Chaos and financial ruin

There is chaos at the South African Broadcasting Corporation (SABC), with rampant corruption and fraud affecting the performance of the company and leading it to financial ruin.

This is the warning from former SABC board member Mathatha Tsedu, who discussed the state broadcaster with Newzroom Afrika.

He said the board was forced to intervene in the company’s management to try and stop the corruption at the state-owned enterprise (SOE).

Tsedu was speaking on the back of a High Court ruling that the former interim board, of which Tsedu was a member, interfered with procurement processes that led to the awarding of an irregular security contract in 2017.

“The interim board arrived at the SABC and found so much chaos that we had to be involved in almost everything. We were almost living there and acting like an executive board,” Tsedu said.

In normal circumstances, Tsedu admitted that much of what the board did would be seen as undue interference.

However, the board felt obliged to interfere in the SABC management due to the broadcaster’s extreme circumstances.

The board cancelled numerous contracts, including some that involved the Gupta family, despite it not being the duty of the board to do so.

“We just needed to find a way of making sure that whatever plans have been put in place to facilitate corruption could not continue,” Tsedu said.

“Our position was that whatever this corrupt system we were sitting over had proposed had to be stopped.”

Despite the ruling from the High Court, “My conscience is clear,” Tsedu said. “The SIU report says that nothing untoward occurred. If I have to die, so be it.”

Financial collapse

The SABC will collapse financially if it does not receive an urgent cash injection from the government and fundamentally change its operating model.

William Bird of Media Monitoring said earlier this year that the state-owned broadcaster needs additional funding from the government to avoid entering into business rescue.

The SABC is in extreme financial distress and could be forced to apply for business rescue, according to the group’s CFO, Yolande van Biljon.

Van Biljon told Parliament that revenue underperformed by 27% compared to its budget and was 8% lower than the previous financial year.

“The bottom has dropped out of our revenue generation initiatives, and as a consequence, the SABC’s loss increased by R949 million to R1.2 billion,” she said.

One of the main reasons for the SABC’s poor financial performance is that people are not paying for TV licenses.

The state broadcaster’s TV licence revenue declined from R968 million in 2019 to R741 million in 2023.

The SABC billed R4.5 billion in TV licence fees in the last financial year, but, like in previous years, it collected far less.

This translates into a TV licence evasion rate of 84% as debt collection agencies failed to convince people to pay. It is up from 69% four years ago.

Van Biljon said it could be liquidated if the group cannot sort out its financial situation.

Bird said the business rescue would not be a good idea for the SABC as it would create further challenges for the company without solving the underlying issue of it simply being uncompetitive in the digital environment.

“This is a perfect recipe for disaster,” said Bird. “Most of the blame, almost exclusively, should be laid at the government’s door.”

However, these short-term factors mask the real issues at the state-owned broadcaster.

The SABC is expected to operate in the 21st century according to a model that has remained unchanged since the 1990s.

“It is simply no longer fit for purpose. It is unable to operate in a digital environment.”


This article was first published by Daily Investor and is republished with permission.

Now read: SABC’s TV licence failure

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Chaos and financial ruin