SABC’s financial crash

Despite repeated denials that it had reached a tipping point, the extent of the SABC’s financial crisis was revealed in a memo sent to general managers of finance on Monday.

The memo, which City Press has obtained, confirms that, after last month’s salaries were paid, the broadcaster would not be able to pay all its bills.

“We have only R104m available to pay creditors on March 31,” it reads, and “requests for payment from the divisions are more than what is available”.

As a result, the SABC, which is drawing on the last of its reserves, “compiled a list of payments for critical vendors, such as municipalities, universities and Telkom. This list totals about R30m.”

Once that was scheduled for payment on Thursday, “the balance of R75m will be allocated to the divisions based on the percentage usage/spend on creditor payments per division”.

Hardest hit by this week’s nonpayment were independent TV producers.

Left out in the cold

Invoices are usually paid by the SABC in the morning on the last day of the month, but most independent TV producers saw nothing come in.

Their fears of a repeat of the SABC’s 2008/09 financial meltdown, which saw many companies close and numerous jobs lost, came true by the end of the day.

Only a fifth of the total owed to producers was paid, according to some of the eight senior SABC insiders and two former SABC senior managers City Press spoke to this week.

The memo revealed that R32m was available for the TV division, which had a producers’ bill estimated at R150m.

This has been the standard monthly amount paid for productions since controversial former SABC boss Hlaudi Motsoeneng announced an 80% local content quota for SABC TV in July.

Before Motsoeneng’s unilateral decision, the monthly bill, said a former SABC manager, was closer to R100m.

Sources repeatedly told City Press that no risk assessment was conducted before Motsoeneng’s quotas were implemented. The SABC has so far not responded to these allegations.

The Independent Producers’ Organisation, which represents more than 100 producers in South Africa, on Friday said it was alarmed by the nonpayments.

The organisation’s Naomi Mokhele said: “These payments are generally for work that has already been delivered or is in the process of being made.

"These payments go towards paying actors, directors, technical crew, caterers, equipment suppliers, car hire companies and fuel.

"These are the people who work 12-hour days to bring some of the country’s favourite programmes to life.

“The failure of the SABC to pay not only places the industry in crisis, but also puts thousands of livelihoods at risk.

"We call on the SABC to urgently convene a meeting of independent producers to explain when and how this failure to meet its contractual obligations will be rectified.”

While it appears that all SABC soap opera producers were paid on Friday – they are prioritised because they earn the broadcaster’s core revenue – the smaller production houses were left feeling the brunt of the crisis.

These included some celebrity producers Motsoeneng handpicked for new shows. Even larger companies with expensive telenovelas in production were not paid.

Sources said TV bosses were furious and heartbroken that no one had warned them that producers would not be paid.

“It left them to blame for trading recklessly,” said one.

The SABC did not respond this week to detailed questions submitted by City Press.

Did James Aguma lie?

Three sources independently told City Press that SABC acting chief executive officer (CEO) James Aguma appears to have misled people during two different meetings this week by insisting that the broadcaster’s financial situation was not critical and everyone would be paid.

He made these claims, sources say, in a meeting with Parliament’s standing committee on public accounts (Scopa), which visited the SABC and confronted executives about the state of the broadcaster.

“Scopa asked James directly: ‘Is the SABC in financial crisis?’ James assured him lavishly that we were not,” said one source.

And in a meeting with the pending interim board, another source said that Aguma “assured the board that everyone would be paid”.

The board is yet to be made official due to an unprecedented demand by former communications minister Faith Muthambi that members must first be vetted by the State Security Agency.

Concerns were also raised that Aguma’s delegation of authority to act as CEO lapsed this week, but Humphrey Maxegwana, the chair of the parliamentary portfolio committee on communications, told City Press that, on Monday, Muthambi extended Aguma’s position until June 27.

Bessie Tugwana, the acting chief operations officer, and Audrey Raphela, the acting chief financial officer, also received extensions.

A R150m ad bill

Impeccable sources close to sales and marketing independently confirmed that the SABC crisis is exacerbated by falling revenue on radio and TV, and a huge debt of R150m to the advertising industry.

The SABC’s primary source of income is adverts flighted on TV.

Advertisers must pay when they book slots to flight their ads, but, “because of Hlaudi’s meddling and schedules being changed to make way for local content, ads weren’t scheduled or flighted where they should be”, said one.

“So advertisers now want a refund before they pay again. This has a big affect on revenue and also on the sales team.”

Another said: “The climate to do business is nearly impossible. The rate card has dropped in value to try to attract ads. A discounted rate is being offered.

"The advertising sales team is devastated – they can’t meet targets. They get a small basic salary, but they live off commission.”

When asked if revenue was down, a source laughed and exclaimed: “The figures are terrible! Especially for radio. TV is the SABC’s biggest money earner. SABC1 is the only channel performing well. SABC2 is trying. SABC3 is nowhere.”

The sources said sales targets had been lowered by R300m to R3.8bn for the next financial year.

The 90% local music fiasco

A source close to radio advertising sales said: “Radio has made almost no money since the 90% local quota was introduced by Hlaudi in May.

"In a finance meeting, the sales division said radio was 35% to 40% behind on its targets. And the big revenue spinners, such as 5FM, Metro and Ukhozi, have plunged.”

Another said: “An English, urban station such as Metro FM is really bleeding. It’s scary.”

Other sources were also asked if the 90% quota was to blame.

One said: “We can only speculate and say the numbers are down because the audience didn’t like the 90%-10% concept because it no longer talked to the target market of the advertisers.”

This week, City Press learnt that Motsoeneng’s promised increase in royalties to local musicians had not been implemented.

It was supposed to go up from 3% needle time collection on radio to 4%.

But now the SABC and the Southern African Music Rights Organisation (Samro), say sources, find themselves at the Copyright Tribunal, deadlocked.

“There is no way can we pay Samro 4%,” said a well-placed source. “We couldn’t even pay 3%.

"We last paid something like seven years ago and we owe them something like R400m. SABC is now taking them to the tribunal.”

Anger from Parliament

The parliamentary portfolio committee on communications also visited Auckland Park this week, and Maxegwana did not mince his words.

“The meetings were about talking with the workers about the problems of that institution. Then going back to the executive and raising these problems with them.

“Some of the issues that we have raised with management include the collapse of trust between workers and the executive, and about senior management being on the rampage – intimidating and harassing workers, and suppressing them ...

"You can see, hear and feel that the SABC workforce is not happy,” he said.

Maxegwana added that the committee was determined to see the report of the parliamentary inquiry into the SABC implemented.

“The portfolio committee is committed to ensuring that the SABC goes back to its glory days.

"When this interim board comes in, because they have the support of all parties in Parliament, it will become the SABC the country wants and deserves,” he said.


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