Africa-Press – South-Africa. The SABC, which is battling to battling to stabilise its finances, says costs associated with its public mandate – notably sports rights to broadcast the Olympics – contributed to the R201 million net loss it suffered in the 2022 financial year.
The finances of the public broadcaster are saddled with irregular expenditure flagged by the Auditor General.
“The reason we had a net loss of R201 million was largely because of the acquisition of the sports rights for the Olympics, which is an obligation of the public broadcaster,” SABC Group CEO Madoda Mxakwe said.
“We used R122 million to acquire the rights, which is about 58% of the total net loss.”
The Olympics were held in Tokyo from 23 July to 8 August 2021.
Still, Mxakwe said the R201 million loss in 2022 was an improvement from the R530 million seen in the previous year. A year ago, this represented a 4% decline in revenue compared to the previous year. At the time, Communications Minister Khumbudzo Ntshavheni ordered the board to submit a revenue improvement plan for the public broadcaster.
Spending on sporting rights appeared not to have translated to a rise in advertising revenue, however, as the company said a drop in audience share had impacted advertising revenue.
The SABC is in the process of implementing its turnaround strategy, now in place for a second year. The strategy is supported by R3.2 billion in additional recapitalisation committed by the government in 2019, and is meant to improve governance and finances.
Mxakwe said the first part of the turnaround was focused on stabilising the company, and the second stage, which the company is currently implementing, deals with business transformation to accelerate revenue growth and arresting cost drivers.
“As we move into the third phase, which is the growth phase, we want to break even and be profitable as an organisation,” said Mxakwe.
Irregular expenditure
As the SABC works to improve its finances and accountability, the entity has reduced its tally of irregular expenditure by 18% from the prior year, with the total amounting to R91 million. Fruitless and wasteful expenditure hit R11 million.
The Auditor General’s office said they could not obtain sufficient audit evidence that the irregular expenditure for previous years had been accounted for, stating that the company had not implemented adequate processes to identify and record all instances of irregular spend.
One of the payments in question related to the incorrect awarding of a security tender awarded in 2017, which was the subject of Special Investigative Unit (SIU) probe concluded in 2019. Mjayeli Security Services, the losing bidder, had allegedly been preferred on the basis of pricing, but the Board overlooked its score and instead awarded the contract to Mafoko Security.
“The likely loss results from the difference between these two bids incurred over the duration of the security contract awarded. As at 31 March 2022, R147 million has been paid on the contract,” according to the Auditor General.
Payments to the SABC’s employees increased 3% from R2.1 billion to R2.2 billion over the year, and cash reserves were forecast to decrease from R1.1 billion to R775 million at 31 March 2023, with own cash on hand at R421 million.
Staffing costs have been a bone of contention at the broadcaster in the past, culminating in a series of bruising retrenchments.
Earlier in the week, the SABC board and executives were grilled by Parliament’s portfolio committee on communications regarding apparently large salary adjustments for three executives including the broadcaster’s head of legal, group executive of sales, and group executive of human resources.
Mxakwe said management had not received increases, but that the adjustments for those three executives were attributable to a promotion, a sales commission that applied to his team, and a shift to a new leave dispensation respectively.
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