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SABC in desperate financial straits

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The SABC's financial situation is becoming more dire by the day.

“It could be summarised in the fact that for a R6bn to R7bn organisation‚ we anticipate about R26m in the bank account at the end of August‚ really a situation that is unsustainable‚” the broadcaster's newly appointed chief financial officer Yolande van Biljon dramatically told MPs on Tuesday morning.

The SABC board told the National Assembly's communications committee that it was unable to meet some of its monthly financial obligations. As at August 15‚ the SABC owed its creditors R694-million with further accruals of R475m. The public broadcaster will have R26 million in its bank account at the end of August.

Board chairperson Bongumusa Makhathini said they were prioritising salaries and paying freelancers but struggling to meet a lot of their monthly financial obligations.

Newly appointed group chief executive officer Madoda Mxakwe said the broadcaster needed an intervention and had been “engaging with the National Treasury” to ensure that they get the funding.

“Indeed if you look at our business model and financial model we are able to generate revenue but because of all the historical issues that we face we are not able to operate a proper business as such‚” added Mxakwe.

On the topical issue of sports broadcasting rights‚ the SABC management revealed that it was still in talks with the PSL hoping to find a solution by September 5.

Giving a background on the matter‚ SABC chief operations officer Chris Maroleng explained that the SABC and PSL had entered into a five-year agreement for PSL radio rights for the 2012/13 to 2016/17 soccer seasons. The agreement had provided inter alia for rights granted to the SABC by PSL and in return the SABC would allow promo airtime to the PSL to promote the matches.

“During the past five years‚ the PSL radio rights with the SABC comprise of the SABC having to pay all the costs to cover the PSL games on the radio. This included assigning journalists to cover all teams and fixtures‚ produce magazine shows for over 10 radio stations as well as promotional airtime to PSL and their sponsors‚” explained Maroleng.

While he would not go into details about the negotiations with the PSL‚ which will continue later this week‚ Maroleng said the SABC remained uncomfortable about renewing the contract on exactly the same terms as the expired contract.

This was because the airtime provided to the PSL was not quantified and the business case for the renewal did not reflect the accumulative values over the five years including the airtime exposure granted to the PSL.

Maroleng also revealed that the deal brokered by communications and sports ministers was for the PSL and SABC to “find a mutually agreeable way forward” within a month [by September 5‚ 2018] and that in the interim the SABC would broadcast the matches on radio.

He said without any changes to sports rights regulations‚ the SABC would require additional funds to deliver on a number of events of national interest and special events which were mandatory sport events as well as events that were deemed as public interest. The required funding would be to assist in the broadcast of special events that had been planned for the current fiscal as well as the next two financial years‚ which were mandatory and contractual commitments.

Without the funding for sports broadcasting‚ the SABC would not be able to broadcast events like SA Sports Awards and the Macufe Cup.

Maroleng warned that once sports rights were lost‚ it would be difficult to acquire them in future from federations like PSL and Safa.

He also feared that there would be an outcry from the public and stakeholders for not broadcasting sport and a decline in sponsorship and classical advertising revenue as well as TV licence revenue.

Maroleng decried the sports rights regulations which were passed in 2010‚ saying not only did the SABC have a very onerous and unfunded public mandate regarding the broadcasting of national sporting events‚ but that those regulations had failed to protect the broadcaster.

Now it wants the Independent Communications Authority of SA [Icasa] to review the sports broadcasting regulations and specifically review the list of national sporting events including the sub-licensing condition and the pricing of sports rights to address anti-competitive concerns.

They will also ask Icasa for a review of the bidding process for subsidiary rights to specify that the process of determining the subsidiary rights be fair and sets criteria on which fairness would be judged and for the implementation of anti-hoarding provisions.

Maroleng explained that sports rights were fundamental to the SABC executing its mandate as a public broadcaster and that it was required to meet the Icasa regulations which‚ among other things‚ stipulated that there were 22 sporting events which were of national interest and which should be aired by the SABC.

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