Pay-TV companies were gouging out audiences from the national broadcaster’s traditional market as they offered cheaper bouquets of channels, SABC CEO Lulama Mokhobo said yesterday.
Competition was getting tougher as new players entered the market and the changing conditions would have a "serious and negative impact" on the public broadcaster’s revenue in the long term, Ms Mokhobo warned.
"The advent of digital satellite broadcasting has seen pay-TV operators increasingly penetrating the audience segments that have been the preserve of the SABC," she told Parliament’s communications committee during a briefing on the broadcaster’s strategic plan for 2013-15.
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Pay-TV operators traditionally target high-income earners and they were increasingly encroaching on the living standards measure 6 market, offering bouquets as low as R59, and soon even R29. Improving content would be vital in the bid to lure back audiences and the SABC planned to invest more than R1-billion in 2013-14 in commissioning and acquiring local and international content.
The SABC predicts only a limited compound annual growth in broadcast advertising revenue of 7,9% between 2010 and 2015 - a rise of only R4-billion to reach R12,6-billion. In this scenario it would need more public funding, Ms Mokhobo said. The current restriction of commercial advertising time to nine minutes per hour was also not sufficient to generate the level of revenue needed.
The other source of revenue - licence fees - was also only expected to grow by a compound annual growth rate of 1% over the same period, staying almost stagnant at R1-billion. The collection of licence fees was a major challenge, especially as the high-income earners who also subscribed to pay-TV refused to pay their SABC licence fees.
Ms Mokhobo said she believed "legislative protection" was needed against the refusal to pay fees and that pay-TV operators should be obliged to assist in the collection of licence fees.
Although faced with these revenue pressures and the heavy drain that the roll-out of digital terrestrial broadcasting would have on the broadcaster’s finances, Ms Mokhobo said the SABC was determined not to draw down the remaining R400-milion of the R1,4-billion loan guarantee provided by the government.
"Serious performance management" would be implemented and non-performers would be "shown the door", a policy to which she said the trade unions had agreed.
The main focus of financial management in the 2012-15 period would be to ensure sustainability by implementing the turnaround strategy, SABC chief financial officer Gugu Duda said.
She told MPs that tight control would be exercised over staff numbers as part of a general drive to contain costs. Vacancies would only be filled if they could be justified in terms of a strict business case, and the remuneration budget would be locked at R1,9-billion, with no extra staff being taken on outside this framework.
However, certain top positions still had to be filled, such as those of chief technology officer and the heads of news and television.
Ms Duda said the SABC also planned to reduce its leave and overtime liabilities, with overtime to be abolished by year-end.
Yesterday, a report quoted the head of sport, Sizwe Nzimande, as saying a new, dedicated sports channel would be ready by October 1. But the SABC said it could not confirm the details of the launch of a sports channel this year.