Running on empty: SABC is down to reserves to fund operations

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Running on empty: SABC is down to reserves to fund operations

Bekezela Phakathi | 2017-03-16 13:51:33.0

Kganyago said the SABC had cautioned on numerous occasions that the contribution from the government (2%) to fund the public broadcasting mandate was miniscule in comparison to the cost. File photo

Image by: Sowetan

The SABC has confirmed that it is facing a financial crisis that has forced it to fund its operations from its dwindling reserves.

“The SABC’s major sources of revenue are advertising revenue and sponsorships (85%) and TV licenses (12%)‚ and we can confirm that these revenue streams are under pressure with the SABC now funding its activities from its reserves‚” SABC spokesperson Kaizer Kganyago said on Thursday.

This admission appears to contradict CEO James Aguma’s pronouncements in Parliament in February that the broadcaster was not in imminent danger‚ as it remained solvent because its assets exceeded its liabilities.

Reports emerged last week that the SABC’s treasurer had warned its management that the broadcaster would soon run out of cash unless it raised new funding urgently.

A confidential treasury risk committee report up to January 31 2017 indicated that cash reserves plunged to R174 million in December — down from more than R1 billion in 2015.

Kganyago said the utterances made by various individuals and organisations at the recently concluded parliamentary inquiry into the public broadcaster’s affairs‚ negatively portrayed the corporation‚ and that that had had an adverse effect on revenue generation‚ with fewer people paying TV licences.

There was also a significant drop in advertising spend‚ and the withdrawal of strategic partners who were engaged to finance additional channels that the public broadcaster intended to launch in preparation for digital terrestrial television.

“The former chief operating officer‚ [Hlaudi] Motsoeneng‚ was at an advanced stage of discussions with funders to generate additional revenue from strategic partnerships with provincial governments and the private sector‚ to fund these additional channels‚” Kganyago said.

“This project has been negatively compromised from October 2016‚ with these planned revenues not being realised. The sustainability of the current SABC News and Encore channels has also been jeopardised‚” he said.

Kganyago said the SABC had cautioned on numerous occasions that the contribution from the government (2%) to fund the public broadcasting mandate was miniscule in comparison to the cost.

“As a result‚ the SABC cautioned that the collapse of its finances was imminent if due care was not exercised in dealing with the confidentiality of contracts with its strategic partners.

These continuous attacks on the SABC‚ affects its business relations with its partners‚ which could unfortunately lead to the retrenchment of staff members‚” said Kganyago. “Despite these challenges‚ the SABC will meet its obligations and continue to discharge its public service mandate of educating‚ entertaining and informing South Africans and other worldwide audiences.”

The SABC‚ which continues to hog the headlines for all the wrong reasons‚ was recently grilled by Parliament’s finance watchdog after it incurred irregular expenditure amounting to R5.1 billion‚ and fruitless and wasteful expenditure totalling R92 million.

In 2016‚ the auditor-general flagged the irregular expenditure “identified in the current and previous year”‚ and highlighted that this had not been investigated to determine who was liable.

The public broadcaster recorded a loss of R411 million in the 2015-16 financial year‚ up from R395 million the previous year.

It looks set for another loss in the current financial year‚ after recording a net loss of R256 million for the second quarter (July-September 2016).

– TMG Digital/BusinessLIVE



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