The public broadcaster will not go back to government with a begging bowl. That's according to group CEO Madoda Mxakwe. He told Business Times that should they receive the entire R3.2bn they asked for, there will be no need for further bailouts.
Mxakwe said: "The SABC is confident that once it receives the remainder of the R3.2bn bailout, it will not need to go back to National Treasury for another bailout."
Last week, communications minister Stella Ndabeni Abrahams announced a R2.1bn injection to the SABC, but said the remaining R1.1bn was conditional on the broadcaster meeting all preconditions for a turnaround.
Mxakwe said the public broadcaster could break even in 18 months, and return to profitability shortly afterwards.
"We have put in place very sound business fundamentals. What we want to do with this money is to make sure from a working capital point of view we are solid, and continue driving and generating revenue growth. We have to break even in the next 12 to 18 months, that's the path towards profitability."
He said the bailout money would be used to settle all outstanding debts so the public broadcaster could start investing in fresh content once more.
The SABC owes its service providers R1.6bn in total, the biggest chunk of which is a R700m debt to signal distributor Sentech. It also owes pay TV giant SuperSport around R200m for the broadcast of soccer matches, and another R148m to the music industry in the form of royalties and other payments.
It spent R500m less on content in 2019 than it did the previous year as cash got depleted. At the height of its cash crisis it was only left with R72m in the bank before the Treasury came to the rescue with R2.1bn of the R3.2bn it requested.
Government is withholding the balance until the SABC can demonstrate that it is able to meet all turnaround preconditions. The last time the SABC received a bailout was in 2009, with a government guarantee of almost R1.5bn, according to the Mail & Guardian.
The broadcaster is also in the process of creating separate financial reporting lines for its commercial and public broadcasting arms.
Production studios and other providers of content to the SABC are in for a cash injection as the public broadcaster is scrambling to use its R2.1bn bailout to settle the R183m it owes them.
"We are going to have to clear the debt owed to content providers, because as the SABC we need exciting and compelling content which will help us to drive audience and also help us from a revenue generation point of view," Mxakwe said.
Another priority is to invest in good local content.
— Madoda Mxakwe, SABC group CEO
Poor investment in content had harmed revenue as viewers switched to other broadcasters and advertisers followed. Advertising revenue shrank by R200m to R4.5bn in the 2018/19 financial year.
Mxakwe said the SABC was especially keen to begin reinvestment in local content, having lost viewers to competitors that have invested in South African stories.
"We have not been able to invest in local content for many years, and this has affected our audience ratings and indirectly affected our revenue. We are in the business of driving eyeballs to our platforms, and the only way you can do that is to ensure you have compelling content.
"From a competitive intensity point of view, you have seen the mushrooming of new players and they are bringing content that is more compelling, and we have not been able to do that. Another priority is to invest in content and make sure we get good local content, particularly South African stories."
The SABC reported revenue of R6.4bn, R1bn short of its R7.4bn target for the financial year. It recorded a loss of R482m.
Mxakwe said they would also invest heavily in new broadcast technology.
A huge marketing drive is being planned for the SABC's 15 public broadcast and three commercial radio stations, which have a combined audience of 29-million. Mxakwe said while the stations were doing well in terms of audience numbers, there was a need to increase advertising revenue.
As it renegotiates sports rights agreements, the SABC insists that it will no longer enter into agreements that do not make financial sense. It spent R3.8bn on sports rights in the past five years but only managed a return of R318m from live matches.
The Treasury has directed the SABC to dispose of all non-core assets, notably its massive property portfolio which includes residential properties across the country. It must also say which of its broadcast assets are a drain on resources and can possibly be sold. Mxakwe, however, said all commercial broadcast assets are off limits.
Meanwhile, the SABC is determined to pursue TV licence fees, despite collecting less than a third of what it was owed in the last financial year. It collected R986m in TV licence fees against a billed target of R3.1bn, with R113m going to collection fees alone.
Of the 9.6-million licence holders on its database, only 2.2-million paid their fees last year. There is a total outstanding amount of R30bn, of which penalties on late and non-payment amount to R14bn.
The SABC wants a 5% increase on the current TV licence fee of R295 per annum.
Franz Kruger, head of the journalism department at Wits University, said the SABC has to make tough choices to remain financially viable, including cutting staff. "They need to pay off debts to boost income, so they must look at [reducing] headcount."
