One simple change helped the SABC make its first monthly profit in 5 years

A revamp of the SABC’s advertising sales was one of the key factors responsible for the broadcaster turning its first monthly profit in five years.

This is according to the SABC’s group executive for corporate affairs and marketing Gugu Ntuli, who recently spoke to MyBroadband about how the SABC managed to achieve this after years of financial troubles and government bailouts.

The ailing public broadcaster has struggled to keep head above water, most recently reporting a R511 million loss in the 2019/2020 financial year, which was 6% worse than the year before.

It was also forced to retrench more than 600 employees earlier this year to cut down on its wage bill.

Nevertheless, its executives have been upbeat about recent improvements in revenue generation, and future expectations for revenue growth and annual profits are optimistic.

SABC CFO Yolande van Biljon in May told Parliament’s communications portfolio committee that the broadcaster anticipated revenue to grow by 28%, 17%, and 13% in the next three years, respectively.

It has also forecast annual profit to reach approximately R150 million in 2023 and R350 million in 2024.

This might seem idealistic to keen observers of the SABC’s trials and tribulations over the last few years, but a reported profit of R43 million during April indicates that the tides could indeed be turning.

Ntuli told MyBroadband while this swing might appear to be sudden, it has been a long time in the making.

She emphasised that these changes were a result of the SABC’s 3-year turnaround plan, which was now in its 19th month.

“We have been focusing on four key areas — financial sustainability and governance, content, HR, and digitisation,” Ntuli said.

“Activities in these key areas have culminated into revenue generation and profit made in April.”

Ntuli said while cutting costs has been important, revenue generation was the major contributor to the increase in profits, and much of this was down to advertising sales.

SABC exeuctive for corporate affairs and marketing Gugu Ntuli.

The broadcaster recently said it saw significant growth in this area in November 2020, when it sold out prime time slots on SABC 1 and SABC 2 for the first time in five years.

The next month it recorded its best achievement in sales – at 92% success against the set target.

Ntuli explained that the SABC’s previous approach to sales was fragmented, with different departments not talking to each other and separate products offered for its advertising platforms.

“One of the things that we’ve focused on is reviewing our sales model, how we go to market and the way in which we put together our packages,” Ntuli stated.

“We’ve become a little more innovative in our approach, and also integrated as opposed to being more silo-operated.”

“Initially, we had salespeople who were just for radio, or for TV, or for digital platforms, and there was no talking to one another or integrating,” she stated.

“Now we offer clients a much more integrated solution so that they get their brands across all platforms.”

Ntuli added that the market has been challenging, but the SABC was being more aggressive and really selling itself to customers, which has borne fruit.

“Our ad spend was R50 million above budget and our sponsor revenue was R25 million above budget, so in both those instances you can see that our efforts are paying out.”

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However, Ntuli acknowledged ad sales to government departments were down.

“Sadly, this is one of the areas of our business that has taken a dip if you compare year on year,” Ntuli said.

“We’ve certainly seen a much lower commitment to spend from government departments.”

Ntuli said while the broadcaster understood the advertising environment was changing rapidly, it was not simply standing down and accepting this.

“We have approached various departments and have a number of projects that we are working on in partnership with these departments to at least return it to spend that we saw in previous years.”

Another area which is supposed to be a big revenue stream for the broadcaster — TV licence fees — has remained problematic, however.

SABC CFO Yolande van Biljon revealed in February that only around 2.5 million of 9.5 million TV licence holders had settled their accounts in 2020.

Ntuli said that TV licence compliance continued to remain a problem in April, while there was also a low number of new TV licence registrations during that month.

“Unfortunately, we have not seen an upswing in compliance in this area. We are still struggling not only with renewals, but also in terms of new sign-ups of TV licences,” Ntuli said.

She said that TV licences remained critical to the organisation’s sustainability, and that the broadcaster was implementing measures to address this.

TV Licences smartphone

As part of its submissions on the draft policy for audio and audiovisual services in South Africa — which aims to address regulatory shortcomings in public broadcasting due to the changing entertainment landscape — the SABC has proposed that a household tax be introduced to fix the TV licence issue.

It wants dominant broadcasters and streaming services in the country, like DStv and Netflix, to collect the tax on its behalf.

Ntuli said the broadcaster still stood by this, but was implementing a number of measures until the legislation was finalised.

“We are specifically looking at targeting our collection agencies to do better for us,” Ntuli said.

In addition, the SABC will focus on educating the public more on the reasons why it’s important to comply and reasons why a TV licence exists.

Furthermore, Ntuli said the SABC was prioritising digitisation to ensure its continued relevance.

“We are very committed to delivering our mandate for many years to come, therefore it’s important that we are digitised and we bring in innovators to take the organisation forward.”

Now read: DStv under siege

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One simple change helped the SABC make its first monthly profit in 5 years