The SABC is out of cash and is sitting on a deficit of almost R800-million, the Mail & Guardian has confirmed.
The broadcaster is seeking a bail-out of R1.5-billion, but this will not be funded by the fiscus and is instead likely to take the form of government support for commercial borrowing.
”Cash flow has been aggravated by rights payments [the costs of programme purchases] and slow-paying debtors,” said Robin Nicholson, the SABC’s chief financial officer, adding that winter generally marks a cyclical downturn for the SABC.
This year there is no cash cushion or working capital, so independent producers have not been paid, workers will not receive annual increases and various other debtors complain about not being paid.
Government is the biggest advertiser on the SABC and its slow payment systems are a key factor in the crisis.
In addition employees are up in arms as the broadcaster failed to implement the annual contractual increase on April 1 and to inform the majority union, Bemawu. This week Bemawu polled its members on the option to bring an interdict against the SABC, though Nicholson said the three-year wage agreement has an opt-out clause in a high-inflation environment.
SABC News International, the sprawling empire of former editor-in-chief Snuki Zikalala, has been the largest cash-drain. Three of its 12 bureaux have already been closed and more are likely to go as the board implements an austerity package.
The channel’s start-up costs were estimated by Empire magazine at R240-million for 12 bureaux and a R45-million studio, and budgeted annual running costs run at R60-million.
Now just a year old, the channel has not made one cent in revenue because it broadcasts on obscure satellite platforms. Multichoice has declined to broadcast the channel, though spokesman Musa Ndwandwe said they are in negotiation with six other African broadcasters who might be interested in carrying SABC News International.
Empire reported in March 2008 that Zikalala and his team did not have a sales strategy for SABC News International and that the channel was driven by ideological rather than commercial imperatives.
Inspired by former president Thabo Mbeki’s dictum that Africans should tell their own stories, the plan was for the SABC to fund a massive expansion of reporters across the world into geopolitically strategic locations so they could present an unbiased account of global news for African and African-American audiences.
But a core problem was that it broadcast into the ether: analysts suggest that viewership never climbed beyond a few thousand eyeballs as costs escalated. Certain bureau choices, such as Jamaica, appeared ill-conceived. Now this island haven office has been closed, as have those in Kinshasa and Washington.
Back at home, said Nicholson, audience share of the SABC’s news programmes has also dropped, leading to revenue dips around news. News and current affairs, until April 30 under the leadership of Zikalala, account for 30% of viewing time and appear to have lost audience share.
But overall, as Gordon Patterson writes in the latest issue of The Media, the SABC’s revenues did not suffer a precipitous fall as measured by advertising spend figures until the end of January: ”— there has been little reduction in adspend and, in fact, we saw an increase in television adspend.”
He said that the SABC reduced its rates too aggressively and will now need to increase them beyond what the market can absorb. Nicholson said the group executive has stopped rampant discounting by its sales teams and is ramping up customer service to protect revenues in a declining economy.
Clearly it won’t be enough to stave off the immediate crisis. ”We are in a delayed payment mode,” said Nicholson. The broadcaster is trying to pay small players in 30 days but larger production houses and other debtors have to wait for between 60 and 90 days.
The SABC is likely to seek loans of R1.5-billion on the financial markets backed by support from government. In addition, it is lobbying the South African Revenue Service for VAT exemption on TV licence payments and for a state subsidy for those South Africans who watch television and listen to the radio but who are too poor to pay the broadcaster.
Ultimately, said Nicholson, the funding model of the SABC needs to be overhauled. While it is a public broadcaster, only a tiny proportion of costs are funded by licences and the state subsidy, leaving it vulnerable to market fluctuations.
Officially in austerity mode, the SABC has promised an end to profligacy.
Some other areas to watch out for include:
- A 70% increase in the cost of consultants, from R129-million in 2007 to R220-million in 2008. At the same time permanent headcount has grown, suggesting there are two parallel sets of staff running the place.
- Matilda Gaboo, the SABC’s former head of international programme buying, spent R49-million on programmes that were never aired, according to an internal audit report and one by Cliffe Dekker Hofmeyr and Comperio Forensics. The Sunday Times reported that only 38 of 165 deals done by Gaboo had been analysed by March, suggesting the wasteful expenditure might be much higher.
- Mafika Sihlali, the SABC’s former legal officer, allegedly defrauded the broadcaster of R1.8-million.
In 2008, the year in which the SABC suffered serial management failures, the top dogs rewarded themselves with massively inflated incentive bonuses:
- Former news and current affairs boss Snuki Zikalala: R2.25-million, an increase of 46.05% a year;
- Acting chief executive Gab Mampone: R1.95-million, an increase of 230%;
- Chief people officer Phumelele Ntombela-Nzimande: R1.7-million, an increase of 59.72%;
- Acting chief operating officer Mvuzo Mbebe: R1.9-million, an increase of 30%; and
- Chief financial officer Robin Nicholson: R3.3-million, an increase of 18.4%.
— Ferial Haffajee