SABC in trouble
As the political infighting between the SABC’s board and its executive management gets nastier, the broadcaster’s financial health has once again come under the spotlight.
The SABC’s financial year-end is March, and it is due to release these results soon. In light of allegations of mismanagement by board chair Khanyisile Mkhonza, there’s much expectation about what these will look like.
If Mkhonza’s allegations that suspended CEO Dali Mpofu was losing the corporation money are anything to go by, the results could confirm the SABC’s diminishing financial power under Mpofu’s leadership.
For the year to March 2007, the SABC reported a huge 52% drop in profits from R383m to R183m. The problem is that even though revenue climbed 8%, expenses shot up 19%, a trend many analysts worry might have continued in financial 2007/2008.
Most notable was a 42% increase in marketing costs, to R254m.
The SABC also upped its expenditure on consulting fees by 186%, causing these costs to climb from R47m to R135m.
Expenditure that seems justified is its investment in broadcast technology and infrastructure, with the 2010 soccer World Cup only two years away. Before his dismissal, Mpofu was set to unveil a R2bn deficit on the switch to digital terrestrial television which would require “significant financial re-engineering”.
The SABC intends to spend R4,1bn over the next three years on government initiatives. These include R979m on new channels, R820m on World Cup rights and R43m on next year’s elections.
What makes the cost escalation more alarming is that a closer look at the financial report reveals an absence of tight controls.
Already, during financial 2006/2007, the SABC lost R54,3m to “fruitless and wasteful expenditure”, according to the auditor-general. Of this amount, it was able to recover a mere R6m, and it lost R11m to “criminal action”.
The broadcaster is also facing several lawsuits. The largest of these relates to a R377m dispute with the Public Investment Corp (PIC), the state-owned asset manager, regarding a cancelled lease agreement for which the PIC feels it is owed money. The SABC has asked the department of communications to intervene in the dispute.
For Mpofu, another set of bad results would lend credence to Mkhonza’s claims that the SABC is in danger of an operational and financial crisis.
Mpofu is already being widely castigated for losing the sought-after Premier Soccer League broadcast rights to SuperSport, and has spent millions in legal costs in an effort to win them back.
Since then, the corporation has also lost the lucrative International Cricket Council 2011 World Cup rights, adding to a wide list of sports broadcast rights it has failed to secure in competition with SuperSport. These include those for local and Springbok rugby, domestic cricket, UK soccer and Formula 1 racing.
As has become customary in the public sector, the SABC’s poor financial performance is not mirrored in Mpofu’s salary, which has increased sharply between August 2005, when he joined, and March last year.
In 2005/2006, his basic salary was R1,1m, but this has grown to R1,8m. Including a bonus of R1,45m, Mpofu earned R3,8m last year.
Back at Auckland Park, the stand-off between the board and Mpofu has reached new levels following the latter’s decision to contest his suspension in court.
Communications minister Ivy Matsepe-Casaburri said last week the board’s reasons for suspending Mpofu centred on “issues of the budget, sports rights, staff problems at executive level and the impact that all these have on the business of the SABC”. She said she was awaiting Mpofu’s response.
The fate of the SABC board also hangs in the balance, following parliament’s communication portfolio committee’s vote of no confidence two weeks ago.
The challenge for the ANC in parliament would be to unify its caucus and ensure that, should the matter come to a vote, the party votes in favour.
ANC MP Barbara Hogan, who was one of the abstaining voters when the board was originally appointed, says her vote will depend on the argument put before her when the hearings take place.
Suzanne Vos, IFP MP and member of the communications committee, who voted against the board, says that though there are problems, the ANC is abusing parliament to achieve political goals.
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