More trouble in SA

Unravelling The Embattled SA Firm Where 400 Staff Are Set For The Chop

By  |  November 24, 2020

One of the events that took over South Africa’s media space in the previous week was the eyebrow-raising action taken by the South African Broadcasting Corporation (SABC) in laying off a number of its workers. 

South African Broadcasting Corporation (SABC) is the state-owned South African broadcaster that powers 19 radio stations, as well as 5 television broadcast stations. The Corporation is one of the heavily indebted state-owned firms in South Africa, which President Cyril Ramaphosa plans to wean off of public funding.

The layoff of 400 staff members of the SABC is one that has been mooted for a while until the recent action was taken.

However,  this action was suspended and prolonged by a week, barely two days after, due to multiple boycott threats by some of its journalists and presenters. This suspension, according to the board members would also allow SABC to explore other likely options. 

A statement announcing the retrenchment suspension by SABC reads: “The Board of the SABC would like to announce that it will suspend the S189 process for 7 days. This will allow all stakeholders to further engage and explore further options to ensure the financial sustainability of the SABC.”

The start of SABC’s job-cut story can be back-dated to 2018, where it initially announced retrenchment plans and labeled it as one that was necessary for restructuring.

Fast forward to June this year, SABC reaffirmed its original layoff plan and stated that 600 jobs would be cut. 

However, four months after i.e in October, the broadcasting body ended with a decision to cut down the number of jobs that would be affected from 600 to 400. This decision came as a result of incessant consultation that took place with multiple stakeholders within a period of four months.

SABC’s CEO, Madoda Mxakwe, acknowledged the difficulty in its decision but noted it to be necessary for the long-term sustainability of the SABC.

In his words, “An insolvent SABC serves no one, not our employees or our citizens who rely on the SABC for transparent, fair and ethical public broadcasting services. This retrenchment is understandably very challenging for all our stakeholders.”

On the bright side, it was disclosed that there would be 170 vacant positions that are available for staff to re-apply for, and hence presenting a likelihood for the job-cut figure to end at 270. That’s a scarce consolation but it’s somewhat the optimistic view.

The reasoning behind the SABC job-cuts

At the center of job-cut plans is the heavy debt it has incurred as a state-owned firm, which has led to South Africa’s President, Cyril Ramaphosa’s plan to cut off the body from government funding.

In time past, the broadcasting body has consistently incurred a loss over its financial years. SABC’s financial report for 2019/20 ended with a huge loss of USD 33 Mn ( ZAR 511 Mn), compared to a USD 31 Mn (ZAR 482 Mn) loss the year before.

The increased loss recorded was caused mainly by a drop in revenue from advertising, sponsorship, and very importantly, the license fees revenue.

It was recorded that SABC’s TV license fee revenue declined by 18 percent year-on-year. The license fee which costs USD 17.00 (ZAR 265.00) is a major source of revenue for the SABC and is an obligatory payment by TV owners in South Africa.

The 2019/2020 FY report disclosed that a vast majority of South Africans boycotted this payment. Hence, the percentage of South Africans that made their license fee payment fell down to 24 percent in 2020 from 31 percent in the previous year.

Lastly, the SABC’s board also disclosed last week that it needed a minimum of USD 65 Mn (ZAR 1 Bn) to keep up with operations. Clearly, with all the loss it has incurred, there’d be no way it’d be able to meet up with this amount, while also considering the president’s decision to wean the body off of public funding.

Thus, trimming down its staff payroll expense appears to be a start in its recovery journey.

In all, the end of the seven-day suspension and the disclosure thereafter would determine the proceeding step for SABC.

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