African public broadcasters facing a financial crunch – different circumstances and common threads but a worrying trend

18 June 2019

Top Story

Two African public broadcasters (SABC and KBC) are in the depths of a financial crisis, a third (ZBC) has just taken on large financial loan and a fourth (UBC) is beginning to emerge from its crisis. Russell Southwood looks at the differences and the common threads and asks will others hit a rocky road soon.

There are four of Africa’s Sub-Saharan broadcasters that are either in financial crisis or may be so in the future:

  1. SABC board chair Bongumusa Makhathini told South Africa’s Sunday Times last week that it was “drowning in debt” and might not be able to pay its June salary bill:” “I’m not sure how we are going to pay for salaries come end of June. We have also not maintained any of our infrastructure and a communication blackout is imminent. We anticipated ‘Day Zero’ in March, but we have managed to stay on air until now.”

Makhathini also confirmed that SABC has accumulated Rand 1.9 billion (€120 million) in debt that it can’t pay off. “We owe SanTech about Rand 337 million; we owe Supersport, which talks to us being able to cover sports, we owe them about Rand 223 million. We owe the City of Joburg over Rand 10 million.”

  1. KBC, the Kenyan public broadcaster, admitted it was broke in July 2018 to a Senate Committee. Officials from the organisation told the Senate Committee on Information and Communications Technology (ICT), chaired by Senator Gideon Moi, that KBC is unable to meet its financial obligations. It was unable to meet its employees’ statutory deductions to the Kenya Revenue Authority (KRA), the National Pension Fund, co-operative unions, health care and insurance. It also could not pay for its satellite transmission costs.

The officials told the Committee KBC earns about Sh9 million a month, against a total expenditure of about Sh180 million. Much was made of an unpaid loan to the Japanese Marubeni Corporation of Tokyo taken out in 1991 to buy equipment to improve and expand its national medium wave frequency radio broadcasting network that has remained unpaid.

Today that loan is estimated to stand at about Sh40 billion. In the 2014/2015 Financial Report, the Auditor General stated that the national broadcaster was insolvent. “The corporation is technically insolvent and its continued existence as a going concern is dependent on the financial support of the Government and its creditors,” stated the report. At that time, the KBC had lost about Sh5.34 billion in the year ending June 2015, and Sh5 billion, the year before. Veteran journalist and media manager Naim Bilal was appointed Managing Director in March 2019 with a mandate to turn the Corporation around.

  1. UBC’s financial crisis became visible at the end of November 2016 when President Museveni gave it UGS20 billion to bail it out. The directive to Finance Minister at the time acknowledged that the national broadcaster’s debt had soared to Shs28.3 billion. The then UBC Managing Director, Winston Agaba, confirmed that the corporation was in dire straits, explaining that while the Uganda Broadcasting Act of 2005 had envisaged that the corporation would partly survive on a TV tax, it has never become operational, leaving it in financial mire.

In August 2016, ICT Minister Frank Tumwebaze set up a seven-member committee to review UBC performance and recommend ways in which the broadcaster could operate efficiently.

Local ad agency owner Nada Andersen (and former broadcast channel owner) was bought in as part of the review team and later became acting CEO until July 2018. Ms Andersen said that UBC faces a host of financial problems such as accumulated debt of Shs80 billion (four times higher than the original estimate), numerous court cases, dysfunctional equipment, archaic means of internal communication and administration systems, delayed payment of salaries, poor handling of finances, lack of accountability and lack of a current board. A new Board is due to be appointed.

  1. ZBC, Zambia’s public broadcaster has taken on 40% of a Chinese loan of US$273 million as part of its joint venture with StarTimes, the Chinese pay-TV broadcaster. The joint venture will be responsible for implementing the transition to digital broadcasting in Zambia. The situation is not one of financial crisis although much local opposition reporting has claimed erroneously that ZBC has been sold to the Chinese.

Leaving aside local partisan politics, the much more difficult question is how will ZBC and StarTimes be able to realize a return on a US$273 million investment in a digital signal carrier in a country that has by any count probably no more than 10 TV channels, only around three of which are of any size?

Tolstoy’s opening lines in his novel Anna Karenina read:” All happy families are alike; each unhappy family is unhappy in its own way”. Each of these public broadcasters’ crises seems to have very specific causes. For example, the ANC’s way of using state power in South Africa and the accompanying incompetence of some of its SABC appointees can be seen as essentially a South African story. In the same way, specific reasons can be found in Kenya and Uganda.

But I want to identify some threads that are common to all these crises that will affect other Sub-Saharan African public broadcasters:

* An ambivalence about what the public broadcaster is for: In the bad old days (which have not gone away in some countries), the public broadcaster was really a state broadcaster and was one of the levers of state control. If you seized power, you seized the public broadcaster to make the announcement. Nobody is really committed to anything but the most peripheral of ideas about public broadcasting. In a less dramatic way, a former Kenyan President used to ring KBC to make his feelings very forcefully known about its coverage. Since that point, politicians in many countries now own private broadcast stations directly or indirectly and the state broadcaster is probably less important to them. The state broadcasters are usually told to compete in the marketplace or, as with UBC, to set up licence fee collection schemes that have little or no chance of success.

A state broadcaster is hard to justify in a multi-channel African world with increasing access to the internet. But no-one yet has defined how to create a public broadcaster in the rather “command-and-control” environment of African government politics. It can be done but it needs a leap of vision, something that has been in short supply for some time.

  1. Over-staffing and over-reach: It is a truism of African state entities that whatever their good intentions, the worst become a trough for patronage. Whilst private TV broadcasters keep their staffing tight, state broadcasters are more likely to employ a larger number of people, who in many cases are not productive.

In the context of the digital transition in broadcasting, all state broadcasters have used it to pitch a great deal of TV channels expansion. But between the optimistic announcements of new additional channels and the reality of putting them on air, there is usually a financial gap that the Government is not covering. SABC is the most ambitious of these promises before finance disasters but it features widely elsewhere.

  1. The impact of digital broadcasting and other media changes: In many cases, state broadcasters have found themselves losing audiences in the new, multi-channel environment. Even private broadcasters have found it tough in the multi-channel landscapes found in places like Kenya and Uganda: they have to run more channels to retain the same audiences. KBC is no longer really a leading broadcaster in Kenya. Ditto UBC in Uganda.

The state broadcasters often had a structural advantage. They were the only ones with a genuinely national infrastructure that guaranteed wider audiences that could attract advertisers like mobile companies, drinks and those in the FMCG sector. The private companies (with exceptions like Citizen TV) used to concentrate on the richer pickings in urban areas. Now a digital transmission platform offers the same transmission coverage to all if they are willing to pay. And satellite platforms, in places like Ghana, also offer national coverage: Multimedia Broadcasting’s multi-channel success was built from this way of accessing audiences.

At the edges, platforms like Netflix and Showmax are making it harder for all broadcasters to deliver certain types of content and piracy continues to be a significant challenge.

The only real solution to many of the problems above is to create a “political settlement” with incumbent Governments that will allow state broadcasters to become more like public broadcasters. Otherwise the TV audiences will go elsewhere and the potential financial hole will only get deeper.

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