Presentation to Parliamentary Portfolio Committee on Communications 03 June 2003

Presentation to

Parliamentary Portfolio Committee on Communications

03 June 2003

• Thank you to outgoing Chairperson and welcome to interim Chair

• Constructive relationship between SABC and Parliament

• Board is in it’s final year and important that it looks back on what it was mandated to do and what it has achieved

• Pleased that we can demonstrate progress not withstanding the challenges we faced and continue to face in transformation

• Transformation is a process not an event

SABC Presentation to PPC 3 June 032

Chairman’s Introduction (1 of 4)

Chairman’s Introduction (2 of 4)• Able to draw on the previous Boards’ work and what has been established in our efforts e.g.

– To stabilise the organisation– Improve management capacity and staff relations– Improve stakeholder relations– Set institution on a path of progress and excellence

• Diversity and unity of the current Board has been a major asset in supporting the transformation of the public broadcaster

• The Board focused its efforts in a number of areas:– Management– Staff– Content– Financial


Chairman’s Introduction (3 of 4)• SABC steadily moving in area of strategic content excellence

– Reflection of our efforts is the number (>200) of national and international awards the SABC has received

• Financially, we are in the position where, for the first time, there is a firm grip on the numbers and on the challenges and important choices around funding flowing there from

• Strong, diverse and competent management team in place

• Draft editorial policies completed– Worked hard and deepened democracy in a way that no one else has since the debates on the

Constitution– Attempting to get it right the first time but recognise we will succeed over time and not necessarily

immediately– It’s important that Parliament supports the SABC in this regard– Final decision on the policies will rest with the Board of the SABC


Chairman’s Introduction (4 of 4)

• Process of Amending the Broadcasting Act has been concluded successfully

• Reading of the Amendment Acts indicate complex tasks facing the Corporation and the new demands and challenges increase complexity

• Competition for limited resources and therefore important choices must be made going forward

• The SABC must implement the Amendment Act in a measured way


• On 25 April SABC published a number of draft editorial policies for public comment, focusing on policies mentioned in the Broadcasting Act:

– Mandate

– News

– Programming

– Language

– Universal service and Access

– Local content

– Religion

– Education

• The policies explain the SABC’s approach to different areas of its performance and what can be expected from the public broadcaster

PoliciesBackground (1 of 2)


• These policies will help to redefine and establish best practice in public broadcasting and broadcasting in general in South Africa

• Moreover, the policies when implemented will provide a number of things, including:

– A guide to editorial staff in their daily decision making

– A guide to the public on what they can expect from the public broadcaster

• The scope of the policies includes:– All SABC content, whether produced by SABC or not

• They contain reporting requirements to Board to allow for effective implementation

PoliciesBackground (2 of 2)


• A key challenge is to make the policies widely accessible and easily understood

• In this regard the SABC has undertook the following:

– Policies launched to key stakeholders and press on 25 April

– Copies of draft policies made available in 6 official languages

– Copies available at all SABC regional offices and on SABC website

– Detailed, easy to read summaries in six official languages at SABC offices and over 1000 post offices countrywide

– Poster campaign in post offices

– Promos on SABC radio stations and TV channels

– SABC talk shows and discussion programmes used to promote discussion on the policies

– Newspaper adverts published summarising the policies

– Public meetings to discuss the policies to be held in each province

PoliciesPublicising


• We have had a good response to date - approximately 300 written responses already received

• Written responses will be taken until 13 June

• Thereafter:

– Submissions will be collated

– Meetings will be held with interest groups making proposals

– Board will finalise policies

• The Board expects to finalise the policies by end of 2003

PoliciesWay Forward


Chief Executive’s Introduction

• The SABC is successfully making the transition to a stable public broadcaster

• Major challenges lie ahead– Management– People– Product– Technology

• Significant work has gone into process of stabilising the broadcaster; the stabilisation is at an advanced stage



• Notable achievements and progress relative to objectives set in our Corporate Plan

• Developing and implementing strategies to ensure compliance with the Act and long-term success and viability

• Going forward continued focus on delivery

• Tough and challenging year ahead

Chief Executive’s Introduction

Chief Executive’s IntroductionProgress

During the fiscal our action has led to a number of notable achievements in relation to our key performance areas

Objectives ProgressFinaliseCorporatisation

Completed

Further the aims ofUniversal Access

All internal process completed timeously; ICASAapproval received in time to roll out in FY03/04

Financial Total Revenue grew by 13% Advertising revenue grew by 7% Sponsorship revenue grew by 56.4% Licence revenue grew by 0.7% Expenditure grew by 13.6%

Local Content CompletedAudience Growth Market tough & competitive we have developed

strategy to improve performanceReview policies First draft complete, currently awaiting public

commentTechnologyStrategy & Plan

Completed; in first phase of implementationessential for mandate going forward



Highlights (1 of 4)

• Amendment Bill passed in Parliament

• Shareholder Compact Completed

• Un-picked Bi-media

• Rebuilt the sales and marketing team

• Reviewed Commissioning Procedures

• Content Hub strategy developed

• Rebuilding PBS radio


Highlights (2 of 4)• Industry development

– Highway Africa

– African Writers’ Lab for Radio and TV

– SABC Internship Program with Kentron College

– Revising Commissioning Procedures

• BEE & SMME Development

– Actual spend and support via broadcasting services

• Launch of News bulletins in SiSwati and IsiNdebele and new current affairs programmes

• Rural Development & urban regeneration

– Relocation of Ikwekwezi

– Integrating CKI into PBS portfolio and developing reinvestment strategy


Highlights (3 of 4)• Coverage of sport of national Interest, development and minority sport

• Heritage and African Culture

– Tobias Bodies

– Values in Education

– Looking Back Moving Forward

– Let’s Meet

– Remember the Day

– Sarah Baartman

• News and Current Affairs from and for the Continent

– WSSD

– W.E.F’s Southern African Economic Summit

• Promotion of Public Health


Highlights (4 of 4)

• Finance

– Financial policies finalised

– Internal audit co-sourced

– Financial model complete

– Financial realignment project well underway

• Policy

– Language workshop

• Architecture in place for aligning and rebuilding Corporation’s brands

• HR

– Performance management system

• Change management underway

Focus Moving Forward• Content:

– Deliver the best content to fulfil our mandate in the most cost effective way to maximize audiences and revenues

• People

– Attract, develop and retain the best creative and other talent

• Technology

– To put in place the appropriate technology infrastructure to deliver on our objectives

• Finance

– To ensure effective and efficient utilisation of resources and to put in place world class systems and processes

• Corporate Reputation

– To be the most admired media brand and brands in South Africa



Specific Delivery Areas(Corporate 1 of 2)

• Submit Licence Applications– Regional TV services– Amendments to existing radio and TV services

• Finalise Corporatisation

• Resolve Bop loan and assets

• Develop strategy for Channel Africa

• Implementation of EVA

• Reduction of overheads and investment in non-productive assets


Specific Delivery Areas(Corporate 2 of 2)

• Content Hub implementation

• Develop & implement Corporate Reputation Strategy

• Expand strategic relationships e.g. Sentech & international broadcasters

• Preparation for Election Coverage

• Realign organisational structure to suit new legislative requirements and ensure operational effectiveness

• Media and Society Workshop

Chief Executive’s IntroductionTrade Offs

• Going forward it is also clear that there are a number of competing interests and therefore difficult choices must be made

– Sport of national interest

– Capital budgets required for levels of convergence

– Regional services

– Funding mix & new revenue sources

– Competition (Convergence Bill)

• Need to implement current obligations before attempting to institute additional change (e.g. Public Broadcasting Conference)


Programming: News


News Programming ChairpersonIntroduction

• The public broadcaster’s news product plays a critical role in keeping the nation informed and encouraging debate

• Clear improvements in quality and delivery

• A number of scheduling and other changes have been implemented as part of a systematic action plan to make news and current affairs more accessible to the public

• The current focus is on the content strategy and includes discussion on linking news events of the day with national objectives and values


News Programming Chairperson Scheduling and Programming

• New current affairs programme launches:– Asikhulume on SABC 1– Current affairs program on X!K FM– Interface - current affairs programme on SABC 3– Consumer Talk – daily consumer/current affairs show on SABC 3– Business Update & Business Focus on SABC 3

• Rescheduled programmes– Siswati/IsiNdebele news bulletins– SeSotho/SeTswana news bulletin from 21h00 to 20h30– English news bulletin from 20h00 to 19h00


News Programming Chairperson Telling the Rural Story

• ALS news and current affairs shows regularly visit remote villages in rural areas for special broadcasts related to community, cultural and socio-economic issues

• Examples of these outside broadcasts include:– Lesedi: Matatiele in the E. Cape focusing on poor service delivery in

the province, using case studies from Matatiele, Mount Fletcher and surrounding areas

– Ligwalagwala: broadcast team sent to Driekoppies to look at the way the local community fights crime after several suspects were punished by a vigilante group


News Programming ChairpersonHighlights

• In addition, our news and current affairs team have continued to bring events of national and international significance to our nation and the World– Walter Sisulu Funeral– Signing of the Congo Peace Accords– War on Iraq (done from a South African Perspective)– WSSD

• A number of awards and accolades have been received for SABC News coverage including:– Media Tenor Award for SABC 1 Nguni bulletin– Accolades for professional and efficient coverage of WSSD– CNN African Journalist of the Year Award in the Radio News Category– Vodacom Award Specialist Category for Radio News– ATKV Radio Award


News Programming ChairpersonWay Forward

• Further scheduling and programming changes include:– News bulletin in tshiVenda and xiTsonga from July (SABC 2)– Changes in the PBS Radio to increase news and current affairs

broadcast on radio (e.g. SAFM, Lesedi)

• A major conference planned Media & Society– to be held this year with stakeholders, including religious leaders,

political parties, government, cultural organisations, women’s bodies and youth organisations

– Will debate key issues of global relevance


Programming: Radio & TV

Programming Chairperson: TV & RadioIntroduction (1 of 2)

• Significant work has gone into reviewing the SABC’s commissioning and acquisition procedures

• We have looked at how the Corporation spends more than three quarter of a billion rands on content both locally and internationally

• All key industry stakeholders consulted, and implementation of changes is planned in the current fiscal

• Editorial line that informs our approach to content has been drafted and is in the public domain for comment

• A number of key stakeholder interactions (e.g. Language Workshop), the Constitution, as well as the policies of other public broadcasters have informed our draft editorial policies


• The strategies to reposition our channels and radio stations are being implemented

• Over the course of the year the national broadcaster has improved in its delivery, particularly in the area of TV local content

• A key focus over the coming year will be the implementation of the Content Hub

Programming Chairperson: TV & RadioIntroduction (2 of 2)


304

391

245

313

348

479

274

367

0

100

200

300

400

500

SABC 1 SABC 2 SABC 3 Average

Min

utes

of L

ocal

Con

tent

per

day

in

TV

Per

form

ance

Per

iod

FY2001/02FY2002/03 (YTD*)

Note: *Year to 28 Feb 2003

Delivery of local content has increased on all channels.

Programming Chairperson: TV & RadioHighlights: Television Local Content


The SABC has continued to exceed local content quotas on both PBS and CBS Radio.

PBS

55 55 58 54

20 20 20 20

020

4060

80100

1999 2000 2001 2002Year

% O

f Loc

al C

onte

nt

SABC Share ICASA Quota

Note: CBS excludes BOP and Sunshine; Annual Average across all stations in portfolio

Source: SABC Management Info.

CBS

26 26 23 2420 20 20 20

0

20

4060

80100

1999 2000 2001 2002

Year

Ave

rage

% O

f Loc

al

Con

tent

SABC Share ICASA Quota

Programming Chairperson: TV & RadioHighlights: Radio Local Content


The SABC remains committed to providing programming in all official languages.

• Content in non-English languages on television has increased over the past 4 years in Nguni, Sotho and Afrikaans

• Increase in language is an ongoing process, and a key objective for the current fiscal is to increase language delivery, both overall and in minority languages

• Strategies are currently in place to ensure delivery

Programming Chairperson: TV & RadioTV: Language

SABC Presentation to PPC 3 June 0333Note: * from FY99/00 to 02/03 – Nguni 14.31% to 14.8%;

Sotho 10.6% to 15%; Afrikaans 22.58% to 31.1%

Reinvesting in Radio

• Assist the portfolio to realise their full broadcasting potential

• Initial recommendations on all 13 PBS stations completed

• Interventions into programming and scheduling strategies already underway

• Recruitment of programming managers currently in progress

• Training programmes for staff being conducted in tandem with development and implementation of strategy

Programming Chairperson: TV & RadioPBS Radio Strategy


HR


HR Chairperson Overview (1 of 2)

• The key pillar supporting our success is our people and our culture

• Board found many very talented people with creative and technical competencies;

• Environment not ideal to fully tap into their creative/positive energies

• The last year has seen a focus on performance and change management– EVA– Development of operating principles– Overhaul of performance management system

• Focus is on rewarding excellence, remunerating competitively and improving and changing the culture

• Ensure long-term sustainability and relevance


HR Chairperson Overview (2 of 2)

• To support our objectives a new performance management system/approach has been developed

• Our performance management approach seeks to drive performance in five key areas– Growth and Financial Health– National Priorities and Mandate– Innovation and Customer– Operations and Process– People and Success Behaviours

• System being implemented in the organisation to improve what we do and how we work together to achieve common objectives and drive excellence


Finance & Audit Committee Chairperson(1 of 2)

• The SABC remains in a sound financial state with sufficient cash resources to meet the current commitments

• The rate of cost increases continue to outpace the rate of revenue growth

• The value of TV licences declined by 35% in real terms. This has significantly impacted the financial performance of the Corporation

• The need of new services, ageing infrastructure and the demands of digital technologies will challenge the financial capacity of the Corporation over the coming years. Shareholder support will be required to implement these strategies


Finance & Audit Committee Chairperson(2 of 2)

• The focus on enhancing financial controls and information needs of the Corporation received further momentum as the financial realignment controls were implemented

• Going forward, the key priorities remain– Sound financial management– Expanding and enhancing business and financial controls– Securing the funding required by the Corporation to implement the technology

and content plans– Finalising the incorporation of the SABC under the Broadcasting Act


If TV Licence fees were increased in line with CPIX inflation since 1998, the rate would be R71 higher today than it is currently.

208 195 181 169 154 145

0

50

100

150

200

250

300

1998 1999 2000 2001 2002 2003(proj)

Year

TV L

icen

ce F

ee (R

and)

Nominal RequiredReal Tariff

Real CAGR

(98 - 02)

7.6%

208221

236252 279

CPIX Deflator: 92.8 100 106.6 117.3

-7.3%

Nominal CAGR

(98 - 02)

86.8

Source: Statistics SA CPIX (annual average) deflator series; 2003 CPIX proj (BMR)

Note: Rounding errors may occur

Actual Tariff = R208

125

300

Environmental FactorsTV Licence Fee Growth


Local our advertising market has faired better than the international market; however, our most significant revenue driver, TV, is growing slower than the overall market.

Note: * - CAGR 2001-2002Source: AC Nielsen Ad Index

0%10%

20%30%40%

50%60%70%80%

90%100%

APR98-MAR99

APR99-MAR00

APR00-MAR01

APR01-MAR02

APR02-DEC02

ATL

Ad

Rev

enue

Dis

trib

utio

n (%

)

INTERNETCINEMAKNOCK AND DROPOUTDOORRADIOTVPRINT

8.5%

206.8%*-6.1%-3.0%25.5%14.6%6.9%6.9%

CAGR(98-02)R6.9bn R7.6bn R8.3bn R8.8bn R8.2bn

Environmental FactorsSA Advertising Revenues (98-02)


2This information was submitted solely for the use of

this discussion and is not to be relied on by any third party without written consent

Growth in Media OfferingsThe number of media channels is increasing across all media types resulting in a fragmentation of audiences

7 8

36 3748 56

65

1991 1995 1997 1998 1999 2000 200142

Growth in offerings continues to put pressure on audiences and revenue

Environmental FactorsSABC Costs Mix

.

Note: *Year to Dec 2002Source:

PROGRAM AND BROADCAST COST

PERSONNEL REMUNERATION

SIGNAL DISTRIBUTION/LINKING

COST

MARKETINGDEPRECIATION

OTHER

TV

RADIO

0%

20%

40%

60%

80%

100%

% o

f Tot

al

Key Drivers• Personnel

• Programming



60% of total content spend is directed towards local content.

60%

40%

0%

20%

40%

60%

80%

100%

FY2002/03 (Projected Actuals)% o

f Tot

al P

rogr

amm

e an

d B

road

cast

Cos

t

ForeignLocal

Environmental FactorsContent Cost Mix

Conclusion (1 of 2)

• Continuous debate about the role and obligations of the Public Broadcaster

• SABC is one of the leading institutions at the forefront of transformation

• SABC is one of the leading institutions that can promote growth in ICT sector

• SABC one of the leading broadcasters that can promote democratic values on the African continent

• SABC needs regulatory and legislative stability to achieve these objectives

Conclusion (2 of 2)

• Over the coming months, our efforts will focus firmly on:– Fully implementing the Act

• Finalising corporatisation• Structural and financial realignment• Applying for regional licences• Amendments to existing licences• Policies

– Ongoing implementation of short and medium term strategies– Improving content– Improving brand recognition

• The Board is committed to ensuring that the SABC continues to deliver on its public service mandate amidst the many challenges it faces

• The Board will seek the support and partnership of its stakeholders to ensure that the SABC continues to improve delivery


THANK YOU

Documents

Presentation to Parliamentary Portfolio Committee on Communications 03 June 2003