“We are technically insolvent as an organisation and are not able to fulfil our financial obligations,” said SABC group CEO Madoda Mxakwe at the broadcaster’s press conference held at their Auckland Park offices.

As a result, the national broadcaster has decided to invoke Section 189 of the Labour Relations Act (LRA) that requires it to seek consultation from all parties involved and unions with a third party mediator, for retrenchments to be “both procedurally and substantively fair”.

The SABC will let go of 981 of their 3,377 permanent employees and 1,200 of the 2,400 freelance journalists.

The SABC’s wage bill stands at R3.1-billion and makes up 42% of its total R7.1-billion expenditure.

And to dispel the rumour that most of this is because of executive payouts, Mxakwe outlined that only R12.5-million cost to company goes to the top three executives, while the entire group executives take R25-million.

The current 2,400 freelance journalists on the broadcasters’ payroll take R500-million per annum, while the five layers of management with 495 managers take R630-million.

Junior managers take roughly R360-million.

The retrenchment will affect Group Services, Provincial Operations, Commercial Enterprises, Media Technology and Infrastructure, News, Radio, Sport and Television.

This will affect 981 employees across all units and operations and 1200 freelancers.

“For the last 10 years salary increases rose by 4.2% while revenue growth fell by -1.4%,” said J HR Head, Jonathan Thekiso.

Furthermore, the SABC haemorrhaged a net loss of R333-million in the first quarter and a total of R805-million in the financial year in operation expenses.

According to Mxakwe, as part of the SABC’s “turn around plan” the organisation has to “accelerate revenue collection”, employ “aggressive cost cutting measures” and “focus on growing the business”.

A big part to achieve this will be to review “all of the biggest cost drivers of the business”, organisational efficiency, effectiveness and commercial viability. Furthermore there need to be “diverse streams of revenue”.

So far 81% of SABC revenue is through advertising. And even with a R3.2-billion revenue improvement in the second quarter, it is still not enough.

“Internally, the team has done a great job at driving the cost down, from things such as driving and accommodation, all have been reviewed,” said Mxakwe.

And even with all these austerity measures, the CEO insists that it is still not enough to salvage the SABC. Much more still needs to be done. And he plans to talk to private companies so as to extend the broadcasters borrowing limit as the threat of commercial insolvency is increasing, significantly.

“Although the news are not positive, at least we are transparent and honest,” said CFO Yolande van Biljon.

In the 2017/2018 financial, advertising as their main source of income dropped from R7.5-billion to R6.8-billion. Making R570-million less that the budget expenses.

And a large part of this is that SABC 2 and 3 are “not meeting their target” as the broadcaster is “not able to secure sufficient content”.

“We feel the impact of the decision from two years ago,” said Van Biljon referencing to the days of Hlaudi Motsoeneng.

“TV licences make 14% of total revenue, and even if the SABC was to improve recovery rate by 100% it might sustain us but not possible

“And although radio stations are the broadcasters’ best performing department, there is not enough marketing being done to get listeners to tune in.

“It is a circle we found ourselves in and struggling to get out of,” said Van Biljon.

“We need to ask fundamental questions on whether our organisation is actually fit for purpose,” said Group COO Chris Maroleng.

And a robust turn around plan, said Maroleng, must include key interventions for driving down cost and marginally improve components of the 19 radio stations.

“This demands that the SABC invest in new technology and prepare for the future so that we are ready to benefit from multi-channel space of income, said Maroleng, and “our wage bill is at a place that does not allow us to benefit from the innovation”.

“We have seen a lot of innovation in the space, we just don’t have the finances to invest for new content,” said Maroleng.

The retrenchment process will put an “emphasis on skills, qualification and experience” as they “engage with with the union” said Thekiso.

After 60 days of invoking Section 189 and engaging the CCMA as a third party mediator, the SABC will proceed with terminations of employment.

However all employees that are let go will receive severance pay for a week’s salary of every year they worked at the SABC. DM