SABC remains in ICU despite unqualified audit

Broadcaster cannot break even without public financing, regardless of improvements in management, governance and internal controls.

Despite receiving an unqualified audit for the first time in 14 years, the financial future of the South African Broadcasting Corporation (SABC) remains uncertain, a media expert and former board member warns.

The public broadcaster received an unqualified audit opinion for the 2023/24 financial year, it announced in a statement on Sunday, attributing this to financial discipline and good governance.

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However, it cautions that its ability to meet its obligations in the next 12 months is uncertain and will require the ongoing implementation of severe austerity measures.

This will include very limited investment in new content.

It says “virtually no funding” is currently available for any capital investment in innovation, infrastructure, and technology.

Media expert and former SABC board member Michael Markovitz wrote on his blog that the SABC’s viewership – and, by extension, its revenue – will continue to decline in the absence of investment in infrastructure and new content.

“This vital public institution operates on a precarious financial edge, with only 3% of its revenue coming from government funding, making the SABC one of the most commercially dependent public broadcasters globally.”

He says despite the SABC’s full governance compliance and strong management (evident from its unqualified audit report), the organisation can neither break even nor fulfil its “unfunded public mandate” unless it receives “sustainable public financing”.

Dwindling viewership, low TV licence compliance

The SABC has been facing headwinds such as the migration of viewership to global streaming platforms, which saw its audience decline significantly and consequently impacted its ability to grow revenue.

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The broadcaster notes there has been a R2 billion decline in revenue since FY2016, while year-on-year revenue has remained mostly flat since FY2021.

The SABC has also been grappling with a decline in TV licence fee revenue, which continues to be on a downward trajectory despite “numerous initiatives” to up TV licence fee income.

The rate of licence fee non-compliance increased to 85.6% in the 2023/24 financial year. ADVERTISEMENT: CONTINUE READING BELOW

It says South African households view TV licences as “low priority” in times of economic hardship.

“[T]he reality is also that compliance cannot be enforced.”

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New equitable financial models need to be devised to fund the SABC’s public interest mandate, it adds.

Better internal control and governance 

The broadcaster was nevertheless proud of its unqualified audit opinion.

SABC chief financial officer Yolande van Biljon says achieving the first unqualified opinion in 14 years reflects the strategic journey the public broadcaster has undertaken to strengthen its internal control environment, compliance with legislation, expenditure management, governance, and oversight.

Improvements during the 2023/24 financial year include:

• A 7% increase in advertising revenue;
• A 4% decrease in total operating expenses;
• A significantly lower net loss before interest and tax – from R1.1 billion in FY2017 to R192 million in FY2024; and
• The loss before interest and tax decreased by R634 million year-on-year between FY2023 and FY2024.

Listen/read: Is cash-strapped SABC heading for a bailout [Jul 2023]

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