The SABC office in Auckland Park, Johannesburg. Picture: SUNDAY TIMES
The SABC office in Auckland Park, Johannesburg. Picture: SUNDAY TIMES

The SABC made a loss of R622m in the year to end-March, an improvement on the restated loss of R1bn the previous year.

Revenue for the year according to the public broadcaster’s annual report tabled in parliament on Monday came in at R6.6bn (R6.5bn in 2017) against a budget of R7.3bn with an operational loss of R635bn (R1.1bn) being posted.

Current assets exceeded current liabilities by R291m at the end of the financial year, and the entity was "commercially insolvent as it was not able to pay its debts as an when they came due", auditor-general Kimi Makwetu said in his report, which is included in the annual report. At the end of the financial year the SABC had cash of R131m and owed trade creditors more than R500m, with creditors having to wait an average of 205 days to be paid.

Makwetu issued a disclaimer — the worst possible opinion — on the financial statements of the corporation as he said there was insufficient audit evidence on which to base an audit opinion. Makwetu was also unable to obtain sufficient, appropriate audit evidence to confirm the reasonableness of the forecast cash flows and the assumptions management used to assess the SABC’s viability for the foreseeable future.

The auditor-general said he was not able to form an opinion about whether or not the SABC was a going concern. Irregular expenditure was stated by the SABC as R5bn but Makwetu said this could not be confirmed because of the absence of adequate internal controls.

SABC chair Bongumusa Makhathini said in the chair’s statement that the public broadcaster had had to overcome some daunting challenges during the year under review, "and the pattern seems to continue with even greater severity for the year ahead".

He said the new SABC board, which was appointed for a five-year term in October 2017, had had to implement measures to stabilise the corporation at a governance level and step up action "to address endemic levels of corruption and maladministration that had been prevalent at the SABC for many years".

Significant headway had been made, Makhathini said.

"The corporation is still paying the price for years of ineffective leadership, failed governance and prejudicial decision-making. Self-inflicted actions like the arbitrary 90-10 decision [regarding the use of local content] continue to impact on the SABC’s revenue.

"The corporation sits on a huge and unsustainable cost base built up over time without proper consideration for a workable operating model."

Makhathini said the board had approved a comprehensive turnaround strategy to be led by the new team of executive directors led by CEO Madoda Mxakwe, COO Chris Maroleng and CFO Yolande van Biljon.

He warned, however, that the challenges to the SABC’s sustainability were not just financial, as it had to urgently "play catch up" on the technology front and embrace digital technology platforms.

The SABC needed to ensure its audiences were able to access its content everywhere. It also needed additional television channels to be able to fulfil its public mandate to broadcast more sport, education and entertainment programming.

"Our three analogue television channels cannot sustain the impact on commercial schedules from sport in particular. A successful digital migration [from analogue] is therefore vital to the public broadcaster’s future in many ways," Makhathini said.

Another priority, the chair said was to develop and expand the SABC’s digital properties on the internet via social media and enhanced websites, though high data costs were still an inhibitor.

Makhathini said the SABC needed an urgent review of the "must carry" regulations by the Independent Communications Authority of SA (Icasa). Those regulations had had a negative effect on the SABC’s revenue, he said. The SABC’s "must carry" channels are the free-to-air SABC1, SABC2 and SABC3, which are required by regulation to be carried by subscription broadcasters at no cost.

"The SABC has submitted to Icasa that this regulation was in conflict with the enabling legislation that envisaged ‘commercially negotiable terms’ being agreed to between the SABC and subscription broadcasters," Makhathini said.

"The SABC ‘must carry’ channels are some of the most watched channels on pay TV bouquets and therefore the corporation should receive market value for its television content."

The SABC has also called for an urgent review of the sports broadcasting regulations by Icasa. Makhathini said these regulations had led to the SABC incurring huge sports rights costs in an attempt to fulfil its public mandate.

"The regulations should be reviewed in order to promote fair competition for sports rights and prevent unfair sublicensing and hoarding practices, he said.