Pretoria - The South African Broadcasting Corporation (SABC) has fully paid its government guarantee loan granted in 2009 following its financial woes, says Communications Minister Faith Muthambi.
“During the period under review, former President Nelson Mandela passed on, and the SABC played a critical role as the host broadcaster providing feeds to both national and international broadcasters.
“The SABC fully paid up its government guarantee loan granted in 2009 following the Corporation’s financial woes,” she said.
Minister Muthambi was speaking in Parliament, where the SABC presented its third quarter expenditure reports for the 2013/2014 financial year, to the Portfolio Committee on Communications.
However, the Minister said although the public broadcaster has posted a positive performance in critical areas including finance, she said the non-performance is a symptomatic reflection of long outstanding issues which, unless comprehensively dealt with, will continue to inhibit the Corporation’s performance.
According to Minister Muthambi, during the period September 1 to December 31, 2013, the public broadcaster posted a total revenue of R2.1 billion - which is 7% higher than budget.
She said commercial revenue streams (advertising, sponsorship) for both radio and TV were the main drivers as they accounted for 80% of the revenues, while TV Licence fees revenue stream continued to struggle as only R284 million was generated during the quarter against the target of R295 million.
However, Minister Muthambi said the corporation’s expenditure during the same period was 10% higher than budget at R1 688.5 billion.
On her analysis of the SABC’s report, the Minister identified three major drivers of expenditure, starting with employee costs for both permanent and non-permanent employees of R649 million, which was not only higher than budget of R466 million, but further accounted for 38% of the total expenditure.
Revenue collection costs of R283 million was higher than budget of 248 million. The costs include mainly television licence fees collections.
“These collection costs were not accounting for 17% of the total expenditure during the quarter, but they were in effect, 14% of the total revenue collected.
“Program and film costs (excluding sports rights and production) of R220 million were lower than budget of R267 million.
“Sports rights & production increased costs of R132 million from a budget of R101 million. This represents a 30.2% increase from the previous quarter,” she said.
Red flags
While appreciating the SABC’s positive financial performance during this quarter as exhibited through the total revenue collected, the Minister said there are still some disturbing areas.
“Firstly, the Corporation’s continued reliance on commercial revenue, while this may be lauded for overcoming dependence on public funding particularly the fiscus; it exposes the public broadcaster to the vagaries of the market, instead of it focusing on delivering public value.
“We should also be concerned that TV licence fees which are a barometer to measure the link between the public broadcaster and its viewing public is under-performing. This makes our project of revising the Public Broadcaster’s business model more urgent as announced previously in our interaction with the Committee,” she said.
The Minister suggested prioritising the public broadcaster’s long outstanding funding model in consultation with the public.
“Secondly, the 38% of expenditure accounted for by employee costs during the quarter, although this is still low relative to March 2009, it is still higher, and unsustainable.
“Notwithstanding, the performance within budget by the Corporation during this quarter, is too low for a broadcaster which is struggling to recover its audience share in a competitive market.
“Content is a key driver of audiences. With the loan fully paid and the Corporation’s improved financial position, we expect the SABC to significantly increase its investment in this area in the interest of our people. In the broadcasting industry, this must be a major cost driver,” she said.
However, she said the investment cannot be implemented in isolation as it has to be part of the whole new content business model which has since been challenged by the digital environment as exposed by the ongoing impasse regarding Generations.
Analysing reports
Minister Muthambi said she is currently analysing a number of reports based on investigations that were carried out at the public broadcaster since 2009.
These reports include the Auditor-General, the Public Protector, the SIU, and Pricewaterhouse Coopers (PwC)’s Skills Audit.
She said the issues raised in the reports are too important not to be ignored as they are at the core of the smooth functioning of the SABC.
“For the department, we shall eventually be part of the process to turn the Corporation around in the interest of South Africans.”
The Minister also agreed to work with the SABC Board and Parliament, where required, on the implementation plan, further announcing that a progress report will be shared with the Committee before the end of the financial year.
Television continues to underperform as it achieved 48% against a target of 53%. Radio received a positive - with 68.6% of the 67% target.
Public service radio portfolio contributed 59% of the audience share, while the commercial services raked in a paltry 9%, despite it being the main resource drivers in the Corporation.
Television’s under-performance can be attributed to low investment in new content, the minister said, adding that unless the situation is addressed, it will persist. - SAnews.gov.za
