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20 May 2011

The SABC Wants More Money

THE SABC has asked Parliament for more money, warning that its cash flow problems and the cost of "migrating" from analogue to digital broadcasting would result in the corporation not being "financially sustainable".

But civil society bodies are asking for an economic modelling exercise of the SABC’s funding needs and new legislation stipulating that it be more transparent about how it spends its money.

SOS Support Public Broadcasting, a coalition of civil society organisations, said it was concerned there would be a repeat of the now-withdrawn Public Service Broadcast Bill, which proposed a 1% income tax to fund the SABC and community media, without any research into the SABC’s needs and whether the amount raised would satisfy those needs.

Parliament and the communications ministry are pressing the SABC to draw up and apply its turnaround strategy — a requirement that also affects its funding. When it presented its medium- term expenditure budget to the parliamentary portfolio committee recently, the SABC said that without additional funding from the government, it could not introduce digital terrestrial television as it did not have the money to fund it internally.

It said its cash flow was impeded by repayments of a R1bn Nedbank loan and the costs of programme, film and sports rights.

Even without digital migration, the SABC envisages continuing liquidity pressure over the next two years.

It requested permission from Parliament to discuss additional borrowing or the restructuring of its Nedbank loan.

The public broadcaster appealed to the government for R408m to fund digital migration. The Treasury has in the past turned down such requests.

With an expected loss of R203m for the 2010-011 financial year, the SABC’s financial officer, Lerato Nage, told Parliament recently : "SABC is not in a position to generate funding for digital terrestrial television."

The broadcaster said it had lost R60m in income because TV licence fees had not been increased, and that it was spending R190m to collect R910m in licence fees.

In a document to be sent to Communications Minister Roy Padayachee, SOS has asked that he investigate possible funding models rather than merely estimating the SABC’s needs.

SOS spokeswoman Kate Skinner said on Tuesday: "What is needed is an economic modelling exercise that looks at the concrete costs of SABC fulfilling its public mandate and the costs of digital migration and the new multichannel environment. The new legislation must emphasise transparent accounting, such as SABC reporting on the percentages its spends on different types of programming."

The SABC is funded 80% by advertising, 18% from licence fees and 2% from the state, but it told the government that the current funding model was not providing the money it needed to move forward.

Two models have been proposed, one that results in commercial radio, TV channels and some digital channels being sold off, leaving the SABC to manage only public service channels. The SABC would also be required to provide "universal programming" as well as educational and locally generated content.

The model supported by the Congress of South African Trade Unions and others is a mix of public — licence fees and subsidies — and commercial funds. Grants from the state should be introduced and targeted at special budget items such as operational costs (salaries), infrastructure, and specified programming, to ensure better control of funds.

There were concerns that the second model might lead to an increase in the SABC’s bureaucracy.
There was consensus that the cross-subsidisation model be done away with as it was not working. SABC 1 earned more in advertising than the commercial channel SABC 3.

Some SOS members are organisations representing independent film and documentary producers, who have queried the SABC’s local content percentages. They claim there was less local content than the SABC told its regulator, the Independent Communications Authority of SA.

Original article here.

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