R1-billion SABC debt disaster

Sentech has said that the South African Broadcasting Commission (SABC) has yet to settle over R1 billion in debt accumulated since January 2023.

This is according to Sentech CFO Rudzani Rasikhinya, who told the Parliamentary Committee on Economic Development and Trade that while the state-owned signal distributor is struggling to collect its debt, the entity will not collapse.

“The company is still solvent and liquid, but the financial sustainability of Sentech is different. If you are not collecting debt, it threatens the sustainability and pushes for revenue diversification,” Rasikhinya said.

This follows the state entity’s net profit after tax dropping from R308 million in 2021 and R110 million in 2022 to a loss of R136 million in 2023 and R146 million in 2024.

“The financial position of Sentech has mostly been affected by non-payment from customers, resulting in the cash balances reducing significantly year on year,” Sentech’s presentation noted.

As of 25 November, the SABC owed Sentech R1.12 billion, of which R1.05 billion dates back to the beginning of 2023.

Rasikhinya pointed out that this debt is constantly increasing. The SABC’s monthly billing of R68 million is in a shortfall of R17 million, as the state broadcaster only pays R51 million per month.

“The SABC wanted the debt to be converted into a long-term loan, but the board did not approve that,” she said.

“We then proposed a payment plan to the SABC with payments starting in this quarter. However, we are yet to receive any payments.”

Rasikhinya highlighted that 94% of Sentech’s revenue is generated from its media broadcasting business, as it was established to be a signal distributor.

Its other revenue streams include broadband (1%) and telecommunications towers (5%).

However, by diversifying these revenue streams, Sentech hopes to decrease its reliance on media to 45%, increase broadband revenue to 30%, towers to 8%, and add data centres and other offerings by 2030.

SABC offered a lifeline

The SABC was threatened with a blackout earlier this year when Sentech threatened to cut off its broadcast signal due to non-payment of its debt.

However, communications minister Solly Malatsi intervened by facilitating a deal through which Sentech agreed not to cut the SABC’s broadcast signals for at least two months while exploring options for a long-term sustainability model.

He said this includes working with the National Treasury to explore reclassifying the SABC grant so that part of its funding can be used to pay Sentech.

Media Monitoring Africa’s William Bird warned that the public broadcaster was at risk of a blackout in May 2024, stating that the government was actively defunding the SABC.

He explained that Sentech is one of the most significant input costs for broadcasters, including the SABC. He said the government should cover these costs on the broadcaster’s behalf.

“It should be something that is covered by the state, frankly, and yet, the SABC is left to carry this enormous bill, and it’s one of the things that makes its model even less sustainable,” said Bird.

“The scenario is absolutely catastrophic. You have the SABC’s finances plummeting. You have the government and Parliament failing to do their job.”

“And then when the government doesn’t provide any kind of a bailout or a loan guarantee, you’re leaving the SABC in an impossible position. It’s not a stretch to think that we will be looking at a blackout,” he added.

The Portfolio Committee on Communications and Digital Technologies has also advocated for greater public funding for the SABC.

However, a battle between Malatsi and President Cyril Ramaphosa over the controversial SABC Bill must first be settled.

Malatsi attempted to withdraw the bill, stating that it did nothing to address the SABC’s dire financial situation.

Instead of tackling the issue, the bill kicks the can down the road. It states that Ministers of Communications and Finance must develop an alternative funding mechanism for the SABC within three years of the bill being signed into law.

Critics of the bill have also warned that it would give the minister too much power over the public broadcaster’s board, threatening its editorial freedom.

Following Malatsi’s attempt to exercise his executive powers as a cabinet minister, Ramaphosa and deputy president Paul Mashatile issued a decree that ministers may no longer withdraw pending legislation without their say-so.

Former communications minister and current Minister in the Presidency, Khumbudzo Ntshavheni, has claimed that this decree will be retroactive, blocking Malatsi’s withdrawal of the SABC Bill.