The SABC’s loss-making streak shows no sign of ending with the embattled public broadcaster reporting a R511m loss for the 2019/2020 financial year.
The SABC has been blasted by the auditor-general for incurring irregular expenditure of at least R5.4bn, which led to the broadcaster being slapped with a qualified audit opinion for the second year running. It received a disclaimer in the 2017/2018 financial year, the worst possible audit outcome.
The SABC, which remains one of the main sources of news and commentary for many South Africans, is facing acute financial difficulties and resolved last week to retrench staff despite objections from MPs, the government and labour. The retrenchments will affect 400 workers. The broadcaster has a staggering wage bill of more than R3bn a year for its 3,000 permanent employees. It received a R3.2bn bailout from the government late in 2019, which it used to pay off most of its debt and invest in content.
Workers embarked on a silent protest on Monday, arguing that the restructuring plan was imposed by management through a procedurally unfair and unjust process.
In the SABC’s annual report tabled in parliament at the weekend, the late auditor-general Kimi Makwetu said the irregular expenditure incurred was the result of payments made in contravention of supply chain management legislation and regulations. The SABC did not implement adequate internal control systems to identify and record all instances of irregular expenditure in either the current or prior year, Makwetu said.
The full extent of the misstatement identified could not be quantified and he was unable to confirm the amount of irregular expenditure to be disclosed by alternative means, he stated. “Consequently, I was unable to determine whether any further adjustments were necessary to the irregular expenditure disclosure stated [almost R5.4bn].”
In the annual report, SABC chair Bongumusa Makhathini said the vulnerability of the broadcaster to its current funding model was evident in its revenue performance during the year under review. While the SABC recorded a R511m loss for the year, this was 20% better than the budgeted loss. The SABC ended the 2018/2019 financial year with an audited loss of R482m. Losses had decreased over the past few years from R1bn in 2016/2017 to R744m in 2017/2018.
Makhathini said the SABC is now in the second phase of developing long-term sustainability as it expands its revenue generation base, cuts costs, embeds a turnaround and implements a new operating model.
“The turnaround plan and efforts to restructure the public broadcaster are necessary but not sufficient conditions for the sustainability of the public broadcaster,” Makhathini said.
One of the crippling cost drivers is the transmission fees charged by state signal distributor Sentech. These were the SABC’s second-biggest cost driver after salaries and, over the past five years, Sentech had cost the public broadcaster more than R3.2bn.
“Reducing transmission costs is therefore a mission critical goal of the turnaround plan and discussions are continuing [with the signal distributor and the government],” he said.
SABC CEO Madoda Mxakwe said the operating model continues to present challenges relating to disproportionate employee compensation costs, high signal distribution costs and a lack of required skills for a digitally enabled broadcasting environment.
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