the Treasury’s conditions.
Briefing members of parliament's communications portfolio committee on the broadcaster’s turnaround plan, Makhathini emphasised the need to review the TV licence fee. The SABC had submitted an application to the communications minister late in 2018, but it is yet to receive feedback.
According to the Broadcasting Act, the licence fee can only be adjusted once approved by the minister.
“TV licence fees are the second biggest thing for us. It gives us 15% [of our revenue], it is the second biggest revenue stream,” Makhathini said.
“Let’s not come here and be impossible and economical with reality. Seventy-two cents a day is not enough and we believe that there are more South Africans who can pay about R1 a day. The truth is we need licences to be paid. We can have a debate around the indigent being protected,” he said.
SABC acting COO Sylvia Tladi said the broadcaster would focus on boosting TV licence fee collection as well as improving the quality of content in a bid to regain the confidence of the public.
But improving the quality of content is proving a difficult task as the broadcaster has been forced to embark on a huge cost-cutting exercise to stay afloat. Furthermore, it confirmed that it would not be broadcasting the Rugby World Cup on television or radio due to high costs.
Responding to questions by MPs on what it will take to ensure that the SABC does not return to request another government guarantee in future, Makhathini said the public broadcaster would be sustainable if the turnaround strategy were properly implemented.
That includes addressing legacy and governance issues with the aim of recovering some money, and policy and legislative issues such as must-carry regulations: the SABC wants MultiChoice’s DStv bouquet to pay to carry its three channels. The SABC also wants the Independent Communications Authority of SA to look into the high costs of sports rights.
The last element of its turnaround strategy focuses on growing revenue, creating new revenue streams, cost-cutting and driving efficiencies, Makhathini said.
“I want to remind honourable members that the SABC last got a guarantee 10 years ago, which was paid back. We should not be confused with other entities that keep requesting bailouts. If we look at what the SABC has been able to do in the last few months without any financial injection, you will see that we are on the right track. We have reduced our losses ... if we are allowed to do what we plan to do, we can turn around the SABC,” Makhathini said.
He also told MPs that some executives had received threats as they pushed to clean up the broadcaster. That had prompted the organisation to hire bodyguards for some of its senior leaders.
SABC CEO Madoda Mxakwe told MPs that the organisation would undertake a thorough evaluation of all its TV channels and radio stations for potential disposal. One of the Treasury pre-conditions for a government guarantee is for the public broadcaster to consider selling noncore assets.