In just three years the SABC went from a profit of R383-million to a
projected R1-billion loss this year. And a Mail & Guardian analysis
of the broadcaster's financials for the past four years shows that the
rot set in during former chief executive Dali Mpofu's reign, writes Qudsiya karrim in the Mail & Guardian.
How a profitable entity could, in a matter of a few years, be turned into a financial basket case has emerged as the leading question in the fog of controversies generated of late by the SABC's woes.
The broadcaster's financial records show clearly that Mpofu should carry the can. Where his predecessor Peter Matlare ran a tight fiscal ship, on Mpofu's watch — and despite the best efforts of some board members — costs spiralled out of control, even while austerity measures were supposed to have been implemented.
Mpofu appears to have been singularly unqualified for the job of running an enterprise with a R4-billion turnover. Although he had a string of directorships, he had no experience in running any large media organisation. His work record includes a disastrous tenure as chairperson of the Boxing South Africa board and being fired from the ANC.
Mpofu told the M&G that it was "absolute nonsense" that he is the cause of the SABC's woes. "The loss in revenue is the reason the SABC is in this current mess," he said. "It has nothing to do with increased costs."
But an analysis of the SABC's revenues reveals otherwise. Revenues have grown year after year, including in the current recessionary conditions. Although media houses generally have seen revenues decline as advertising expenditure has dried up, the SABC has continued to increase its revenues.
Revenue grew from R3.9-billion four years ago to R4.7-billion in 2007-08. The recession slowed SABC's revenue growth to R4.8-billion in its last financial year.
Cost increases, meanwhile, have been stratospheric, increasing 63% from R3.5-billion in 2005-06 — the year Mpofu took over — to R5.7-billion in 2008-09. In the last year alone costs jumped by almost R1-billion.
Uncontrolled spending between 2006 and 2009 has encumbered the SABC with a R784-million deficit projected for this year, a nonexistent board, striking staff members and a R2-billion bail-out request to the government that looks increasingly unlikely to be granted.
Key contributors to the SABC's costs have been employee compensation and benefits; consulting fees; and amortisation of programme, film and sports rights.
The SABC has inflated its staff, increased salaries and provided generous housing and vehicle allowances since 2005. Despite warnings from the board to cut back on hiring, management continued recruiting. Permanent staff increased from 3185 in 2005 to 4098 in March 2009. Employee compensation and benefit costs rose from R987.8-million in 2005-06 to R1.7-billion in 2008-09. And despite the recessionary climate and a negative cash flow last year, the SABC generously dished out R23-million in staff bonuses.
It has also spent recklessly on consulting fees. Payments to consultants increased by 186% from R47-million in 2005-06 to R135-million in 2006-07. These payments increased by a further 68% to R226-million in 2007-08. Consulting fees for 2008-09 amounted to R335-million.
Since 2006 the broadcaster has spent more than R1-billion each year on the amortisation of programme, film and sports rights. This increased to R1.6-billion in the last financial year.
Coupled with escalating costs is evidence of overspending and wasteful expenditure. In 2007-08 the SABC squandered R76-million on procuring programmes that were not broadcast within the licensed period. During that year, a further R40.6-million was lost through what the SABC's annual report referred to as "wasteful expenditure". No one was held accountable for these unnecessary losses.
Amid the growing financial strain at the SABC, its former news head Snuki Zikalala was given free rein to develop SABC International in 2007.
In an attempt to expand the broadcaster's global footprint he opened 12 news bureaus around the world at an estimated cost of R240-million, three of which have already shut down. A R45-million studio and annual running costs of about R60-million added to the broadcaster's cash woes. The channel has not earned any revenue, because it broadcasts on obscure satellite platforms.
Click here to read the full report, posted on mg.co.za.
