Reg Rumney: Let us avoid privatisation by default at our public broadcaster. Anna was comfortable at the SABC, perhaps too comfortable. Based on her years

of service, she could justifiably argue that if she was not doing her job

properly, no one had complained before. And yet she was being retrenched.

She could not imagine a working life outside of the corporation where she had

many friends and she refused to accept the reality, protesting vocally to

anyone who would listen about the unfairness of her fate and her fear of never

finding gainful employment again. I was working at the SABC in 1997 when it

effected its first-ever wide-scale retrenchments. We who remained sympathised

with Anna, because she was distraught. Eventually, she had to be escorted from

the building.

She was representative of an SABC culture of long-term employment, encouraged

by the generous retirement benefits - retirees in the past had 100% of their

medical aid expenses paid, and though this has dropped to 60% it is still

generous. The staff attrition rate at the corporation is around 4%, and

according to Human Resources group CEO Jonathan Thekiso, only 146 people of

around 3,300 employees left the corporation in the past year. Many employees

did not leave until they reached retirement age, he said, and the average

tenure was around 10 to 15 years.

Anna was not her real name, but her story was real and an illustration of how

painful the process can be for ordinary employees. Studies show that

retrenchment can hurt company morale and have other unintended effects.

The SABC faces another round of punishing retrenchments, one that cannot be

dodged. The noise around the decision is not helpful, and the pressure faced

by the management is team immense. After presenting to the parliamentary

portfolio committee earlier this month on the need to retrench, the SABC

management team met with reactions that ranged from friendly scepticism to

open hostility.

It did not matter that the team's presentation began with the stark message

that the corporation was commercially insolvent, and unaided, will close next

year. The net loss in the year-to-date was 323-million rand, but more importantly

the forecast is that without drastic action by the end of March next year the

corporation faces a loss of 805-million rand. This after a loss of a little over

1-billion rand in 2016/17 and a loss of 622-million rand in the 2017/2018 financial

year. Without action, the corporation expects not to be able to pay monthly

expenses in the fourth quarter, ie the first three months of next year.

This is not an ideologically driven exercise in "trimming a bloated civil

service" or a knee-jerk attempt to boost profits but a matter of survival for

an institution that provides news and information to the poorest people in

South Africa in their home languages.

The SABC's staff complement has over the past 15 years fluctuated between

3,100 and 4,100 people, and has dropped back to where it was in 2006, around

3,380. employees Above-inflation wage increases, and lower revenue, mean that

the cost of staff - including freelance costs - has risen to around 43% of

revenue. By contrast, as COO Chris Maroleng pointed out, it is spending 30% on

content that ultimately generates revenue and fulfils its mandate instead of

the 50% it should be spending.

The committee suggested the SABC come up with alternatives to retrenchment but

made no real suggestions. It is hard to see what those might be in the short

term. Already the corporation has saved 463-million rand by cutting back on non-

essentials like catering and printing. According to Thekiso, the saving after

paying severance packages would be just under 480-million rand - and freeing

itself of its 1,300 freelancers would save another 150-million rand from the

annual salary bill.

In the long term, some solution must be found for the well-known problem of

the non-payment of TV licences, it is clear, since TV licence revenue

comprises only 14% of SABC total revenue. That won't solve the short-term cash

flow problems.

The SABC team hinted that some of the employees at the SABC need to go because

they do not have the skills to work there. In other words, retrenchment is not

only necessary to stave off liquidation but also to slim down. The

presentation to Parliament talked of achieving a "fit for purpose workforce,"

implying that it isn't fit for purpose now.

Retrenchments may be a blow to morale. It is also morale-sapping to be

employed in an organisation where too many are overburdened while others

pretend to work.

At the same time the state has to stop shirking its responsibility as the

shareholder whose intervention in management led to the financial instability

in the first place. It must recapitalise the SABC, strengthening the

organisation's balance sheet, and stop intervening in the running of the

corporation.

The corporation's balance sheet is weak, thanks to the drain of cash from the

corporation over the past few years but does not show a high level of

borrowing. What it does show is more than 1-billion rand of its liabilities relate

to employee benefits.

The poor state of the balance sheet means, according to group CEO Madoda

Mxakwe, that an injection of 3-billion rand is needed. The reluctance to inject

that is political, since it feeds into the idea that government is "bailing

out" inefficient companies and that the private sector could do a better job.

Saddling the broadcaster with debt it may struggle to repay is also no answer.

If ever the idea of public broadcasters being made necessary by state

intervention to correct market failure needed evidence, broadcasting in South

Africa provides this. The private sector is not remotely interested in

investing to serve the millions of mostly poor listeners and viewers served

exclusively by the SABC.

In an interview last year for input into the Rhodes Journalism School study on

media sustainability, Paying the Piper, Unisa academic Julie Reid remarked

that if the SABC were to vanish tomorrow around 65% of the population of South

Africa would be completely in the dark about the world around them.

Nothing would please market fundamentalists more than the media market being

left entirely to the private sector. Be careful what you wish for, the saying

goes. Another way of correcting for market failure would be to disperse the

public service broadcasting burden among private broadcasting companies as a

condition of licensing.

More likely than closure is some compromise that leaves the SABC limping

along, unable to stop private sector competitors stealing the share of

wealthier audiences in a rapidly changing market and leaving the SABC with

insufficient resources to serve those who need it most, especially the

indigenous-language radio audiences of millions of South Africans. This is a

form of privatisation by default.

What of Anna, who was ejected from the SABC? I found out that she had, despite

her fears, found a job, working for a private production company. It didn't

hold out the hope of the same job security, but then that security had proved

ephemeral anyway. The SABC, however, apparently didn't miss her services at

all. DM

Reg Rumney is the former director of the SA Reserve Bank Centre for Economics

Journalism at Rhodes University and former head of the economics department at

the SABC.