SABC money troubles hit music industry

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The SABC needs billions of rands by March in order to pay its staff and other expenses.
The SABC needs billions of rands by March in order to pay its staff and other expenses.

The SABC stopped paying royalties for music used on its radio and television stations last year, making the local music industry the latest victim of the public broadcaster’s financial implosion.

The latest annual report of the Southern African Music Rights Organisation (Samro), released in December, has revealed that the SABC owed it R55.5 million in royalties at the end of June last year.

If the debt is not paid this month, the money will not be available for distribution of royalties due to music publishers and composers in February and March, Samro told City Press.

Neither the SABC nor Samro would tell City Press whether the broadcaster had managed to pay royalties after June last year or what its current debt to Samro is.

“The SABC’s dire financial situation is a matter of public record. We are in ongoing discussions with our service providers and suppliers, including Samro, to negotiate payment terms,” said the broadcaster’s spokesperson, Neo Momodu.

Samro is South Africa’s only collection organisation for musical performance rights and pays out in the region of R300 million in royalties to publishers and composers every year.

This is after administration expenses are subtracted from the R470 million paid to Samro annually by licensees like the SABC.

Non-payment by the SABC would blow a massive hole into the pool of royalties paid to the music industry.

Radio and television accounts for 67% of all Samro income and the SABC accounts for 33% of that.

That means non-payment by the SABC will cost Samro 22% of its entire income.

Based on Samro’s financial statements of last year, the SABC’s royalty payments for music played on its stations comes to roughly R100 million.

OVERSTATED FLOOR SPACE

Samro, too, has been dogged by controversy over a number of apparently foolish investments made with members’ money.

In the new annual report a failed attempt to set up a collection agency in the United Arab Emirates has been fully written off at a cost of R48 million.

A stranger write-down was the revaluation of the organisation’s building in Johannesburg’s Braamfontein suburb – from R65 million down to R4 million.

The purchase of the large building and nearby parking lot in 2008 has come under scrutiny because Samro bought them for R56 million from a property entrepreneur called Mark Stevens, who had paid only R15 million for the same property a year earlier.

In the annual report, Samro explains that it had to reduce the value of the property due to a “calculation error made in the floor space”, as well an error related to the parking space. The error was made by an independent valuer, which has been replaced, said Samro.

The new valuation shows Samro House is now worth less than what Samro paid for it a decade ago, despite significant capital expenditure on it over the past few years.

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