SABC Board Six Month Review

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
3 October 2000
SABC BOARD SIX MONTH REVIEW

Documents handed out
Slides on SABC Board six month review - text outline only (see Appendix 1)

SABC Panel: Members of the SABC Board (led by the Chairperson, Dr Vincent Maphai) and members of the SABC Group Executive.

SUMMARY
The new SABC Board reported on its first six months in existence.

There are concerns about the split of the SABC into a public sector and a commercial sector. Opposition parties expressed uncertainty about the split's potential for success and urged the Board to consult with the Ministry as to whether there is ''room for movement'' on the issue. The ANC disagreed with this view, saying that the restructuring must be undertaken according to the Broadcasting Act. They can make adjustments afterwards if it is necessary.

The fact that the Board must submit a list of senior staff candidates to Cabinet for approval was also criticised by opposition parties as it impacts upon the independence of the SABC.

Dr Maphai admitted that there are serious problems in the SABC news department. He said that a ''level of professionalism'' is needed. The problems are being urgently addressed. To this end a new head of news has already been appointed.

MINUTES
Introductory comments by Committee Chairperson, Mr Kekana
- In the past the SABC was the mouthpiece of government. It must develop into a vibrant, successful organisation.
- It is a public body therefore it is in a position to be criticized by the media.
- The SABC's independence must be protected.
- It must have a policy which can be used as a yardstick to measure its performance.
- The question before them is how best to take the SABC forward. Has the SABC Board developed a strategic plan to do this? The Board should provide leadership as to where the SABC is going.

Summary of SABC Board presentation
Context at inception of the Board
When the Board took over in March:
- They had to deal with the high profile resignation of two senior executive members.
- There was negative media coverage over many issues such as the allegations of corruption against senior members. No such charges were proved against the members. They were found guilty but they were not found guilty of corruption.
- There was a seriously low staff morale.
- The Board was faced with pressure to respond on urgent issues such as the Gemini Report and issues around Bop TV.
- The Board is still very new. The leadership of the Board is only six months old. It is a non-executive Board which means that they only meet about two times a month. In terms of meetings therefore they are really only 24 days old.

Achievements
- The appointment of the interim leadership structure is working well.
- They have appointed some key people such as the recent appointment of the head of the news department. They have also initiated the recruitment of executive board members.
- They have resolved the problem with actors repeat fees.
- They have produced a blueprint on restructuring which is based on the Gemini Report.
- RSG has become the first ever multi-media radio station.
- Management and unions have submitted full reports which indicate an overwhelming consensus on major issues. This is considered a big achievement.

Prioritisation
- There is a focus on human resources strategies, management and vacancies.
- There are 5 vacancies in top positions.
- the list of candidates for senior executives must be submitted to Cabinet for approval.
- A new head of news (Mr Mthombothi) has been appointed after the previous head of news (Mr Sithole) resigned.
- They have placed a moratorium on certain vacancies since August 2000. This is because they do not want to appoint people if they have to let them go after the transformation. They only want to appoint people who will still be needed after the restructuring. In the meanwhile they are going to appoint people in contract positions. Thus the work of the broadcaster will not suffer in light of the moratorium.

- Government, the Board, Management and the Union have reached consensus on the ''Strategic Framework on Restructuring''.

- Managing the image of the SABC is considered very important. In terms of short term strategies they want to act on issues which brought them into public disrepute. In the long term they must finalise the leadership questions within the SABC. One way to deal with image is to ensure that employees are happy in the organisation because they can build or destroy the image.

Aligning the SABC with the Broadcasting Act
There are technical issues in the Act which require clarity. Examples of these are:
- Section 6 of the Act does not provide for transitional provisions. This means that the SABC has no legal status right now.
- Section 7 deals with corporatisation. There is no procedure in the Act to say in which order things should happen.
- Section 14 of the Broadcasting Act provides that the CEO is the accounting officer while the Public Finance Management Act provides that the Board is the accounting officer. Clarity on this has to be provided.

There is a sub-committee on restructuring which is looking at issues such as:
- how to make the restructuring affordable, and
- how to keep audiences and maximise revenue.

Shortcomings in the Gemini Report
- Outsourcing was not considered
- Equity partners were not considered as part of the commercialisation plan?
Not considering such options makes what the SABC has to do more expensive.

Key challenges highlighted
They must change the mindset of the advertising fraternity. For example the programme Yizo Yizo has good ratings but it has no revenue. They need to convince advertisers to advertise if local programmes have good ratings.

Finances
- They examine the SABC's performance on a monthly basis. There is a solid relationship between internal and external audits to ensure that all audit controls are followed. In terms of corruption they ensure that all suspect issues are raised by auditors and are followed up immediately. Every element of overriding protocol is addressed immediately.
- They are trying to improve their ability to collect licence fees.

For the next 3 - 5 years the SABC will need approximately 1.7 billion rand to perform their mandate. They are looking for ways to achieve their mandate without actually using such a large amount of money. To cut costs and enhance growth they will have to find creative ways of rolling out the restructuring process.

Their budget information indicates that they have been able to stick to their budget for the year (noting that they did budget for a surplus of 22 million rand).

Next steps
The goals set for March 2001 are to complete corporatisation. The new SABC structure must be viable and ''hold its own''.
They also have to complete senior management appointments.

Conclusion
The Board has shown that it takes its mandate seriously. They are cautious and they will not rush things. Within the subcommittee, they have debates but ultimately there is no dissension within the subcommittee. The survival of the SABC depends upon the survival of top management.

Discussion
Ms Smuts (DP) referred to Dr Maphai's comment that staff members were found guilty but not guilty of corruption. She asked him to explain this comment.
Reply: In terms of the KPMG report, it was found that there were instances where individuals signed beyond the level of their authority. However they could not prove that this amounted to fraud. The SABC formally demoted these individuals. The individuals accepted the demotion and at a later time resigned. They are no longer working for the SABC.

Noting that the CEO of the SABC had resigned, an ANC member asked if there was a problem with the two positions, CEO of the SABC and Chairperson of the Board, in terms of confusion as to who was the boss.
Reply: Dr Maphai replied that the CEO's departure from the SABC was mutually agreed upon. There was not a personality conflict between the two of them. It was not personal.

Ms Van Wyk (NNP) commented that there seemed to be a large turnover of staff. The financial incentive for people to stay is high yet people are still leaving. She asked whether they have made an analysis as to why there was such a high turnover and what needs to be addressed to ensure that employees stay.
Reply: The Chief Operating Officer (COO) and the head of marketing left because their contracts ended. The head of the news department left but it did not have anything to do with the internal operations of the organisation.
In the long-term they must create organisational stability, post-Gemini. It is crucial that management and the Board stick together. They must retain staff and attract people from other sectors.
Attracting people from other sectors means that they will have to pay market-related salaries. This is an element which other parastatals must also deal with.

A member asked about the integrity of the interview process for hiring staff.
Reply: The SABC can vouch for the integrity of the interview process. For the top positions it is managed by a head-hunting agency which is separate from the SABC. For the bulk of employees however they use a normal internal selection panel.

A member asked how many people were head-hunted by the firm for the position of senior news editor and how many people were interviewed.
Reply: It was handled by a professional firm. They scoured the market and advertised in newpapers as required by the Labour Relations Act. They then shortlisted the candidates and someone was appointed from the second round of interviews. The candidates were individually approached. The integrity of the procedure was vitally important. Confidentiality of the candidates had to be respected.

Ms Vos (IFP) asked about the vacancies in the SABC and about recruitment. She referred to Dr Maphai's earlier statement that a list of candidates for the senior positions had to be submitted to Cabinet for approval. She asked why this had to be done when the SABC was not a state broadcaster.
Reply: Dr Maphai replied that the Broadcasting Act did not address the matter. In terms of the corporate governance of parastatals they were required to get Cabinet's approval.

Ms Vos wondered if the Board did not have a problem with this in terms of their independence. What would happen if Cabinet rejected a proposal that the Board made?
Reply: Dr Maphai replied that they would have no choice but to abide by Cabinet's decision but they hoped that it would never come to such a situation.

An ANC member asked if there was a time frame within which to appoint people for the vacant positions.
Reply: The CEO must be appointed first because this person will be involved in appointing the Chief Operating Officer and the Chief Financial Officer. This should be completed before the end of the financial year.

The Chairperson referred to the SABC's comment that they were the first to have a multi-media radio station. He said that before he could congratulate them on this he had to know what it was.
Reply: It relates to the integration of technology (namely radio, television, cellular phones, and the internet) via satellite. It is highly interactive. It can help in the education sector for example where one needs interaction in broadcasting programmes. They had to do a feasibility study on this first. They are working closely with Sentech to ensure proper access on the roll-out of this project. In 6 months time they will be able to report on this more and in two year's time it will be a big part of the Portfolio Committee's work. Currently one can already access SABC news via a cellphone. The process of technology integration is going on more and more. If the SABC wants to be a global player then they cannot shy away from new technology.

An ANC member asked about the SABC's editorial policy. How far has the SABC Board gone in developing a comprehensive editorial policy for the enforcement of positive themes that are common to everybody?
Reply: The issue of news delivery is very important to the Board. This is why the Board fast-tracked the appointment of the head of the news department. In terms of fair representation on issues of diversity it is critical for the SABC to monitor its output. The newsroom assesses stories. Important considerations are objectivity, integrity, fairness, and impartiality. The editorial policy is informed by:
- a code of ethics (all the reporters know the code),
- editorial philosophy (staff must remain sensitive to the diverse nature of society) and
- all journalists have a check list regarding checking sources and facts for the accuracy of their information. They must also take account of different viewpoints and they must respect the right of reply. There are benchmarks which inform and guide the editorial decisions taken every day.

Mr Kekana commented that they were not just asking about newsroom policies but about what the Board must consider regarding the entire structure of the SABC. They need something more comprehensive than just a guide for journalists.

Ms Mndende (UDM) asked the Board how free they were from political persuasion. What criteria do they use to cover national and provincial conferences and rallies? She referred to the recent conference by Cosatu which received full coverage. She noted that after the recent debate in Parliament on AIDS, there was no interest by the SABC to get a reaction from the minority political parties.

In a similar vein Ms Smuts asked why they are covering party political conferences. They cannot do it for the governing party if they are not going to do it for all the other parties too. On the issue of editorial policy she said that management and the Board can easily be subject to government pressure - therefore the editorial people must be independent.

Reply: The SABC covers all national political conferences but not provincial rallies.
The decision to cover an event is based on the newsworthiness of the event and the merit of the event. This is always the overriding consideration. Dr Maphai admitted that there were serious problems in the newsroom but this was not the place to delve into it. He did say that a level of professionalism must be brought into the newsroom. This is a top priority and they must address it strongly. To address these problems they have appointed certain persons.

In terms of editorial policy they do not concern themselves about specific political parties. Their concern lies more with what messages they are sending out about the country, for example the high crime rate. They are concerned about this - therefore they are addressing the running of the newsroom.

An ANC member commented that there must also be a guiding policy around productions. What kind of values is the SABC trying to promote around entertainment programming?
Reply: They have not finalised a policy around values but they are currently in the process of discussing the issue. One of the things that they do is to look at the audience response to programming. In the audience research department they have something called the ''appreciation index''. In terms of this they look at how much a programme is appreciated by the audience even though the programme does not have a high viewer rating. The quality of programmes is a subjective area and a problem all over the world. Some programmes work well, have massive audiences and promote values such as Yizo Yizo while some programmes are simply duds. Programs which are violent or of a sexual nature are not played in certain time periods. Some are not allowed on air at all. The categories of programmes are constantly being blurred. Programs do not necessarily have to fit into one category or another. Edutainment for example entertains and informs at the same time. This is a situation in progress.

Another panel member added that in terms of local programming they go through a full tender procedure. This enhances the quality of programmes. The SABC could also look at the possibility of creating a training fund to train individuals. Even the SABC's producers need training. They are currently doing an audit to assess the situation. They may get international assistance.

A committee member asked if the restructuring of Bop TV restructure was complete.
Reply: It has been hard to restructure this because the SABC does not know if it is theirs or not. They are not sure where Bop TV belongs. Dr Maphai said that they have made recommendations to the Minister that Bop be fully incorporated into the SABC. This will help the SABC to deal with the language deliberation issue and it will extend their capacity.

Mr Pieterse (ANC) asked about their focus on sign language.
Reply: Developing sign language still has a long way to go. They need to give more attention to programming on disability. Language generally has always been a challenge for the SABC. The language problem will not simply go away, it has to be addressed. It has been discussed as a matter of urgency for the past six months. New technology such as transmitters could provide for programming in all languages. Subtitling must also be considered as a means for language delivery. The SABC must look into this.

Mr Kekana said that what he had heard from the SABC was that they need a fourth channel. He asked them if they have approached the Regulator about this.
Reply: Dr Maphai said that they will talk to the Minister about this and they will follow the correct procedure.

Ms Vos asked about the restructuring of the SABC into a public and a commercial sector. Have the implications of the split been properly researched? Are they confident that it can be successfully done? Will they not have the problem of viewers migrating to DSTV for example?
Reply: Dr Maphai said that the Board has debated this but there is no official Board position. A panel member added that the commercial channel will have to compete with other channels but the profits of that channel will be used to subsidise the public sector service. This is an uncomfortable situation. It is an inconsistency that they must deal with. They must look at how to separate the two arms (perhaps they will not separate it in terms of channels). It will be a huge expense and they are concerned and nervous about it. Another panel member said that if they achieve corporatisation it will be a milestone. They need more time to address the issues and they must apply their minds as to whether they can afford this. The policy directive will come from government.

Dr Maphai said that the Board would appreciate leadership from the Portfolio Committee. Sometimes they wonder whether the whole concept has been thought through or not. If government says that they should think about it some more, then that is what they will do. However if government says that this has been going on for too long and they should do it now, then that is what they will do.

Ms Smuts said that they had asked the drafters of the Act which channels would be commercial and which channels would not be commercial if they made the split. They gave no answer to this which indicates that they are not ready to make the split.
- There should be consultation as to which technical amendments must be made and if there is room for movement on the part of the Ministry. If an adjustment needs to be made in terms of a split, then they should adjust. They should not rush into this especially in a field where technology is always changing.

The Chairperson said that implementing the Broadcasting Act is the law of the country. They can make adjustments if it is necessary but they cannot ''throw it out''. They must implement and then look at the shortcomings.

Mr Pieterse commented that the SABC should cover at least 50% of the para-Olympics. He also asked if the SABC (especially the Board) had a role to play in fighting AIDS. He added that in rural areas they cannot access the SABC's services yet they pay the same licence fee.

Reply: Playing a role in fighting AIDS is a high priority item. As national broadcaster it is one of their responsibilities. There is extensive education and promotion of HIV awareness at grassroots level. Television and radio programmes deal with this. They are going to discuss the possibility of a dedicated education channel with the Minister of Education. This should magnify the reach on an education level.

They had an AIDS telethon where the proceeds went to the AIDS council. Together with this council they are trying to get a trust fund established. They also participated in the International AIDS Conference and they have a relationship with Loveline.

Ms Mndende noted that it was expensive to cover overseas visits by politicians and commented that it was unnecessary to follow Ministers overseas.

Reply: As the public broadcaster they have a responsibility to cover these events. The panel member used the coverage of Princess Diana's funeral as an example. When the SABC covered this there were sectors of society which applauded them for it while another sector criticised them saying that it was not relevant to South Africa. The SABC must make objective decisions. The newsworthiness of the event is the most important consideration.

Closing comments by parties
DP (Ms Smuts) - The SABC Board's attention to the news division is good.
- The Portfolio Committee must do something about the fact that Cabinet appoints senior management staff. This is not addressed in the Broadcasting Act.
- The Board should give more consideration to the split.
- The Portfolio Committee must look at the required technical amendments.

UDM (Ms Mndende) - the SABC must act like a public broadcaster. They must not give preferential treatment to the ruling political party. She said that she wondered how the assessment of newsworthiness was done.

IFP (Ms Vos) - the SABC must be independent of state control. There should be no clouding of this issue.

Members of the ANC - the Board should conduct an audit of how many services are delivered to rural areas.
- There are 12 official languages. They must balance the languages.
- They should be covering South African-related overseas events. It is the public broadcaster's responsibility.
- They need radical but cautious transformation.
- They must improve the capacity of their staff (for example, political journalists must truly understand the issues).

Chairperson Kekana made the following concluding comments:
- The SABC is going from strength to strength. They do however face competition and they must look into issues like the loss of audience to e-TV.
- The SABC needs a clear policy framework.
- They should implement the Broadcasting Act as soon as possible.

The meeting was adjourned.

Appendix 1:

SABC BOARD SIX MONTH REVIEW
Submission to the Portfolio Committee October 2000

Order of Submission
1.Context at Board Inception
2.Achievements
3.Priorities
4.Repositioning/Restructuring
5.Key Challenges
6.Financial Results
7.Next Steps

1. Context at Inception
· Two Senior Executive Members resigned within six weeks.
· An avalanche of negative media coverage.
· Senior management under siege and insecure.
· Conflict management through selective media leakages.
· High profile corruption cases.
· SABC leadership under six months.
· Tremendously low staff morale.
· External pressures on the board to respond to urgent issues.

2. Achievements
· Relationship building with various stakeholders.
· Appointment of interim leadership structure.
· Appointment of News Head.
· Initiate Executive Board members recruitment.
· 80% Coverage of Radio footprint for PBS stations.
· Sales Revenue increase of 8%
year on year.
· Highest ever AR ratings on Radio.
· Financial turnaround on SABC 2.
· TV programme stock turnaround.
· Commissioning procedures fully implemented.
· Actors repeat fees implemented.
· Competitive scheduling strategy against e-tv & M-Net.
· Intervention to improve rural integration (Active rural radio programmes)
· Launch of:
- San Radio Station
- SABC News.com
· 1st Multi-Media Radio Station RSG
· Management & Labour development of "Restructuring Blueprint".

3. Prioritisation
· Intensive induction into the SABC.
· Focus on Human Resource Strategies, management and vacancies.
· Managing our image.
· Bringing the SABC in line with the Broadcasting Act.

Induction
Full-day brief by the Minister within three days of Board's appointment.
Full-day brief by the Director-General.
Several briefings by Senior Management.
Several briefings by the Gemini Team.
This is in addition to 10 Board meetings already held.

Human Resource Strategies
Five vacancies:
Group Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Head of News
Head of Sales & Marketing
GCE - Rev. H Mbatha
Appointment of Acting GCE Mrs. C Khuzwayo.
Appointed an International Headhunting Firm "Spencer Stuart" for GCEO, COO & CFO.
GCEO will be appointed first.
Resignation of Head of News Mr. E Sithole.
During September 2000 Head of News was appointed - Mr. B Mthombothi.
Moratorium placed on all vacancies during August 2000.
Audit of all management posts to validate CV credentials.

Human Resource Development
· Government, Board, Management & Union consensus on "Strategic Framework on Restructuring"
· Development of a clear "Business Plan"
· Development of a "New Organisational Framework" (Organogram)
· Planning & consulting stakeholders on "Staff Migration Plan"
· Implementation of new "HR Framework"

Managing SABC's Image
Combination of short & long term strategies:
· Short Term
-Act and be seen to be dealing
with corruption
-Engagement of Senior Editors
· Long Term
Finalise leadership questions
within the SABC

Aligning SABC with the Broadcasting Act
· Corporatisation (Ltd Company)
· Number of Board Members (15,3 Executive)
· Number of Executive Committee Members (7)
· Distinctive Split between PBS & PCBS (Management & Financial Reporting)
Minister and Board "Implementers rather than Architects"

Observations about the ACT
Technical
Normative

The Act Technical Observations
· Currently no legal status (s. 6)
· Corporatisation procedure not stipulated (s. 7)
· Regarding the split, not clear, internal split or external? (s. 9)
· SABC's commercial service's subject to:
-Commercial broadcasting services;
-Public broadcasting service (s. 11)
· Accounting officer
-Broadcasting Act - GCE
-Public Finance Management Act - Board (S.14.2)
· Memorandum and Articles of Association vs Corporate Governance.
· Members of the Executive Committee requesting flexibility.
· Transfer of the SABC's assets (s. 74) of IBA Act (s.22).
· Borrowing Powers: Ministerial approval
-Flexibility necessary for the day to day running (s. 23)
· Television licenses requesting flexibility.

Questions regarding Gemini Model
· What consideration was given to outsourcing
· To what extent was Equity Partner considered? Part of Commercialisation plan
· Regional broadcasting Partnerships?
· Extent of research regarding viability of individual Regional Broadcasting clusters identified (R1,7 Billion)
· Extent of research regarding immediate introduction of 5 regions
· What about an incremental Regional broadcasting approach as we progress?
· Has research been done on the use of digi-cameras to bring down the R6000 cost per minute?

4. Cornerstones of Repositioning
· Board / management / union consensus.
· Free flow of information and exchange of ideas.
· Inspired by the Board and driven by Management.
· Completion of top appointments.
· Evolving process:
-Balance between urgency and the need for the Board to synthesise their ideas.
· The search for additional information to ensure best solutions for the SABC.

Restructuring Sub-Committee
A Vehicle of Transformation
Addressing the following challenges:
-How to:
· Make restructuring affordable.
· At the same time strategically position the SABC in the current broadcasting environment.
· Whilst meeting all the demands placed on it by the PBS/PCBS split.

Restructuring Process: Key Development & Achievements
Most importantly
Management and Unions have submitted full reports which indicate an overwhelming consensus on major issues, including Gemini's recommendations.
-New Business and New Media developments
-Outdated technology and under-utilised services
-Education
-Advertising
-Radio
-Dubbing/sub-titling
-Programme Research

Restructuring Sub-Committee
How to adapt the Vision to be:
Less cumbersome.
More audience friendly.
Financially viable.
Without losing in essence, what the SABC is committed to.

Restructuring Process: Key Developments & Achievements
Presentations and discussions have been held on a host of subjects including:
-Different approaches to regional broadcasting.
-Clarity on channel identity.
-Current language allocation and audience feedback.
-The PBS/PCBS split and content delivery.

5. Key Challenges Highlighted
· Financial-Sustainability
(Gemini's regional broadcasting plan R1.7 Billion).
· Language:
Best alternatives for delivery.
-Management Proposal:
PBS 1 - Nguni Group & English
PBS 2 - Sotho Group & English
PBS 3 - TshiVenda,Xitsonga, Afrikaans & English
· Advertising:
Structure envisaged for organising the synergy between the different media in order to exploit the SABC's potential to the fullest.
· Corporate Culture:
Modern Corporation rather than Hierarchical Bureaucratic Institution
· Structure:
Ensuring that the correct personnel onboard to implement.
· Audience & Schedules:
Does the report give sufficient information in relation to channels and programming on Audiences and Schedules for policy to be formulated?
· Bi-Media:
Is not working in other places around the world, here it is expensive an possibly also needs to be rethought.
· Selling Plan:
Once we've worked through the above, we will need to sell the plan to the critical stakeholders such as the advertisers.
· Local content
Delivery and quality.
· National objectives delivery
Disability
· Convergence of technologies
· Future in Africa

Phasing in Restructuring
Evolution or Big Bang
Better to get it right than act for the sake of being seen to be doing?
Costing:
To ensure that we do not end up in a worse financial position.

6. Finances
· Performance Year to Date
31 August 2000

[PMG Editor's Note: Financial Results YTD -Graphs not included]
· Financial Controls
The improvement of financial controls has been a focus area. Various initiatives have been launched with positive results.

7. Next Steps
· Completion of senior mangement appointments.
· Corporatisation
· Delivery of mandate and content, including Radio & Television.