SABC on its Quarter 4 performance & SABC Board inquiry recommendations, with Minister

Meeting report

The Chairperson welcomed Communications Minister, Ayanda Dlodlo, and the SABC interim board. He said the Committee was interested in developments regarding the leadership of the SABC.

SABC Quarter 4 performance for 2016/17
Ms Khanyisile Kweyama, SABC Interim Board chairperson, facilitated the presentation. Major liquidity challenges and lack of cash flow were some of the problems which the SABC emphasised due to the net loss of R1.1 billion for 2016/17. This had resulted in a 52% (R590 million) decline compared to prior year results. The SABC was approaching National Treasury to raise additional funding. Some of the figures outlined in the financials included:
- A total revenue and income for the 4th Quarter of R1.6 billion, which was a R353m (20%) decline compared to the prior year period;
- The total quarterly revenue underperformed by 22% (R466m) compared to budget;
- Total revenue year to date decreased by R740m (9%) from prior year;
- SABC’s performance for the quarter ended 31 March 2017 showed an operating loss of R509 million which was below the budgeted loss of R137 million;
- Expenses performed better than budget which cushioned the SABC from bigger losses;
- An operating loss of R509 which exceeded the budgeted loss of R137 million.

The report highlighted plans which had been approved to address audit risks; internal control frameworks; IT governance; a business continuity plan and disaster recovery plan. The Special Investigating Unit (SIU) had been appointed and a task team had been established to work with it. A task team would also approve contracts and prioritise payments.

Recent developments included:
- All advertising for top positions had been closed, screening was underway and arrangements were being made for interviews;
- The cessation of all TNA breakfasts;
- The termination of the Lornavision contract with an SIU probe underway;
- A new editorial code; and
- The Chief Financial Officer, James Aguma, had been suspended and charged with misconduct and acting CEO Hlaudi Motsoeneng’s employment had been terminated.

Discussion
Mr R Tseli (ANC) asked what the implications were for the recent cancellation of the Lorna Vision contract in light of the 11% funding from licence fees.

He asked for more information on the operating loss in the fourth quarter of R509 million when the budget which was below the budget loss of R137 million. In catering for people with disabilities, was there a tool to detect the number of people who benefited or contributed?

Ms P Van Damme (DA) said the SABC Interim Board had done excellent work and was one of the state- owned entities that was not involved in looting. It was worrying that cash reserves were down due to a R1.1 billion net loss. How much exactly had the SABC requested from National Treasury. That number had to be given immediately.

She said Mr Aguma’s disciplinary action should be very soon. When was it being held as it could not be another issue that continued in perpetuity in which a person continued to get paid.

Was the Landmark advertising management system contract which showed a R300 million loss under review?

She asked if Mr Motsoeneng’s dismissal meant he would still be paid out for the remainder of the year.

Mr Maxegwana asked about the R20 million TNA contract for the morning breakfasts as the Committee had been told they had not cost the SABC a cent. People had been lying.

Ms W Newhoudt-Druchem (ANC) was interested why the target to provide more access to the SABC for the deaf had not increased as only one out of three had been achieved. A critical issue like HIV/Aids announcements was not reaching deaf people. What were the names of the companies who the SABC dealt with that had persons with disabilities in its employ? She was also worried about how production companies were going to be able to make the transition from analogue to digital. Would the SABC be assisting them?

Mr W Madisha (COPE) also commended the SABC Interim Board and hoped it could correct the situation as there were very serious problems.

In his opinion a lot of money was being spent unnecessarily. For example, coverage of funerals: “Mandela yes but if Willie dies tomorrow – to air that on TV that is pointless.” Similarly the broadcasting of certain sports like kickboxing had to be reconsidered.

He asked if the SABC had considered that most of the youth got their news from social media platforms. Could social media presence be grown at all?

Mr Madisha also wanted to know how much money Mr Motsoeneng had received. Was it correct that he got lots and lots of bonuses: R11 or 14 million and about R33 million more? What was going to be done about someone with only a standard nine education getting so much money?

Ms N Tolashe (ANC) said there had been an impression in the public that the Department of Communications (DoC) should be shut down but it was more a case of “only one child” creating the problem. The SABC Interim Board had done great work to dissolve this perception that the department was corrupt. By the time the term of the SABC Interim Board came to an end could a new board come in and just run with things?

Referring to Mr Motsoeneng, she asked what was going to be done. “This is South Africa; it’s not a banana republic, you can’t do what you wish.”

Regarding local content, the shareholder had to get more involved.

Mr M Kalako (ANC) asked how the SABC, which had the biggest audience, was going to manage to weather the decline in advertising revenue. The rights of local artists had to be protected and this could not be laid at only the feet of the Department of Trade and Industry. However, he could see progress had been made by the DoC, the SABC and the Minister.

Ms M Matshoba (ANC) thanked the Minister for her quick intervention considering she had only been appointed in April. She was pleased that the SABC and the Minister had tackled the issue of Motsoeneng which was an “elephant in the report”.

Local community radio stations under the Media Development and Diversity Agency (MDDA) also required urgent intervention.

Mr M Gungubele (ANC) said he supported the initiatives of the Minister but the public broadcaster should be a pillar in nation building. He asked about the decline in advertising and to which financial quarter the R32 million positive cash balance referred. He agreed that most young people were more interested in social media.

Mr Maxegwana noted total revenue of R1.6 billion received in the fourth quarter was a 20% decrease and income from TV licence fees had deteriorated. How was this being handled? 

There should also be more focus on social cohesion, using smaller radio stations as a means because they reached all language groups. The Government’s newspaper Vuk’unenzele had a wide circulation both on social media and in hard copy. In addition between Friday and Monday a video clip of what happened in the week was also posted online. This was disseminated by other broadcast channels like eNCA.

There was a large focus on TV but not enough on radio stations which were doing very well.

The SABC should also consider opening up the parliamentary DSTV channel to the public. Presently it is only accessible to people with a decoder.

Referring to Mr Motsoeneng and others he asked what informed the bonuses. How was performance and non-performance quantified?

Broadcasting of sports events and funerals should be looked at.

Mr Aguma’s R11 million ‘bonus’ for the Multichoice contract was more like a finder’s fee. What was the formula for bonuses?

Responses
Acting CEO Tsheliso Ralitabo said the records may not be articulating the R300 million loss incurred in the fourth quarter.

The board would have to track down and account for radio stations’ performance.

He said Digital Terrestrial Transmission (DDT) should assist people with disabilities as it prescribed that the broadcasters should cater for those who were sight and hearing impaired. It raised the question however whether the local industry could produce that content.

SABC board member Audrey Raphela said the broadcasting of sports depended on acquired rights and there were costs linked to that.

As for increasing advertising there was also a ruling by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) that there should be no advertising during children’s programmes.

Before and after the presentation, the Minister and Ms Kweyama said the SABC former COO’s dismissal was not with immediate effect. This was for calling for holding a press briefing instead of attending a parliamentary committee meeting. This had caused a breakdown in the relationship between Parliament and the SABC.

He had been given a month’s notice pending the outcome of another disciplinary process recommended by the 2014 Public Protector’s report.

Ms Kweyama said should Motsoeneng be found guilty, he would not be paid out the remainder of his contract. The results from the court came out yesterday, 12 June, after two attempts to get his position back had been blocked. The board was happy the court had made no judgment against the SABC. Motsoeneng should be “completely gone from the SABC” by the end of the month.

The Minister said she felt the dismissal was fair.

Ms Kweyama said after the Motsoeneng matter had been dealt with, the fate of suspended Chief Financial Officer James Aguma would be next on the agenda. Mr Aguma was charged with misconduct, lying to Parliament and dishonesty, while the SIU was also conducting an investigation and internal one was also underway. This was for misleading Parliament and lying to MPs over the costs of the TNA breakfasts. She said the breakfasts had in fact run up a cost of R20 million. This despite claims that they had not cost the SABC anything. Even though the TNA contract had 11 months to run, the last breakfast broadcast had been the Friday before. The Interim Board had learnt that there was a time that there was an offer that profits could be shared.

Ms Kweyama said controls and governance principles had been approved at the SABC. A list of contracts had been handed over to the Special Investigating Unit for probing. About 20 SIU officials would conduct the investigations. The SABC wanted the matter closed within six months. One of the cases involved a past R11 million bonus paid out to Mr Motsoeneng over the Multichoice deal.

She said, in addition, there were efforts to ensure that cash flow issues “don’t hit us”. The SA Revenue Service had been called in as independent content producers had not been paid in a while. Local content was being played but no royalties were being paid out.

The Minister said ‘local sold’ which was evidenced by the popularity of the SABC1 channel. Any suggestion that local content broadcasting was a ruling party decision was wrong. It was a matter of radical socio-economic transformation. Whose responsibility was it to help the local market? We have a responsibility as government.

Ms Kweyama said the relationship with Lorna Vision, a debt collection company, had also been severed after it was found that no tender had been invited. Lornavision had filed papers against the SABC in court that day.

The decision to censor violent visuals had also been rescinded as the SABC needed to follow the Independent Communications Authority of South Africa (ICASA) rules. Ms Kweyama said this did not mean “anything goes” but the old editorial code had been reverted to. Staff morale had “been quite bitten”.

The Minister said she could not provide a figure as to how much money the SABC needed. It could possibly be supplied the following week.

The meeting was adjourned.