SABC Presentation to the Select Committee on Labour and Public

Enterprises

07 September 2011

Contents

SABC Journey of Turnaround1

Objectives and Context2

Points for Discussion

Key Themes3

Phases of Turnaround4

Governance Structure of Turnaround5

Opening RemarksThe Turnaround Strategy is a strategy developed by the SABC to ensure its recovery, stability, and sustainability to enable the organisation to deliver upon its mandate.

The SABC is operating in an increasingly competitive environment that is evolving with the adoption of digital technologies and a new creative economy.

The SABC needs to adapt, change and respond accordingly to these market externalities.

The Turnaround Strategy is aimed at returning the organisation to a reputable public service broadcaster that all of its stakeholders can be proud of.

The key objective is to ensure the SABC’s financial viability, strengthen its governance controls and meet its audience requirements through driving public value.

Whilst strides have been made in the implementation of initiatives that resulted in the stabilisation of the organisation, this fiscal’s focus on rebuilding and realigning operating business models will see the organisation addressing its challenges.

The SABC Provinces are key and central to the Turnaround Strategy of the Organisation

Main objectives in this Turnaround

The objective of SABC’s turn-around strategy is to enable the organisation to achieve its vision

Short term priority To improve free cash flow, independent of bail-outs and government guarantees

Longer term priority

Shaping the SABC for success in the future digital media environment in order to... “deliver distinctive and compelling programming through sound business practices”

“To be the Pulse of Africa’s Creative Spirit”

Context

• The terms of the Government Guarantee (GG)

• The Shareholder compact (currently signed)

• The approved 2010/11 corporate plan

• Audit General report for the previous financial year

• Undertakings of the Board of Directors

The SABC finalised its turnaround strategy, which was approved by the Board, and presented to the Parliamentary Portfolio Committee on Communications. The turnaround strategy included the financial performance recovery plan. In preparing the strategy the SABC took cognisance of the following:

In preparing this turnaround strategy the SABC has assumed that it will

a) implement DTT and switch-over from analogue terrestrial broadcasting by 2015 and

b) migrate its operations from the current analogue operation to an integrated digital media network, providing a bouquet of digital channels and services to a variety of digital platforms including DTT, satellite and on-line.

Internal information

Regulatory and legal environment

Other considerations

SABC Turnaround Strategy drives recovery, stability and Sustainability.

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SABC’s leadership charted a Turnaround Strategy aimed at restoring the broadcaster’s performance and ensuring it delivers on its national mandate.

Phase 3: Sustainability

Sustain and grow the performance of the “transformed” SABC by changing the fundamental proposition, focus and purpose while implementing and executing it in a professional and sustainable way.

Phase 1: Recovery

Clean-up the business, prioritising those areas identified in the audit reports and investigations to ensure that the SABC resumes operations within government guidelines and regulations

Phase 2: Stability

Stabilise the SABC by putting in place the execution foundations to help ensure overall effectiveness for the long term health of the SABC, related to:

• Core operations;

• Organisation structures and people;

• Funding strategies; and,

• Process architectures and management information systems.

Operational ExcellenceMoving out of crisis and into the black.Building solid foundations for sustainable

growth

People Process Technology

Key themes of TurnaroundThe SABC structured its turnaround strategy within six key themes, each supported by people, process and technology changes as appropriate

Revise and adopt corporate governance structure and procedures to ensure clear accountabilities and defined authority for both the Board and company Executives, swift and transparent appointment procedures for senior vacancies, and to build risk management into the core of the governance culture

Leadership and governance

The SABC is addressing the financial management and control issues through a core focus on cash generating activities. These include a balance sheet restructuring; strict P&L control; tight working capital management and better financial and management reporting

Financial management & controls

Ensuring that an enabling structure and associated people related controls are in place to support the business strategy and mandate requirements of the SABC

Reorganisation & people alignment

To enable the organisation by developing critical skills and capabilities that can adapt to the changing needs of the organisation, enhancing productivity, and instilling a culture of good people management processes

Human capital development

Create stronger commercial integration, management, incentives and controls between channels, distribution strategy, content, procurement and sales, to improve the return on investment made on content acquisition and commissions

Improving return on programming operations

The SABC’s credibility and reputation can be rebuilt by implementing a corporate brand marketing programme, improving the quality and credibility of SABC’s news programming

Restoring credibility and brand

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The Turnaround is delivering value to the SABC and enhancing its National Footprint and thereby fulfilling the Public Mandate

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Conclusion

• FIFA 2010 Soccer World Cup• Delivery on language and local content mandate• Celebration of 150 years of the arrival of Indians to South Africa• India/South Africa cricket tournament• Cricket World Cup• Coverage of Local Government Elections – a Great Success!• Re-launched digital media platforms• SABC is also an award winning broadcaster, collecting the most awards at the 2010 SAFTA Awards as

well receiving a number of international awards

Broadcasting Successes

• Briefing to all political parties on Local Government Elections • Consultations with The Ministry of Sport & Recreation and the Portfolio Committee on Sport as well as

engagement with sporting bodies on the development of a new sport strategy for the SABC• Commercial relationships stabilised• International content supplier relationships stabilised and local content relationships improving• Executive Meetings to be held in the Provinces• Board Visits in the Provinces

Stakeholders

• Turnaround Strategy approved, Recovery achieved, now in Stabilisation phase• Plan of action established to address the recommendations contained in the AG Report• The Board has adopted a set of Corporate Pillars that informs the SABC’s Strategic Focus areas and

operational plans• Revised operating model and structure developed and being considered by the Board• Performance contracts signed with all Executives for the 2012 fiscal

Strategic Goals Achieved