[DEBATE] : SABC drama [1]

[Dominic Tweedie]

SABC creates bail-out drama


Jocelyn Newmarch, Business Day Weekender, Johannesburg, 16 May 2009


After repeatedly denying that it was in trouble, the public
broadcaster is about to ask Treasury for funds, writes JOCELYN
NEWMARCH


IF THE SABC were a private company, it would be trading illegally as
it is technically bankrupt, independent producers say. The SABC is
failing to pay creditors hand over fist and failed to give its staff
an agreed increase this month, and is losing millions in advertising
revenue.

A senior manager, who did not wish to be named, confirmed that the
broadcaster will ask the N ational Treasury for a bail-out. The
national broadcaster probably needs an additional R400m just to cover
operating costs until the end of the year, the manager says.

Their constant assurances that suppliers would be paid, and the SABC’s
regular failure to pay invoices, would be considered reckless trading
if it happened in a private company, independent television producers
say.

The popular soapie Isidingo was nearly pulled off air by its
production company on April 30 as a result of nonpayment.

A representative from Endemol was sent to the SABC’s offices to
collect the tapes prior to broadcast. The broadcaster then released a
portion of the money owed and the soapie was eventually broadcast.

But producers say the SABC is now prioritising payment to companies
which have shows airing daily, in a bid to avoid shows being pulled at
the last minute.

The Department of Communications, which receives quarterly financial
updates from the SABC, does not know how much the broadcaster needs
from the government to remain afloat.

 “We would only know the exact figure when the SABC submits,” the
department’s spokesman Joe Makhafola says.

The SABC admitted two months ago that it would make a R780m loss for
the year ended March, after repeatedly denying media reports about the
extent of its deficit.

An austerity plan was unveiled in March, although the Broadcast,
Electronic, Media and Allied Workers’ Union (Bemawu), the largest
trade union at the SABC, says the organisation appears to be spending
money at the same rate as before. Bemawu president Hannes du Buisson
says the SABC did not pay union dues last month.

The SABC initially denied the union was not paid, but then admitted an
administrative error and paid what was owed.

The SABC is scrambling to put together documents needed for its
request for a bail-out to be considered. The Treasury has not received
any request to assist the SABC, its spokeswoman Thoraya Pandy says.

A senior staffer at the SABC said the broadcaster needs between R1,1bn
and R1,2bn for the next three years.

He says the SABC will approach the Treasury in the next 10 days with a
formal request for a bail-out. It is unclear what form of assistance
will be required — a direct financial transfer or a guarantee for
short-term financing. This needs to be given to the Treasury through
the Minister for Communications Siphiwe Nyanda, who represents the
government as the SABC’s sole shareholder.

“If we didn’t have the press on our back and problems with the board,
we’d be able to raise it with the banks,” the staffer says. “We’ve
managed to stay afloat so far. We are not insolvent, we do have a
problem with liquidity.”

Independent producers are owed more than R35m, says Rehad Desai, chair
of the South African Screen Federation.

The SABC has failed to pay producers in the midst of filming with no
prior warning, says Desiree Markgraaf, chairperson of the Independent
Producers’ Organisation. Producers were told off the record that the
SABC did not have sufficient funds to meet payment, but when
approached on the record, it had assured producers it could and would
pay.

Production companies tend to be small- or medium-sized companies but
have a large multiplier effect. If Isidingo goes off air, 150 people
might be laid off, but 1000 jobs could be affected in the supply chain
once services such as catering and equipment hire are taken into
account.

On April 1, the SABC failed to implement annual salary hikes for
employees or to inform Bemawu.

Du Buisson says the broadcaster is bound by a multi year salary
agreement it had concluded, and that although either party could
reopen negotiations, there is no opt-out clause in the agreement. Yet,
Gordon Patterson, writing in The Media magazine this month, says TV
adspend has increased over the past three months for which data has
been published — from November last year to January this year .

SABC 1 saw a 9% increase in year-on-year advertising revenue for
January, while SABC 2 saw a 1% decline and SABC 3 a 3% increase.

But the broadcaster handed back R78m to advertisers for the financial
year ended last month.

When advertisements are incorrectly flighted or not shown at all —
because they have not been scheduled, or because the programmes they
were sold into do not air — the SABC has to return the money
advertisers have paid for the spots.

The total credits passed by SABC television in the financial year is
R71147242, and about R8m for radio.

Bemawu claims only 56% of the SABC’s staffers are employed in core
operational areas and broadcasting, with the rest employed as support
staff or management.

It seems the SABC’s deepening financial woes were overlooked by its
oversight structures. Last year, SABC management presented its board,
chaired by Khanyi Mkonza, with a strategy plan and a budget showing a
projected deficit for the year. This budget was withdrawn at the
board’s insistence and a new budget drawn up.

Parliament’s portfolio committee on communications also failed to
interrogate the SABC board on the organisation’s financials.

Dene Smuts, the Democratic Alliance’s spokeswoman for communications
last year, says she had gone through the annual report with the SABC’s
chief financial officer in September last year.

“The traditional problem areas were there, but there was no indication
we were heading for the financial slide that appeared this year,” she
says.

The Department of Communications, which receives quarterly financial
statements from the SABC, has been slow to act but has been in regular
meetings with the corporation over the past few months. The
taxpayer-funded SABC’s finances are made public only once a year, when
the annual report is released in September, six months after financial
year-end.

The most recent annual report, for the year ended March last year, is
relentlessly upbeat in tone.

Yet, at that stage, the SABC was already halfway through what would
soon turn out to be a disastrous financial year.

The SABC did not respond to e-mailed questions but issued a statement
denying that independent producers had not been paid and promising its
staff would receive their increases.

“Their constant assurances that suppliers would be paid and the SABC’s
regular failure to pay invoices would be considered reckless trading
if it happened in a private company”

From: http://www.businessday.co.za/weekender/article.aspx?ID=BD4A1000712