Goodbye TV licence — Even the SABC doesn’t want it

The SABC continued to struggle to get South Africans to pay their TV licence fees over its past financial year, despite spending more on collection efforts.

The public broadcaster recently tabled its annual report for the 2021/2022 financial year in Parliament, revealing a net loss of R200.78 million during the period.

While still substantial, it was 62% less than the R530.18 million it lost during the previous financial year.

SABC group executive for corporate affairs and marketing, Gugu Ntuli, explained the acquisition of sports rights for the 2022 Beijing Olympics cost the broadcaster R122 million, accounting for 58% of the net loss.

“If not for the Olympics investment — which is a public mandate obligation — the operating position would have resulted in a loss of R78m, an 85% improvement from the previous fiscal,” Ntuli said.

The broadcaster’s overall revenue grew by around R90 million year-on-year to reach R5.068 billion, primarily due to a significant increase in sponsorships from R354.4 million to R664.4 million.

TV licence revenue also increased from R788.4 million to R815.1 million, which the SABC attributed to its brand awareness campaigns and customer self-service options.

The latter could take a hit in the next financial year, as the SABC took down its online self-service TV licence payment portal after a MyBroadband reader discovered a major security flaw over two months ago.

Below is the SABC’s summarised income statement for the 2021/2022 financial year.

While the R26.7 million uptick in TV licence revenues might seem significant, it must be viewed in the context of a larger overall TV licence base in the latest financial year.

The SABC’s total TV licences billed increased by R30 million, and its collections increased by R3 million less than that.

Taking the R815 million in TV licence revenue realised as a percentage of the R4.446 billion total billed amount, it amounts to a compliance rate of 18.3%.

That is a tiny 0.4% increase over the 17.9% compliance rate measured in the previous financial year, when the SABC collected R788 million out of R4.416 billion.

It is also significantly lower than the compliance rate five years ago, when the SABC collected TV licence revenue of R941.4 million.

The broadcaster spent R73 million on collection efforts, compared to R64 million in the year before, meaning the collection cost rate increased from 8.1% to 8.9%.

The graphs below summarise the financials pertaining to TV licence revenue collection.

Advertising revenue took a hit, with a 23% decline between the 2020/2021 and 2021/2022 financial years. The SABC said this was primarily due to an audience share decline.

Only 31% of South African viewers tuned in to SABC channels during primetime, compared to 35.8% in the previous year.

The broadcaster also said its public mandate continued to negatively affect the financial performance, with an average annual cost of R1.5 billion.

Ntuli said the underperformance in revenue generation had put pressure on liquidity in the short term. Still, the SABC continued to pursue several initiatives to manage day-to-day working capital and sustainably reduce the risk.

Among its previous efforts, the broadcaster has made significant employee cost cuts, dropping from more than R3.1 billion in 2018 to just over R2 billion by 2022 — a reduction of over 35%.

It also spent around 33.9% less on content and sports rights in 2022 than it did five years ago.

SABC wants to replace TV licence fee and battle signal “monopoly”

The broadcaster has proposed three main interventions to help complete its turnaround plan.

To address the TV licence issue, it has proposed a technology-neutral, device-independent, public media levy to replace the existing television licence.

The SABC wants the dominant subscription broadcaster — currently MultiChoice’s DStv platform — to collect a part of these fees on its behalf.

Although MultiChoice favours a public media levy, it has called the SABC’s proposal that it must collect the tax “inappropriate” and “unfeasible”.

The SABC also wants more direct funding for public interest programming by relevant government departments without compromising the SABC’s “independent editorial independence”.

As it stands, direct government funding for the public broadcaster amounts to only 3% of its total revenue.

It is specifically seeking more expenditure by the departments of education, health, and sports, arts and culture.

The broadcaster has also challenged Sentech’s signal distribution costs in a matter currently before the Competition Commission.

The SABC believes Sentech has a monopoly on terrestrial television and radio signal distribution and is abusing it to charge exorbitant prices.

Now read: Vodacom and Amazon launch Prime Video Mobile Edition in South Africa

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Goodbye TV licence — Even the SABC doesn’t want it