One of South Africa’s top state-owned enterprises technically insolvent
The South African Broadcasting Corporation (SABC) revealed that it is technically insolvent and uncertain if it can meet its financial obligations for the next year.
The SABC tabled its 2023/24 annual report in Parliament, which showed that the state-owned enterprise is in financial trouble.
It explained that its audience share has been impacted by the migration of audiences to global streaming platforms.
To add fuel to the fire, people who migrate to streaming services watch the service on all types of screens and do not want to pay for TV licences.
“As audiences migrate to consuming content across a range of screens other than television screens, the relevance of this license fee continues to be questioned,” it said.
This caused license fee compliance to decline to all-time lows. “Compliance cannot be enforced, causing the non-compliance rate to increase to 85.60%,” the SABC said.
These problems filtered down to the bottom line. The SABC’s annual report revealed a loss before interest and tax of R192 million.
Even more concerning is its balance sheet, which revealed that the state broadcaster is technically insolvent.
“The impact of actuarial valuations on post-employment benefits since FY2020 has given rise to the negative equity reported in the Statement of Financial Position as of 31 March 2024,” it said.
Negative equity means the company is technically insolvent and cannot settle all its liabilities if all its assets are liquidated.
The SABC said it ‘remains materially uncertain’ whether it will be able to meet its obligations in the next twelve months.
It will require implementing severe austerity measures, including suspending more than 80% of the long-term capital plan and limiting content investment.
“It must be noted that virtually no funding is currently available for any capital investment in innovation, infrastructure and technology,” the SABC said.
Despite these financial challenges, the broadcaster put on a brave face and highlighted many positives at the company.
These include a 7% increase in advertising revenue, a 4% decrease in operating expenses, and a 77% decrease in its loss before interest and tax.
“Despite financial sustainability challenges, the corporation executed its mandate diligently and passionately,” SABC CFO Yolande van Biljon said.
The SABC has also achieved its first unqualified audit opinion from the Auditor General of South Africa since 2009/10 – the first time in 14 years.
SABC CEO Nomsa Chabeli also highlighted positives, including their election coverage and the relaunch of the SABC+ streaming platform.
“The SABC is an iconic broadcast media asset in South Africa, with the largest audience and geographic reach,” she said.
“We continue to be South Africa’s most trusted media brand as we entertain, educate, inform, and empower our audiences.”
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