SABC pays back R416 million towards R1 billion loan – a critical summary

SABC PAYS BACK R416 MILLION TOWARDS R1 BILLION LOAN – CRITICAL SUMMARY

The SABC announced that it has paid back a significant portion of the R1 billion government guaranteed Nedbank commercial loan, on Friday 31 January 2013.

On Thursday, a payment of R416 million was made to the bank, announced Board chairperson, Dr Ben Ngubane.

The SABC received a R1 billion loan from Nedbank backed by a R1.47 billion government guarantee in November/December 2009 when the corporation lost close to a R1bn in the 2008/2009 financial year. .

“To date, R778 million of the capital has been paid back, and an amount of R210 million in interest charges,” said Ngubane, adding that Thursday’s repayment had the effect of accelerating the payments by 14 months. This has made the broadcaster a net saving of R17 million in interest repayments.

The SABC is, therefore, left with R230 million (capital amount of R222 million and R8 million in interest charges) outstanding on the loan.

Expressing his pleasure with the performance of the corporation, Ngubane attributed this success to the turn-around strategy and different initiatives instituted internally. “Our cash-flow position has improved and this was driven by improved working capital management and expense controls”.

“These are the good news out of what has been called the Faulty Towers,” said Ngubane.

Themba Godi, chairperson of the Standing Committee on Public Accounts (SCOPA) said he and the committee were pleased by this news. He, nevertheless, pointed out that the SABC was not out of the woods yet. The SABC still had a number of challenges it had to resolve and the corporation was still bound to meet the conditions attached to the government guarantee.

Some of the key conditions of the guarantee included:
• Improved cash-flow management and the strengthening of financial controls;
• Reviewing and setting in place corporate governance policies, particularly those related to procurements and supply-chain management;
• Reducing the headcount in the corporation by over 600 employees;
• Ensuring that all strategic management positions are filled with permanent incumbents;
• Improved alignment of content to audiences which means the procurement and commissioning of viable and profitable content.

Despite the slow progress made to this end, Acting Chief Operations Officer, Hlaudi Motsoeneng, asserted that the SABC was now stronger than before. In addition to enabling the broadcaster to accelerate its loan repayments, Motsoeneng reported that improved cash-flow management and intensified efforts within the sales division had put the SABC in a position where it now had well over R500 million in its bank account.

Laudable as the improved financial standing of the SABC was, there still remained the concern of how the savings made impacted on programming. In the last financial year, the broadcaster reported a R226 million cut from its content budget which translated to 65.8% of its reported R343 million profit. The key issue raised by SOS is that the SABC should not be making savings through cuts to programming budgets. Cuts need to be made in other places.

Motsoeneng gave his assurances that new content had been budgeted for and, although the budget had not yet been finalised, he said that a “local is lekker,” emphasis would be placed on the procurement and commissioning of fresh local content. Part of the new strategy, Motsoeneng added, was a significant change in the way in which content would be procured. “We’re not going to be buying in bulk like we used to, we are now buying what we know,” said Motsoeneng.

This is a welcome change of practice from the broadcaster, particularly because of the central role bulk and ill-advised content procurements has played in the SABC’s financial melt-down. Nevertheless, SOS wishes to emphasise that this should not mean that the SABC should cut down (and so significantly) on programming. The public broadcaster, the SABC needs to prioritise the commissioning and procurement of local content which reflects the experiences and lived realities of its audiences as well as meet its mandate to inform, educate and entertain.

The Board were further questioned on the staffing arrangements within the SABC, particularly as they related to the conversion of freelancer contracts as well as executive (CFO and COO) and management positions still being without permanently contracted incumbents. These particular issues stood in direct contravention with the government guarantee conditions.

Ngubane asserted that right now, the SABC was not prepared to lose staff and that there were more effective ways of improving efficiencies within the broadcaster without having to let go of staff. As the broadcaster grows and evolves, as is the case with the imminence of the switch over to DTT, this skilled staff could be redeployed elsewhere within the broadcaster based on its needs.

Motsoeneng added that freelancers have always been budgeted for within the SABC and the move to convert their contracts would, in fact, only save the broadcaster money because freelancers effectively cost the SABC more than employees. What is happening in the SABC now is a skills audit which would determine the staff profile of and skills set in the SABC. The outcome of this audit will certainly serve the broadcaster well in improving efficiencies as well as building capacity in an industry facing significant and fundamental changes, but for this to happen, the process also needs to be prioritised and fast-tracked in time to inform the broadcaster’s staffing strategy for digital switch-on.

Board Deputy Chairperson, Thami ka Plaatjie clarified how the broadcaster would be moving on the executive positions. He announced that with the final settlement of the Dispute between Mvuso? Mbebe and the Broadcaster, the Board has since reviewed the employment criteria and has been given the green-light by the Minister of Communications to advertise the position generally. We saw the first of these in the Sunday papers. On the part of the CFO position which is currently occupied by Tian Olivier in an acting position, ka Plaatjie clarified that this would continue to be the case until the legal and disciplinary processes instituted against suspended incumbent, Gugu Duda, have been concluded.

SOS welcomes the advertisement of the COO position. The focus now, is on ensuring that as many people are encouraged to apply for this post as possible, and that the Board scrupulously follow good and fair labour practices in making the final recommendation. While SOS acknowledges that although there is some Ministerial involvement in the selection process, the Coalition emphasises that there should be none at all with this appointment, and will continue to campaign against such involvement.

Expressing his faith in the feasibility of a complete turnaround of the broadcaster, Motsoeneng said “I believe in miracles. I believe that we can turn the SABC around from a R6bn corporation to a R10bn corporation.” SOS emphatically shares in this belief, but for this to happen we need more experienced, visionary and citizen-oriented leadership across all levels of the SABC.

We want a public broadcaster that works. We deserve an SABC that works.