Poor decision-making and the inability to adapt to global trends prove to be more nails in the SABC coffin

I grew up in the early 1990s. It was an exciting time for South Africa as the country broke the shackles of apartheid and embraced democracy. Because of the sanctions imposed on South Africa, global trends always took longer to get to South Africa than the rest of the world. One only has to watch repeats of the 1995 Rugby World Cup, where the fashion trends of the fans had a significant 1980s feel. And the South African Broadcasting Corporation (SABC) showcased this in all of its glory. 

This has changed with the impacts of global trends being felt in South Africa soon after they are released. However, the downside to our troubled past is that when global trends enact change, we take our time to respond or pay attention to them. Recent examples of this include: 

• Multichoice (DSTv) ignoring Porter’s Five Forces at a time when streaming services are causing global disruption; and 
• The South African Post Office (SAPO). Technology has impacted the operating model of postal services on a global scale. The SAPO was slow to recognise these impacts on its operating model. 

There is another prime example that we need to focus on. SABC has had a troubled recent history which has been well documented in the press. Can the company overcome its challenges to become relevant within the South African narrative again? 

Financial troubles persist

The SABC’s cost-cutting strategy, which resulted in many job losses and the closure of several offices around the country, seems to have yielded undesired financial results.

The public broadcaster is expected to declare a net loss of more than R1 billion.

This was allegedly revealed by the new SABC board chairperson, Khathu Ramukumba, during the meet-and-greet session with staff members in Auckland Park, Johannesburg, at the end of May.

The article points out that the loss of revenue happened barely four years after the public broadcaster was given a R3.2 billion bailout by the government in 2020. Last year, it was reported that Auditor-General Tsakani Maluleke had informed Parliament’s standing committee on public accounts that the R3.2 billion bailout government had given the SABC had done little to improve its financial position, with irregular spending and other financial concerns still dogging the public broadcaster.

SABC red tape and other challenges

In an interview with City Press, the Auckland Park-based organisation’s outgoing CEO Madoda Mxakwe explained what prevented it from being a profitable state-owned enterprise.

The article points out that Mxakwe said that, as the country’s public broadcaster, it carried a huge responsibility towards the nation because of its mandate, as regulated by the Independent Communications Authority of SA, among other entities.

One of the main reasons the SABC was in financial crisis was because of legislation which dictated that 48% of the contents it broadcast should be by unfunded public mandate. This included religious, education, children’s and news content. This made it difficult for the organisation to get advertisers – a situation which made no business sense, since such advertisers were readily available.

“Sometimes it takes a long time to finally get things approved because decisions have to go to the executive committee, the board and Treasury for approval,” he said.

The article adds that Mxakwe cited the example of when the SA Reserve Bank had informed him and other executives that there was a budget of over R65 million for advertising for the SABC alone.

However, the process that followed this was so lengthy that, by the time Mxakwe and his colleagues finally gave the bank the answer, it was very late and other broadcasters had already carried the client’s wish.

The article points out that Mxakwe said the SABC’s public mandate formed part of the content which could not be monetised.

He explained, “we only have to commercialise 52% of our content and be mindful that our competitors – which are private ones, such as eMedia, MultiChoice and others – don’t have that obligation.”

Mxakwe said the SABC spent about R2.6 billion a year on the unfunded mandate, which did not reflect on its balance sheet and did not include salaries.

He said its obligation was to ensure that content – especially religious and children’s – was available to every village and township. The public broadcaster spent more than R1 billion every year on the newsroom alone.

Navigating the identity crisis

The broadcaster is facing other challenges, such as loadshedding and the challenge of switching from the analogue signal to digital. In this article, we focused on poor decision-making, and it seems as if this is very much embraced at the National Broadcaster. 

Mxakwe laments the fact that 48% of the SABCs’ contents should be by unfunded public mandate making it hard to secure advertising revenue. There was also the diabolical decision by former CEO, Hlaudi Motsoeneng, to enact a rule that 90% of SABC’s content should be local. We know that the SABC serves the people of South Africa who do not have access to DSTv. We are also fully aware that the SABC is a platform to help people keep in touch with their cultural roots, which is why there are news-based programmes in as many of South Africa’s 11 official languages as possible. But if advertising revenue helps keep the company profitable, then one should relook at the rules and regulations governing this. 

The real problem with the SABC is the current attrition towards TV licences and policy decisions surrounding this issue. With streaming services becoming more popular and social media being the most popular place to consume news, there is very little reason for consumers to watch or even own a television in some cases. The SABC has acknowledged this and announced plans to try and implement a licence-based tax on streaming services. However, this will probably fail to come to fruition as it will only make streaming services such as Netflix and Disney+ question their future involvement in South Africa. It will also prevent future streaming services from coming into the country. 

The SABC needs to undergo the same transformation the SAPO desperately needs. Just as with the SAPO, the departure point is the proper assessment of consumer needs in a digital age. This will include financial and communication services. The next step is to radically reorganise how this can be achieved and how it will be funded. If the SABC is going to continue to be a free-to-air content provider, it needs to find other ways to supplement its income. 

The next important decisions surround the structure of the SABC and whether it can continue to be the behemoth it was in the 1980s and 1990s. The most likely answer to this question is that it cannot and therefore needs scaling down. What will it mean for the existing infrastructure that the company already has and the lease agreements that the company has?

As we can see, plenty of questions will guide the SABC regarding its future. The question is, how much value needs to be lost before these questions are asked?