10 October 2017

South Africa: Innovative Models to Improve SABC Revenue Streams

Communications Minister Ayanda Dlodlo says innovative trade models are being implemented to improve the public broadcaster's licence revenue collection and to improve advertising.

The Minister said this as the SABC recorded a net loss after tax of R976 million due to declining advertising, sponsorship and TV licence revenue, among others, in its current annual report.

According to the SABC's annual report for the 2016/17 financial year, revenue and other income declined by -6% to R7.6 billion year-on year - with advertising revenue dropping to R5.6 billion compared to R5.9 billion that was recorded in 2016. Sponsorships declined to R384 million compared to R469 million that was recorded last year.

TV licence revenue fell by 7% to R915 million in 2016/17, while the figure for the previous year was R986 million.

"One of the indicators was net profit before tax. What was actually achieved was a R1 billion loss and the reason for the non-achievement is that all revenue streams underperformed against budget and also showed a year-on-year decline [under] constrained economic conditions... As I present this, it is against the backdrop of what the ad hoc committee had undertaken, in terms of the inquiry that was held into the fitness of the SABC [Board].

"The planned interventions would be the... strategies to increase advertising and television licence revenue. Also, innovative trading models for radio, television and digital media service are being devised and implemented to ensure optimisation of the SABC's commercial [position]," Minister Dlodlo said.

Briefing Members of Parliament, the Minister said some of the targets that were set for the public broadcaster was to maintain a minimum cash equivalent balance of R600 million.

"That too was not achieved owing to a lower cash collection at the SABC, which had to use its reserves to fund infrastructure capex projects, acquire sports rights and broadcast events of national interest.

"On the additional channels to be carried on the digital terrestrial television (DTT) transmitter networks, two channels - SABC News and SABC Encore - SABC News is available on DTT platforms.

"SABC's infrastructure is still ready to carry all five channels on DTT. Encore still needs to be included on SABC DTT services. It could not be done in the year under review owing to DStv contractual issues as well as a lack of resources from the SABC... " the Minister said.

Improving SABC performance

The Minister said the some of the targets that were not achieved include embedding a high performance culture, which required that performance management be implemented by 31 March 2016; that all performance contracts be signed off by 30 April 2016 and that four performance conversations per employee be conducted by 7 July, 7 October, 7 January and 7 April 2016, respectively.

The Minister said as part of the interventions that are being implemented to improve the state of affairs at the SABC, the department will draw from the expertise and resources of other organs of State and State entities, including National Treasury and the Public Service Commission.

"... We have asked other entities within government to assist... with issues of human resource turnaround. We have asked National Treasury to assist with issues related to financial stability. We have also asked the Auditor General to assist us with issues related to financial stability as well," Minister Dlodlo said.

Speaking to journalists after the SABC presentation, the Minister said she, as a shareholder, was doing her best to ensure that the best candidates are appointed to fill top vacancies at the SABC - particularly the CEO, COO and CFO.

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