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SABC Board Four years in Review

Sonwabo Eddie Funde6 November 2007

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Outline

• Board Goals : An overview– Also highlight what committees exist

• Highlights of Actions against each board goal

• Overall Challenges facing the SABC.

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Corporate Goals Summary

• Early in its tenure, the Board discussed a way of focusing the organisation on its mandate

• This resulted in a discussion which led to the adoption of the Corporate Goals of the SABC

• These goals are derived from the broadcasting act and editorial policies of the SABC

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Corporate Goals Summary continued…

• They have been used to guide the Board and Management in decision making and operations

• Foundation for Corporate Strategy A foundation for key performance areas and Indicators

• They have been incorporated into performance management across the SABC

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Content Goals

Ensure the SABC promotes democracy, non-racism, nation building, and empowerment through news, current affairs and innovative programming, in all official languages, which is informative, educational and entertaining.

Ensure the SABC produces compelling, professional and authoritative news, current affairs and other programming that tells the South African and African story accurately, fairly and in a balanced way to all South Africans in line with its Editorial policies and regulations of ICASA.

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Content Goals continued…

Ensure that the SABC reflects the World, in particular Africa, in line with its editorial policies and corporate goals, and plays a meaningful role in supporting the African Renaissance and NEPAD.

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Content Goals Structure

Content is mainly divided into two main areas, and thus, divisions:

These are:1. News and current affairs, which is in turn divided into

the following platforms: Domestic, i.e.. channels 1, 2 and 3, and the 19 radio

stations and International i.e. SABC Africa, SABC News

International and Channel Africa Radio. 2. Public and Commercial programming

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Content Goals– News and Current Affairs: Interventions (1)

• Insisted of a paradigm shift on coverage of news. Emphasis to be laid on developmental news agenda with a clear shift from coverage of events and sensational stories.

• Clear strategy to improve skills of journalists, in co-operation with academic institutions. E.g. Collaboration with Wits University on a Media in Society intervention.

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Content Goals– News and Current Affairs: Interventions (1)

• Encouraged better quality of delivery of news by ensuring each programme is researched and has a producer and a separate presenter.

• Extension of news gathering network locally and internationally:

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Content Goals – News and Current Affairs: Interventions (2)

• Domestically, on television, news is now broadcast in the eleven official languages and on Radio in 13 languages, including Xu! And Khwe

• Increase a number of news bulletins to address language challenges

• Increased current affairs in African languages e.g.

Asikhulume,

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Content Goals – News and Current Affairs: Interventions (3)

• SABC News International will also be packaged by the Commercial Enterprises for revenue exploitation globally

• SABC News International launched with an intention to tell the African from an African perspective

Initiated the establishment of News Bureaus in 4 regions of Africa and a further 6 international ones:one each in the Carribean, Brazil and China and Washington, New York and Brussels

Launched a local bureau in George and the extension of operations in Bisho and Mthatha

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Content Goals – Programming: interventions (1)

• Board through the goals drove content transformation to reduce reliance on international content:

In 2004: 65% international vs. 35% local In 2005: 30% international vs. 70% local In 2006: 18% international vs. 82% local

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Content Goals – Programming: Interventions (2)

• Insisted on the improvement of cultural diversity in content

• Insisted on compliance in the use of more African and all 11 official languages across all programmes ( e.g. soapies)

• Increase diversity of audiences via subtitles to encourage cultural exchange

• Increased procurement of content from companies owned by black people and women and drastically reduce the recycling of same ‘production companies’ and therefore ‘same actors’ etc.

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Content Goals – Programming: Interventions (3)

• SABC 2 and 3 exceeded their ICASA targets. SABC 1 making significant progress

• All channels reinventing themselves to look at audience satisfaction

• Initiated and maintained dynamic relations with Content producers and the Unions of Actors to ensure that they are reliable partners, produce quality, relevant, informative, educational and entertaining programming consistently

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Content Goals – Programming: Interventions (4)

• Significant growth universal access through increasing in SABC footprint in last four to five years:

Ikwekwezi from 30% to 81% Ligwalagwala from 34% to 68% Ukhozi FM from 68% to 87% SABC1 from 82% to 89% SABC2 from 85% to 91% SABC3 from 71% to 77%

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Content Goals – Programming (5)Improved Facts and Figures

Total number of Sithengi Briefs (RFP’s) for 2004-5 84

Total number of Proposals commissioned to date 114

Total number of BBBEE commissioned companies 77

Commissioned Black owned companies to date 62

Commissioned Black women owned companies 41

Commissioned Black Empowered companies to date 15

Commissioned White only owned companies to date 37

Total number of newly commissioned companies 59

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2. People Goal

Make the SABC a place of preferred employment by attracting, retaining and nurturing talent in the Corporation and the country, while ensuring appropriate compliance with Employment Equity

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People Goal: Interventions (1)

• Transformation of middle management in terms of Race and Gender.

• Tackled challenges of attracting skills in Finance and Technology.

• Approached the challenges not as only about numbers but about culture as well.

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People Goal: Interventions (2)

Implemented remuneration parity across all sections of the SABC

Appointment of managements team: 1st parastatal to meet 50% women at top management level

Benchmarked remuneration especially in news to make it market related in order to achieve higher levels of staff retention.

Crated and implementing a comprehensive Remuneration and performance management system

All senior managers will be on performance contracts by the end of 2007.

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People Goal : Improved Figures to ponder

Category 2004 Level 2007 Level Remarks

Top Management:

Black Staff

62% 77.3% Dramatic Increase

Top Management Female Staff

31% 32,99% Slow Growth

Middle Management

Black Staff

41,5% 59.8% Dramatic Transformation

Middle Management

Female Staff

31% 35% Steady increase

News

Black Managers

55% 65% Steady Increase

News

Female Managers

30% 34% Steady Increase

Total Black Staff 79.86% 85.7% Steady Increase

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3. Financial Goals

Create a financially sound Corporation built on a sustainable business model, and ensure that its assets are used in an effective and efficient way in line with the requirements of key legislation to which the SABC is subject.

Establish a procurement policy that complies with the ICT Black Empowerment Charter, and promotes ownership and the participation of youth, women and persons with disabilities in the broadcasting industry.

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Financial Goals: Intervention (1)

• Sound financial system established• Massive investment of profits in local content • Investment in Technology to improve transmission, • Introduced new systems of interacting broadcasting

including sms and websites. Introduce marketing for all stations.

• Revenue increased to R4-billion• After-tax profit up to R382-million in 2006

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4. Stakeholders Goal

• Create an SABC that enjoys the support and respect of its viewers, listeners, shareholder as well as other stakeholders

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Stakeholders Goal: Intervention (1)

Improved relations with the Shareholder

Improved and regular reporting to the Portfolio Committee

Annual Public Broadcasting Service Colloquium

Board Regional outreach to all provinces

Meeting with political parties

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Stakeholders Goal:Intervention (2)

• Empowerment and consultation across the value chain

• Conferences and regular meetings are held with industry to discuss business operations as well as editorial matters. These include:

Durban International Film West Film festival Provincial road shows Encounters Film festival

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5. Technology Goal

Put in place an innovative technology platform and infrastructure that will enable the SABC to deliver on its

mandate.

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Technology Goal: Intervention (1)

• Investment of R1.2 billion in the first year of office to improve broadcasting technology I the organisation for news processing, ERP, and document management system, archiving and digitisation

• Introduced new media for dissemination of news and other information 082152, SMS etc

• Getting ready for digital migration• Developing new technology strategy to prepare for

services convergence and competition

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6. Governance Goal

• Ensure full compliance by the SABC with the Broadcasting Act, the Charter, the Corporation’s editorial policies and other legislation applicable to the SABC and put in place systems, policies and procedures to ensure improved business processes, achieve efficiencies and ensure good governance within the Corporation

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Governance Goal: Intervention (1)

• 3 years of unqualified audit• Complied with separation of public and commercial

accounting • Comprehensive Board Charter approved• Comprehensive Delegation of Authority document and

staff training concluded • Process of comprehensive policies started• Procurement policy and office in place

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Governance Goal: Intervention (2)

• Materiality framework approved by shareholder• Shareholder compact approved and • Quarterly reporting complied with• Initiated all breaches of rules and control systems

investigated and appropriate action taken • Risk management policy and office is in place

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Governance Goals:Intervention (3)

• Introduction of new procurement policies to broaden access to SABC contracts- from 5 to over 400 companies.

• The SABC is now a competitive, effective and powerful media player in the industry

• Assisted and created an awareness of a culture of good corporate governance and management’s responsibility in terms of the PFMA, through advise

provided during the course of the 4 years

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Governance Goals: Intervention (4)

• Reduced fraud risk by exposing fraudulent activities and other irregularities through the performance of forensic investigators where required

• Through the Internal Audit department identified control deficiencies and ensuring that appropriate internal controls be put place

• Manage the relationships between the stakeholders on the Audit Committee, i.e. Internal audit, external audit and management

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7. Performance Monitoring

Monitor, evaluate and reward performance in implementing these Corporate Goals and the SABC’s Editorial policies

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Performance Monitoring: Interventions

• New performance systems approved by the Board and in place

• Strict alignment of strategy and operation with Corporate Goals

• Regular summits held with management to ensure alignment of content production in line with the statutes, regulation and Corporate Goals. board goals

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Challenges going forward• Funding model

• Preparation for 2010 World Cup

• Greater citizen participation

• Dynamic Internal Communication

• Consensus building

• Lack of understanding of the role of the public broadcaster

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THANK YOU

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Presentation by the Group CEO of the SABC

Advocate Dali Mpofu

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SABC STRATEGY FRAMEWORK

A. Corporate Goals:

•Content – democracy non-racism, nation building

•Stakeholders – support and respect of shareholder and audiences

•Financial – sustainability and empowerment

•People – preferred employer

•Technology – innovative

•Governance – compliance – legislative framework

•Performance Monitoring – Corporate Goals and SABC policies

B. Organisational Values• Conversations & Partnerships• Restoration of Human Dignity• Building a Common Future

C. Strategic Pillars•People•Operations•Funding•Technology•Governance

3 Strategy Building Blocks

Informs the Vision : Broadcasting for Total Citizen Empowerment

informs new performance management framework/group score card

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“Through listening you allow others to unfold, develop and expand”

• SABC is an organisation on the move.

• An organisation characterised by progress in performance.

• An organisation whose performance exemplifies its mandate, its mission and its goal.

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Our vision “Broadcasting for Total Citizen Empowerment” translated in:-

• Shared vision unifying the organisation into clusters.

• Viewing our audiences as citizens not consumers.

• Empowering citizens with information education and entertainment.

• Empowering Internal Citizens through reviewed corporate policies

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SABC Highlights

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Investment YearUniversal Access

• Increased footprint of transmitters – minimum of 2 677331 citizens have been provided with SABC programming

o SABC3 at Bethlehem and Nelspruit potential increase of 737 758 viewers

o SABC 1 & 2 transmitters with potential viewer gains of 41 599 (SABC1) and 37 983 (SABC2)

o SABC 1 & 2 Elandsheights gross potential gain of 1046848

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Investment year continued…

o Umhlobo Wenene and Lesedi in Kimberley listeners increase by 13414 and 6204 respectively

o Ukhozi FM transmitter at Louwsburg with an increase of 93549 potential listeners

o Lotus FM transmitter in PE resulted in an increase of 10861

o Lesedi transmitter in Durban resulted in an increase of 17883 listeners

o Umhlobo Wenene FM in the Eastern Cape – additional 671 232 listeners

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Investment year continued…

Capacity Building

• The year of organisational Renewal for Total Citizen Empowerment

• Investment in PBS Radio drama productions studios

• Local content (both Radio & TV)

• Big investment into:– News gathering and News programming– Building Human Resources capacity – Marketing PBS radio brands – Quality of programming (educational/entertainment/FIFA 2010 +

2014 rights)

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Cluster Highlights

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People – the cornerstone of SABC

• More than R1b invested in people and people related areas

• Empowerment through learning and development

• Development of a totally new skills profile for SABC and country

• Partnership with tertiary institutions (i.e. NEMISA)

• Employee wellness central to people centered plan

• Voted most gender empowered organisation

• Voted the employer of first choice by South African graduates

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People – the cornerstone of SABC continued…

• Developed strategic partnerships with organised labour

• SABC academy in the pipeline

• Revitalisation of recruitment & retention strategy (hot skills)

• Climate survey completed – recommendations being implemented

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People- give life to the mandate of SABC

• Had extensive conversations with all levels of stakeholders

• Implemented multi-pronged communication strategy process internally and externally

• Championed the birth of AUB - strategically positioned to meet new sector demands

• Led Continental drive for broadcasting legacy for 2010

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Operations

Investment in Content – R543m

Our content which inculcates social consciousness and multi-voice delivered the following:-

• SABC1 and SABC 2 took first and second positions respectively in the Sunday Times/Markinor viewer ship survey. SABC 3 came 4th.

• Investment in sign language and sub-titling to expand access to all South Africans including the deaf

• Investment in the world class production of the 2006 Soccer World Cup (Germany)

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Operations continued…• A total of 17 million listeners daily remain loyal to PBS radio

stations

• 6 PBS stations remain part of the national top ten stations (i.e.. audience figures and Sunday Times Markinor)

• 5fm is the most integrated contemporary station unifying the SA youth

• Metro Fm undertook a trip to 13 African countries (I am an African Tour)

• PBS and PCS – exceeded mandate delivery as per ICASA quotas

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Operations continued…Content Enterprises

• Investment in quality content in a multi-media and multi-platform environment

o Rollout of the Warner bros content dealo Secured rights for Tsotsi (Academy Award Winner)o Strategic deals concluded with NBC/Universal and MGMo 2010 and 2014 Gatekeeper Broadcast Rights – FIFA World Cup o Acquisition of the IOC rights (2008/2012/2016)

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Local v foreign content

0100000200000300000400000500000600000700000800000900000

2003 2004 2005 2006 2007

Years

R000's Foreign purchases

Local commissioning

Internal production

Local vs Foreign Content

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News and Current Affairs

• Massive investment in increased news and current affairs programmes and news infrastructure

• 24 million or 80% South Africans adults choose SABC as primary source of News

• SABC News offering enjoyed 93% credibility rating and 94% “freshness ratings”

• Launch of bureaus on the continent in line with corporate goal supporting NEPAD (have Kinshasa, DRC and UN and Brussels)

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News and Current Affairs continued…

• Launch 24 hour news channel on Vivid – an overnight news feed on SABC3

• News on new media platforms

• Big stories covered – DRC elections, 50 years of Independence of Ghana

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Technology

• Investment in technology was a third of our operating cost (R500m)

• Mordernising organisation by installing the best technology e.g. HD Vans, ERP

• Innovative programming delivery methods.

• Ensuring that all internal citizens have access to technology.

• Considered strategic options on how technology can help the SABC to deliver the mandate and increase revenue generation for the organisation.

• Improvement in Management Information Systems.

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Governance

• Consolidated KPI for all areas of business

• Internal Audit part of Governance Cluster

• Solid Risk plan developed with emphasis on prevention, detection and reporting of risks

• Employed new executives responsible for Strategy and Risk, and Procurement

• Investment in capacitating regions continuing

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Other success stories and accolades

• People Cluster – Wellness project and salary negotiations, performance management and the successful launch of the sexual harassment policy.

• Stakeholder management and international affairs – improved relations with stakeholders locally and globally especially on the African continent

• Concluded MOUs with different International Broadcasters

• SABC consistently led an International debate on role of public service broadcasting (e.g. CBA Conference in the Bahamas – Theme: Empowering the Citizen)

• SABC hosting Input 2008

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Awards:SABC Programmes won numerous awards

In the year under review the SABC won more than 80 Local and International Awards.

•Magic Cellar (animation) 40 different international awards

•Different dramas commissioned by the SABC won 14 different awards.

•SABC Kids News - UNICEF Award

•Entertainment programmes won 7 different awards.

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Awards continued…

• Factual - 7 awards.

• Religion - 4 awards (1 international award for Issues of Faith).

• Technology won 7 different awards

• SAFTA Awards – 28 awards

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Accolades - Radio

• PBS Radio and staff got 38 different awards ranging from best economic programming to excellence in nation building content

• PCS Radio got 9 awards ranging best African content to best DJ’s / Radio personalities

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CSI initiatives:Improving lives of citizens

Increased investment in CSI

• SABC Foundation established – 18 students awarded bursaries

• Child Headed Household project – Partnership with ABSA and others

• Community Builder of the year – 12th year of partnership

• Mass Choir – 19th anniversary

• Airtime value of R 11m for PSA’s (Health, Crime, HIV/AIDS messages)

• HIV AIDS initiatives – on air and awareness campaigns (ABMP)

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Outlook• Funding model and Funding Mix

• 2010 Readiness

• DTT

• Niche channels / Pay TV Strategy

• Public Value and its measurement

• Green Revolution initiatives (unity - growth - development)– Culture– Social Development– Empowerment

• Heartlines series - values

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Conclusion

‘Our success should no longer be measured solely on the basis of our financial performance. Important as this is as a barometer of efficient management, it is our delivery against the freedoms enshrined in the Constitution, the requirements of the Broadcasting Charter and our delivery on our Corporate Goals and strategy that show our true performance’

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THANK YOU

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Presentation by the CFO of the SABC

Robin Nicholson

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Overview

• 2006/7 has been a year of investment for the SABC. The focus of this investments has been guided by our strategic direction and emphasised content, people and technology. This was supported by investment in infrastructure and support services. This investment theme has pervaded every element of the business and has seen a significant step up in the levels of spend. This is likely to continue in the years to come.

• To support the investments we have revised the funding model of the SABC and while it remains biased to wards the commercial revenue sources significant sacrifices in revenue were made in the last year including significant schedule disruption arising from the revised licence conditions.

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Overview continued…

• Public funding softened in the year as licence income came under pressure from rising costs, the exclusion of some windfall gains in the prior year and no licence fee increase in the last 4 years.

• The support form government for the Technology renewal programme provided the base for continued spend on new technologies including the Digital HD OB van and several other digital projects. These included several new Radio facility upgrades to support enhanced mandate delivery.

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INCOME STATEMENT – SABC Ltd

Summary Consolidated Income Statement - SABC Ltd

Actuals Actuals Actuals Actuals Actuals

2003 2004 2005 2006 2007

R'm R'm R'm R'm R'm

Operating Income 2 452 2 712 3 420 3 970 4 314

Operating Expenditure 2 652 2 731 3 147 3 455 4 103

EBIT ( 200) ( 19) 273 515 211

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REVENUE ANALYSIS

Funding the SABC

Actuals Actuals Actuals Actuals Actuals

2003 2004 2005 2006 2007

R'm R'm R'm R'm R'm

Operating Income (R'm)

Commercial 1 898 2 128 2 670 3 054 3 297

TV Licence Fees 361 395 568 739 760

Other Revenue and Other Income 129 113 133 127 173

Government Grants 64 76 49 50 84

Per Group Financial Statements 2 452 2 712 3 420 3 970 4 314

Expressed as a % Total Revenue

Commercial 77% 78% 78% 77% 76%

TV Licence Fees 15% 15% 17% 19% 18%

Other Income 5% 4% 4% 3% 4%

Government Grants 3% 3% 1% 1% 2%

Total % 100% 100% 100% 100% 100%

% growth year on year 7% 11% 26% 16% 9%

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COST ANALYSIS

Consolidated Act 02-03 Act 03-04 Act 04-05 Act 05-06 Act 06-07

Details R'000 R'000 R'000 R'000 R'000

Foreign 195,700 170,179 152,630 132,362 130,230

Overnight (foreign News etc) 20,816 2,578 2,825 2,246 14,939

Sub-Total External - Foreign 216,516 172,757 159,359 134,608 145,169

External Commissioning 390,467 401,242 437,119 529,603 559,569

Overnight (local News etc) 6,654 8,560 8,690 5,905 10,524

SABC Africa 4,617 5,226 6,531

Sub-Total External - Local 401,738 415,028 452,340 535,508 570,093

Facilities usage for external production 36,613 47,721 51,875 56,828 39,981

News (excluding foreign News) 221,016 259,777 266,831 330,211 215,502

Content Hub - - - 22,559 44,528

Education * - - 59,391 49,860

Religion 15,416 23,455 30,187 21,607 31,497

Sport 313,516 291,257 322,613 309,901 474,189

Sub-Total I nternal 586,561 622,210 671,506 800,497 855,557

Total = I ncome Statement (P&B) 1,204,815 1,209,995 1,283,205 1,470,613 1,570,819

Consolidated Content (Internal/External)

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Forward looking statements

• The SABC anticipates that it will remain reliant on significant revenue generated from internal sources for the next few years as the new funding models are developed and implemented. This despite an increase in competition coming from new DTH platforms, DTT multiplexes and other new media platforms including cellular and DVBH.

• This environment will also compel the SABC to compete more aggressively for talent and rights. A more efficient and effective SABC will be required to provide the services that we anticipate will be provided by the SABC to these platforms. Continued investments in production and information technologies will facilitate this growth but a more concerted focus on implementation of strategy will be required. This will be facilitated by 2010 but this too will require investment.

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Forward looking statements

• The regional services and dedicated News and Sports channels will provide significant new opportunities for production houses and SABC staff in the content and News areas of the business as well as in production and distribution technology segments of the Corporation. This will also require more and sustained investment form the SABC.

• While we have established a sound financial platform for the SABC the new and even more challenging environment will necessitate a radical rethink of the business models and funding mechanisms of the SABC These models must also consider the other competitors in the media market in particular new and emerging media players.

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THANK YOU