SABC running out of money for salaries

Times LIVE reports that the SABC may not be able to pay salaries in November.

ABC board chairperson Bongumusa Makhathini told the news website that the state broadcaster was already struggling to pay its independent producers, and if the situation didn’t improve “it will escalate and get to the employees”.

16 months ago the then interim SABC board asked government for a guarantee so it could borrow money. The government has yet to grant the request.

Not only that, but the SABC’s last audit had a disclaimer, making it even harder to get a loan.

According to The Citizen, the auditors were worried that the SABC might not still be a going concern. It had racked up a R622m loss, and was already reportedly commercially insolvent in 2017 according to Business LIVE.

They also cited questions around property, plant and equipment, and irregular expenditure.

According to Dirk de Vos at the Daily Maverick, as of 2016 the SABC was actually spending more trying to recover license fees than it was getting from them.

The SABC has warned that it is in talks with unions about retrenchments as part of its bid to cut costs.

According to another report in the Daily Maverick, the SABC currently has 1,000 managers, for about 3,400 staff.

“We are looking at six to seven layers below the manager. We want to reduce those layers,” said CEO Chris Maroleng.

My Take

Management, in business terms, is a cost center – it doesn’t actually produce income – so you want to keep it to the bare minimum you can get away with.

That is the likely root to a lot of the SABC’s problem right now.

Dirk de Vos’ point on TV licenses also raises alarm bells for me.

If the SABC is spending more trying to collect on them than it is getting in from them, logically it would follow that we should scrap TV licenses.

Businesses quite frequently make provisions for bad debts – this is because you can’t get blood from a stone. If someone cannot or will not pay you, and it will cost you more to collect than you’d actually get – you take the debt off your books, it has gone bad and keeping it there is just lying.

And this is exactly what is going on with TV licenses, a lot of that debt is bad. Not only that, a lot of it probably isn’t even legally valid – my father had a TV license which the SABC chased for ages after he died.

Why is it doing this? Why is it sending good money to chase after bad?

The SABC right now is struggling to get finance. It is asking for government to guarantee its debt so it can borrow money.

It has every motivation to inflate its debtor’s book, to make it look like more people owe it money than really do.

Admitting that TV licenses are just not worth it, that they actually cost more to administer than they’re worth, means trimming an already distressed balance sheet.

The illusion of assets is being maintained – at great expense.

So why isn’t it working? Well, banks aren’t total idiots.

Even the disclaimer on the audit report, which surprisingly didn’t look to focus on the validity of the debtor’s book, raises serious questions.

After the great recession of 2008, one of the lessons learned was, “If you don’t know what you’re buying, don’t buy it.”

The disclaimer included property, plant and equipment – even the fixed asset register is dubious, which means a bank that used it as security wouldn’t really know that it is real.

Without trust business is impossible, and the SABC looks to be in such a mess that trust is pretty much impossible.

It is a situation where the full extent of the horror show going on there needs to be exposed before it can be fixed. As bad as the SABC looks now, the reality is probably much, much worse.

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