SABC asks for R3bn lifeline, nothing more
Debts soar as public broadcaster struggles to pay creditors
The SABC has submitted a fresh request for a R3-billion guarantee to the Department of Communications as it struggles to pay creditors.
Chairman Bongumusa Makhathini said on Thursday: “We’ve reworked our request for funding . . . R3-billion will be sufficient.” He confirmed that this application was submitted to the communications minister.
Communications Minister Mmamoloko Kubayi-Ngubane said on Friday the SABC had reworked the application for a guarantee, but she had not yet formally submitted it to the Treasury.
“We are in constant discussion [with the Treasury],” she said.
It is understood the Treasury may demand a viable turnaround plan before considering the SABC’s request.
The Treasury said a guarantee application submitted by the previous interim board of the SABC through former communications minister Ayanda Dlodlo in June this year was still under consideration. “The minister will determine conditions [to the guarantee] once he considers the application.”
Owes millions
But Kubayi-Ngubane said the Treasury guarantee was not the only option. “We are looking at other funding. It’s at a sensitive stage. We can’t disclose what we are doing.”
Makhathini said there was “an appreciation of the urgency. We’re not asking for a grant, we’re asking for a guarantee to enable us to get funding from financing houses like commercial banks.”
The SABC owes creditors, including Sentech, millions of rands. Currently it can only pay its creditors half of what is owed and is receiving letters of demand which has led to debt accumulating to more than R500-million while the SABC tries to renegotiate temporary payment arrangements.
If the guarantee is approved, the SABC intends to borrow further to repay the debt.
The organisation was working on positioning itself to get funding from banks. It has received some interest from banks.
It owes Sentech R250-million. Without Sentech the SABC’s broadcasting services are at risk. It will also procure content as the SABC is producing programmes for current broadcast requirements, but it should be building an inventory of content to flight in six months or later.
“Quite a big chunk of money we’re requesting will go into that. This is mission critical,” he said.
The SABC had managed to reduce its monthly shortfall in operating costs to between R70-million and R100-million from more than R200-million and doubled TV licence collections, he said. It had reassured advertisers that the broadcaster would continue to honour agreements.
One of the SABC’s sources of revenue is a government grant contributing only 3% to its revenue streams, which Makhathini said was insufficient. The bulk of funding is derived from advertising, sponsorship and TV licences.
We are looking at other funding. It’s at a sensitive stage ... we can’t disclose. Mmamoloko Kubayi-Ngubane Communications Minister
Asset sales
The board, which is not taking fees for its work until finances are stabilised, had established a payments committee to scrutinise every payment and renegotiate with suppliers. “There’s a lot being done,” he said.
A study to value SABC assets was under way and a report was due in January, possibly resulting in asset sales, although Makhathini did not commit to this.
“We’ll review everything. We’re here to do what’s best for the SABC and we’ll review everything because the reality is that we cannot inherit and protect things that don’t make business sense.”
A committee was also established to review the broadcaster’s business model, including its presence on many platforms.
“Whether the public broadcaster is leveraging all [these platforms to the full extent]. We may have been properly structured for 20 years back but when you look at where we are today: are we still properly structured, are we still efficient, are we still in a position to remain relevant? Those are the things that we are engaging on as a board.”
A benchmarking study against public broadcasters in other countries would be conducted at a later stage.
Last month the North Gauteng High Court ordered that the communications minister may not intervene in the appointment of SABC executives, a ruling the minister is appealing against. The SABC is continuing with a recruitment process to appoint a permanent CEO, chief financial officer and chief operating officer.
Makhathini said the SABC had filed an affidavit addressing the independence of the SABC as stipulated in the constitution and broadcasting act and the urgency of appointing an executive. “Everything hangs on us having a permanent executive. No bank may give you money until you have one or two of these executives being made permanent.”
Kubayi-Ngubane said the basis of her appeal was that the judgment was unfair, but she would not disclose further details.