SABC loan paid in full says Faith Muthambi

Communications Minister Faith Muthambi says the SABC has repaid its loan to government but still needs to implement a turnaround strategy to return it to proper profitability. Image: GCIS

Muthambi was speaking in Parliament, where the SABC presented its third quarter expenditure reports for the 2013/2014 financial year, to the Portfolio Committee on Communications.

However, the Minister said although the public broadcaster has posted a positive performance in some areas including finance, she said its non-performance is a symptomatic reflection of long outstanding issues which, unless comprehensively dealt with, will continue to inhibit the Corporation's performance.

According to Muthambi, between September and December last year, the public broadcaster earned total revenue of R2.1bn - which was 7% higher than budget.

She said commercial revenue streams (mainly advertising and sponsorship) for both radio and TV were the main drivers as they accounted for 80% of the revenue, while TV licence fees continued to struggle as only R284m was generated during the quarter against the target of R295m.

However, Muthambi said the corporation's expenditure during the same period was 10% higher than budget at R1,68bn.

On her analysis of the SABC's report, the Muthambi identified three major drivers of expenditure, starting with employee costs for both permanent and non-permanent employees of R649m, which was not only higher than budget of R466m, but further accounted for 38% of the total expenditure.

Revenue collection costs of R283m was higher than budget of R248m. The costs include mainly television licence fees collections.

"Programme and film costs (excluding sports rights and production) of R220m were lower than budget of R267m.

"Sports rights and production increased from R101m to R132m representing a 30.2% increase from the previous quarter," she said.

Red flags still waving

A report on the SABC's turnaround strategy will, according to Communications Minister Faith Muthambi, be presented to Parliament before the end of the 2014 financial year. Image: Newsview

While appreciating the SABC's positive financial performance during this quarter as exhibited through the total revenue collected, Muthambi said there are still some disturbing areas.

"Firstly, the Corporation's continued reliance on commercial revenue, while this may be lauded for overcoming dependence on public funding particularly the fiscus, it exposes the public broadcaster to the vagaries of the market, instead of it focusing on delivering value.

"We should also be concerned that TV licence fees which are a barometer to measure the link between the public broadcaster and its viewing public is under-performing. This makes our project of revising the Public Broadcaster's business model more urgent," she said.

Muthambi suggested prioritising the public broadcaster's long-outstanding funding model in consultation with the public.

"Secondly, the 38% of expenditure accounted for by employee costs during the quarter, although this is still low relative to March 2009, it is still unsustainable," she said, adding that the broadcaster is struggling to recover its audience share in a competitive market.

"Content is a key driver for audiences. With the loan fully paid and the SABC's improved financial position, we expect it to significantly increase its investment in content in the interest of our people. In the broadcasting industry, this will be a major cost," she said.

However, she said the investment cannot be implemented in isolation as it has to be part of the whole new content business model which has since been challenged by the digital environment as exposed by the ongoing impasse regarding the programme Generations.

Muthambi said she is currently analysing reports dating back to 2009 from the Auditor-General, the Public Protector, the Special Investigating Unit and the Pricewaterhouse Coopers Skills Audit.

She agreed to work with the SABC Board and Parliament, where required, on the implementation plan for a turnaround of the SABC and added that a progress report will be presented to the Committee before the end of the financial year.