The South African Broadcasting Corporation’s (SABC) 2020/21 Annual Report was tabled in Parliament on 30 September 2021. As detailed in the Annual Report, the public broadcaster continues to deliver on its extensive public service mandate despite very challenging conditions. The year under review had an economic meltdown exacerbated by the COVID-19 pandemic.
The phenomenal resilience and unwavering commitment of the SABC employees allowed the Corporation to transition its whole organisation to virtual platforms and remote operations, with no interruption to broadcasting.
At the end of March 2021, the SABC reported a net loss of R530 million, a 4% decline compared to the previous year, but nearly 61% better performance against the revised budget. The SABC is encouraged with the year-on-year decline in net loss in the past few years.
In the prevailing economic environment, total revenue declined by 12% year-on-year to R4.97 billion. The decline can be attributed largely to the impact of COVID-19 and the continuous displacement of scheduled programmes to accommodate COVID-19 communication and awareness campaigns.
TV licence revenue declined by 0.4% year-on-year to R 788 million. This resulted in only 18% of the total licence fees billed being realised as revenue, which is very similar to that realised for the year ended 31 March 2020. Numerous initiatives to simplify the payment process continue to be rolled out and online payments increased by 26% year on year.
Total expenses were under budget by 17% or R1.1 billion. The pandemic disrupted the supply value chain, productions and events and that resulted in significant underspending against the budget and the prior year, but it also yielded savings as a result of the remote working practices. There was a resultant 20% decline in content investment and a 13% decline in other operational expenditure when compared with the previous financial year. The employee costs reduced year-on-year even though the cost of the Section 189 process was a significant once-off additional R177 million.
The settlement of long outstanding creditors following the receipt of the final tranche of the Bailout reduced Trade and Other Payables further with creditor payment days closing the year at 33 days. The Cash on Hand as at 31 March 2021 amounted to R1.4 billion.
During the year under review, the SABC continued its journey to improve its internal controls and ensure that governance is restored in the organisation. Key to this was the monitoring and oversight by the Board, IT Governance, Risk Management, Internal Audit, and record keeping.
The Corporation was once again encouraged by the decline in year-to-year irregular expenditure of 45%, amounting to a total of R111 million, compared to R202 million for the year ended 31 March 2020 (and R 336 million in 2019). Of the R111 million only 10% relates to transgression in the financial year under review and 90% are legacy multi-year contracts.
Year-on-year fruitless and wasteful expenditure decreased by 22% to R21 million, with the main contributor being a lease agreement entered into in 2017.
Of significant importance is that the Corporation’s Audit Opinion was maintained as Qualified with Findings. Only one qualification area remains but it is now centred around the opening balances as at 1 April 2020.
During the year under review and despite its severe liquidity challenges, the SABC performed well in meeting its content obligations for nation-building and social cohesion by acquiring and scheduling content that reflects the South African story on both its radio and television platforms.
The implementation of the SABC’s turnaround plan has ensured its financial sustainability in order to fulfil its constitutional public mandate. There has been improvement in revenue generation, the reduction of its huge cost base, stability at leadership levels, sound financial management and a continuously strengthening internal control environment.
The sustainability of the SABC is vital to our constitutional democracy. Therefore the SABC continues to engage with government and regulatory authorities on the necessary policy, legislative and regulatory changes that need to be made to ensure the long term sustainability of public broadcasting.
- replacing the current TV licence system with a technology-neutral public broadcasting levy;
- funding the SABC’s large, significant but unfunded public mandate;
- finalising Must Carry regulations to ensure subscription broadcasters are required to by law to have commercial negotiations on the carriage of SABC channels (currently carried for free);
- addressing Sentech’s exorbitant, monopoly pricing through fair and reasonable tariff regulation; and
- removing the policy and regulatory requirement for the SABC to have specified coverage on the DTT network.
The SABC is confident that these policy and regulatory changes, taken together with the turnaround plan currently being implemented, will ensure a viable public broadcaster for generations to come.