The SABC has reported a loss of more than R500 million for the 2019/2020 financial year, but its executives insist there has been a 20% improvement in performance against budget.
During a media briefing on Tuesday, the public broadcaster which received a R3.2 billion bailout from the National Treasury, said that its total revenue declined by 12% year-on-year to R5.7 billion.
The group’s CEO, Madoda Mxakwe, said the decline could be attributed primarily to a decrease in advertising spend across the industry and the delay in finalising commercial partnerships on digital platforms.
“With regard to financial performance, although the R5.7 billion revenue achieved for the year was 23% under budget, exceptional financial management saw the SABC end the year with a lower loss before interest and tax than expected [R534 million loss recorded against a projected loss before interest and tax of R639 million],” said Mxakwe.
He said that TV licence revenue had also come under pressure due to difficult economic conditions for audiences who took a financial knock because of the Covid-19 coronavirus pandemic.
The TV licence revenue declined by 18% year-on-year to R791 million due to the delayed use of debt collection agencies and this resulted in only 24% of the total licence fees billed being realised as revenue, compared to 31% for the year ended March 31 2019.
Mxakwe also said that the bailout funds from the Treasury were mainly used to pay long-standing debt to creditors, procure compelling content and acquire broadcast infrastructure.
“The delay in receiving the bailout had the unfortunate, though predictable, impact on our ability to implement key actions necessary to turn the organisation around, such as the timeous acquisition of the much-needed fresh content to attract audiences back to our platforms, and investing in aggressively marketing our existing offerings,” he said.
According to chairperson, Bongumusa Makhathini, the SABC board had vacancies in March last year and the broadcaster urgently needed a financial injection to implement a lasting and sustainable turnaround plan.
Makhathini said that a combination of unfilled vacancies and five resignations during the previous financial year had left the board with only four non-executive directors remaining.
“The SABC also faced the challenge of covering the national elections in May last year without the board being able to make decisions as to the accounting authority. Thankfully, the SABC was able to overcome these challenges and turn an important corner,” said Makhathini.
In April last year the board was freshly constituted with the addition of eight new non-executive members, therefore restoring stability to the institution.
Makhathini said the board’s central purpose was to guide the public broadcaster in fulfilling its public mandate in a self-sustaining manner and without any undue influence and interference.
“With two years left of this board’s term of office it is possible to discern three distinct phases in restoring the SABC to long-term sustainability, namely: the stabilising phase, the sustaining phase and the growth phase,” he said.
During the stabilising phase which began in 2017, he said the board and management started the tough process of dealing with legacy governance failures by implementing the recommendations of the Public Protector, the parliamentary ad hoc committee, the Special Investigating Unit, the Auditor-General, the SABC’s forensic investigations as well as the recommendations of the independent commissions into sexual harassment and political interference in the newsroom.
Makhathini also said that after years of turbulence and reputational damage it was important to fill vacancies in the top executive team, renegotiate contracts and develop a lasting turnaround that included a financial injection and fundamental legislative and regulatory reforms.
“The vulnerability of the SABC to its current funding model was evident in its revenue performance during the year under review.
Amid lacklustre economic activity and due to internal challenges, revenue collected for the year under review was R5.7 billion which was 23% under budget. While the corporation recorded a R511 million loss for the year, this was 20% better than the budgeted loss,” he said.
SABC spokesperson Mmoni Seapolelo said the corporation was encouraged by the decline in year-to-year irregular expenditure of 40%, amounting to R202 million, compared to R336 million for the year ended March 31 2019.
She said that the group’s supply chain management environment still required strengthening and action was underway to tighten the belt.
“The SABC continues to implement its turnaround plan with purpose and commitment. While the pandemic will have a significant impact on the broadcaster’s financial sustainability in the short-term, the corporation remains confident that it is on track to deliver on its objectives,” said Seapolelo.