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15 March 2011

SABC's Fuzzy Fiscal Picture











Revenue growth of 10%/year is forecast. This follows the SABC’s disastrous performance in 2008/2009 when it lost R1bn. A government guarantee allowed the broadcaster to borrow R1bn from financial institutions, for which repayments become due in January 2012

Robin Nicholson, the acting group CE of the SABC, has forecast a financial turnaround for the broadcaster which will return it to profit next year.

In the estimates of national expenditure, published in last week’s budget, national treasury shares his optimism. After another R348m loss for this year, the SABC expects to return to profit and to grow earnings over the next three years (see table).

Revenue growth of 10%/year is forecast. This follows the SABC’s disastrous performance in 2008/2009 when it lost R1bn. A government guarantee allowed the broadcaster to borrow R1bn from financial institutions, for which repayments become due in January 2012.

But how secure is the turnaround?
Several problems stand out. The main one is the impending conversion to digital broadcasting by 2013. Though the biggest cost is with the signal distributor Sentech, for the broadcaster this carries many implications. New skills and technology will be required as well as much more programming. Digital broadcasting allows for more viewing channels. As well as a 24-hour news channel and sports channel, it is expected that the SABC will operate between eight and 12 channels.

In this year’s budget, the SABC received no additional funding for digital television, despite its request. The estimates assume that the introduction of digital television will be a profitable exercise, hence the strong revenue growth. In many countries , this has been the case, but almost all broadcasters have used the opportunity to extend their services.

Without additional resources from treasury to produce a quality 24-hour news offering or compete in the purchase of sports rights, the SABC is likely to find itself under huge pressure just as the first loan repayment falls due early next year .

Nicholson says he hopes for more funding in the next medium-term expenditure cycle — 2012/2013 — to give the broadcaster enough time to prepare for digital migration.

The shortage of good content has, since 2005, put SABC’s television market share under pressure from e.tv and DStv. For 2010, the SABC had targeted a 64% market share but achieved only 59%.

The lack of investment in content is also a big concern of independent television producers, who say that despite its recovery, the SABC is still holding back on commissioning new programming. A fresh request for proposals, which was scheduled to appear in December, has not yet materialised. And, budgets for the small number of productions already commissioned are being negotiated downwards, they say.

SA Screen Federation chair Feizel Mamdoo says the federation doubts the SABC is commissioning enough material to meet its needs or doing it efficiently , as the slashing of budgets has stalled many productions.

The real cost-saving measure that needs to be taken, everyone agrees, is in the reduction of the SABC’s bloated management echelons. The interim SABC board, which took over at the height of the crisis, before the current board was put in place, estimated that as many as 1000 managers needed to go.

Trade union representative for the Media Workers Association of SA (Mwasa) Tuwani Gumani says the SABC needs to get on top of the “runaway madness and rampant employment that took place in the days when there was no correlation between jobs and vacancies”.

Since December, Nicholson has cut nine GMs out of operations and projects total savings, when restructuring is completed, of R22m/year on the wage bill.

However, he says, it’s not possible to easily put a number on how many should go. Digital television will make some jobs redundant, leading to early retirement, and create others that need to be filled. Negotiations with trade unions are on- going, he says.

Original article here.

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