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Shambles at the SABC

While a new board should have been in place at the end of September, many other questions remain about the broadcaster’s future as SA moves to digital TV.

BY  Nicola Mawson , 1 October 20130 comments

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Lacking long-lasting top leadership, financial turmoil, a heavy staff base and a turnaround plan that is falling behind all plague South Africa’s public broadcaster, the over 75-year-old South African Broadcasting Corporation (SABC).

The beleaguered broadcaster was due to have a new board in place by the end of September (after this publication went to print). It’s facing several challenges, including government’s aim of finally turning on digital television in what is left of 2013.

In July, newly appointed Minister of Communications Yunus Carrim and Deputy Minister Stella Ndabeni-Abrahams met with the SABC board and management.

“We’ve decided to set up a high-level team made up of the SABC, the Department of Communications (DoC), National Treasury and the Auditor General to set a firm foundation for financial stability of the public broadcaster,” said Carrim.

The team will ensure the government-guarantee target needs ‘are addressed within reasonable means and that the SABC is appropriately skilled at the right levels’, states the DoC. Under the terms of the guarantee, the SABC must grow advertising and sponsorship revenue, and cut staff costs.

In mid-July, a joint task team was set up by the DoC and the SABC that will ‘continue to function to ensure the launch of digital terrestrial television (DTT)’.

Currently, the apparent hold-up with digital television, which will provide more channels, better audio and visual, and free up much-needed spectrum, is the SABC board’s signature to appoint a company to handle conditional access.

Yet, the SABC isn’t saying where this process is and its oversight department, the DoC, seems confused as to whether conditional access is needed before digital TV can officially go live.

Viewers with access to a set-top box can already pick up the improved signal, but the official launch has been delayed for almost a year after e.tv took the DoC to court over who was going to handle conditional access. Now this issue is in the broadcaster’s hands, and e.tv says the matter still has to be sorted out by the SABC board.

In the meantime, the broadcaster has yet to develop a business plan around digital television. Commentators are scathing in their criticism of the SABC, citing issues such as the recently launched 24-hour news channel, on a satellite platform, and its staff-heavy structure.

Fresh blood

In March, the SABC board was obliterated after mass resignations. The DoC noted, without elaborating, that significant progress has been made in reviewing the shareholder compact so that the incoming board can use it to make the SABC far more effective. Some 37 candidates were to be interviewed, and 12 chosen. At the time of writing, the interim board had only four members.

Other challenges facing the broadcaster include ‘runaway’ staffing costs, audience losses, weak and inappropriately skilled and experienced executive management, continuing legal battles with staff about their removal from office, and financial constraints on developing content for DTT as Treasury is denying more funds until the SABC meets its turnaround targets, the most pressing of which is trimming staff, says the Democratic Alliance’s Marian Shinn, Shadow Minister of Communications.

She says a brief committee meeting at the end of July revealed the SABC is ‘testing’ digital television on ten channels and is on track with its internal turnaround strategy, in that it’s ahead on paying back the loan, but behind on pruning staff numbers.

Legal disputes

The committee has yet to have an update on the Special Investigating Unit’s (SIU’s) progress with charging staff for theft and fraud, says Shinn. In October last year, it sent the acting COO Hlaudi Motsoeneng away to redo an `incomprehensible’ report, she adds.

He was meant to present the report to the committee in February, says Shinn. “But a huge row between him and the board erupted and led to the current crisis, and the SIU report has slipped down the committee’s to-do list.”

Motsoeneng was controversially removed from the board before mass resignations, but is currently back in office. Shinn hopes there will be an update on the SIU matter when the SABC does its annual report presentation some time during Parliament’s last term.

Since 2009, corruption investigations at the SABC have cost it R19.5 million “A turnaround will not happen overnight. But if all the relevant parties cooperate, there will certainly be improvements over time. For the past six years, the SABC has lurched from crisis to crisis, with no end in sight. The time for action is now,” says the DA’s Shinn in a statement.

In its previous annual report, then chairman Ben Ngubane said the 2011/12 year had been “both a challenging as well as a rewarding year for all of us at the SABC.” He noted it had progressed well with the second phase of the turnaround strategy, had regained stability, was being prudent in spending and cost reduction and had implemented strict financial and internal controls.

“Crucially, the foundation has been laid for the corporation to continue to move towards meeting the government guarantee conditions and targets.”

Remarkable turnaround

CEO Lulama Mokhobo writes that, during the previous year, it fine-tuned its preparation for digital television and also undertook an extensive skills audit to aid it in evaluating its skills base against the needs of the digital era.

She adds that the SABC had been able to meet most of its turnaround targets and had accelerated the repayment of the R1 billion Nedbank loan, which it received on the back of a government guarantee, in 2010, worth R1.4 billion.

Meanwhile, the SOS Coalition’s coordinator Carol Mohlala comments that the loan should have been settled in June, but the SABC is not living up to its conditions, which include cutting staff and increasing local content.

During the previous financial year, its net profit exceeded the government guarantee target, coming in at R343 million, while the target was R228 million. “This is a remarkable turnaround for the corporation as it had posted a loss of R129 million in the 2010/2011 financial year,” says Mokhobo.

However, the declining trend in audience share continues to be concern, especially with the ‘imminent’ launch of DTT, which will lead to increased competition, she says. To counter this, content offerings are set to be improved, Mokhobo says.

The SABC has 18 radio stations and three television channels. Mokhobo notes that its TV channels had kept stable schedules and met the guarantee’s targets, helping grow revenue. “This, however, has been offset by declining sponsorship revenue which remains an area of focus for the corporation.”

Progress was made in trimming costs, although there was a challenge in the ‘escalating’ people management costs: despite a ten percent reduction in headcount, staff costs increased because of post-retirement medical and pension benefits obligations, says Mokhobo.

Yet, despite the ‘progress’, it received a qualified audit due to ‘poor control environment’. Mokhobo says the SABC is putting ‘maximum’ effort into improving the control environment through interventions such as policy reviews, business process re-engineering, and embedding risk and compliance in business processes and decision-making.

The SABC needs a defined strategy and there is a ‘clear sign of a lack of leadership at the SABC’, says SOS Coalition’s Mohlala. For example, she says, the broadcaster has not had a permanent COO in the past seven years, and the CFO, suspended after six months in the job, is still on gardening leave, but earning a full salary.

Kganyago notes the SABC, like any other media organisation or business, will routinely hire new people to complement the high set of skills it already has with its current employees. He says the SABC is ‘on track’ with DTT plans, but he would not comment on the conditional access process.

DTT concerns

Key skills have been lost, says Mohlala. An unstable DoC, which has seen four ministers in four years, has had an effect on the SABC. She says as the interim board’s term expired at the end of August, there is a possibility the SABC will be ‘board-less’.

In the midst of the current change, the SABC has launched a 24-hour news channel on DStv’s bouquet. SABC chairman Ellen Tshabalala says the SABC is using the launch to fine-tune its readiness for the launch of DTT.

However, Shinn wants to know if National Treasury approved the MultiChoice deal in terms of the R1.4 billion loan guarantee financing the corporation’s turnaround strategy and whether Nedbank, to whom the loan is being repaid, was consulted.

“The fact that the 24-hour news and entertainment channels are to be broadcast on a pay-platform may be in contravention of its public broadcasting mandate, and possibly undermine its much-delayed transition to digital terrestrial broadcasting,” says Shinn.

She says the SABC faces ‘stiff competition’ from e.tv’s free-to-air satellite platform, as advertisers will be tempted to follow audiences who are likely to be attracted to fresh content on the new platform.

The channel was launched to provide the South African public with local and global news on a 24-hour basis, says Kganyago. “This platform will also enable the SABC to focus on more provincial stories, which means there will be more news programming in all the 11 official languages.”

Shinn says there remain serious doubts about the SABC’s commitment to digital television and how to fund it.