SABC spending spree causes concern
THE SABC’s latest annual report makes no mention of the broadcaster’s current crises, including the suspension of its CEO, Dali Mpofu, and the moves by Parliament to remove the board due to political infighting.
In its results for the year to March, the broadcaster, which received a qualified audit, reported a 75% increase in profit. But this conceals serious cash-flow problems, with the group spending more than it makes.
Cash generated from operations was a negative R34m, from a positive R188m in the previous year. Profit was R321m, boosted by the inclusion of a pension fund surplus. Had the surplus been excluded, the operating profit would be R43m. Last year, the SABC made a R182m profit.
Revenue increased 9% to R4,7bn, helped by a 14% increase in advertising to R3,1bn.
Jane Duncan, director of the Freedom of Expression Institute, says a government bail-out could become necessary, but it will be difficult to pull off given the standoff between the African National Congress and the SABC.
“They are clearly not generating enough income from their operations to keep the ship afloat properly, and next year’s results are likely to be worse,” she says.
The migration to digital terrestrial TV — a key government policy — could also be jeopardised if further funding from the government is not forthcoming.
This is in part because digital terrestrial TV will allow additional channels. If the additional channels feature new content, rather than reruns, programming costs will increase, says the SABC’s chief financial officer, Robin Nicholson.
The SABC spent R257m on broadcast technology, with R132m received as a government grant for technology. Employee costs — which include contributions to freelancers — increased 38% to R1,5bn, an increase that Nicholson describes as “problematic”.
Content costs also increased sharply. Programme, film and sports rights and broadcast costs rose 13,9% to R1,9bn, including amortisation and impairment.
But auditors KPMG, Kwinana & Associates and Ngubane & Co say there is insufficient audit evidence to substantiate these costs. Nicholson says this is because of a known weakness in an out-of-date accounting package, and it will be resolved.
The broadcaster has also incurred R40m in wasteful expenditure, as defined by the Public Finance Management Act, and Nicholson says instances of noncompliance with the act are being investigated.
Duncan says she is concerned about the violations of the act, because they point to a lack of internal controls.
“Wasteful expenditure will make it extremely difficult, if not impossible, for the SABC to motivate for public funding.”
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