SABC registers R511m loss as adspend and TV licence revenue fall

The SABC reported a net loss of R511m for the year ending March 31 2020 and a decline in revenue from R6.4bn the previous year to R5.7bn.

Presenting financial results for the 2019/20 financial year on Tuesday, SABC group CEO Madoda Mxakwe said the public broadcaster faced a difficult financial year, compounded by depressed economic activities that affected the broadcaster's revenue generation activities.

“Despite this, I can assure the public that building blocks to stabilise the SABC are now in place and we want to ensure we can have a financially stable organisation that will deliver on its public mandate,” Mxakwe said.

He said the net loss of R511m was an increase from the year ending March 31 2019, in which the SABC recorded a R444m net loss.

Mxakwe said this loss happened in an organisation going through a turnaround phase.

“Our total revenue declined 12% year on year to R5.7bn. This decline is largely attributed to declining advertising spend and a delay in finalising some of the commercial partnerships for the SABC on digital platforms,” he said.

TV licences revenue declined 18% year on year to R791m.

“This is largely due to delayed use of debt collecting agencies. As part of the overall policy review, we have submitted a proposal to the shareholder for the future collection of a collection levy,” Mxakwe said.

However, Mxakwe said there were areas of improvement during the past financial year, such as the settlement of debts owed to long outstanding creditors.

“We reduced trade and other payables by 50% and credit payment days closing the year at 51 days. Just to give you a sense, as at March 31 2019, credit payment days was standing at 143 days.”

Mxakwe also said cash on hand for the SABC as at March 31 this year was R2.1bn.

“This is a marked improvement from the R73m which we had at the end of March 2019.”

Mxakwe said the SABC was encouraged by a decline in irregular expenditure by about 40%, amounting to R202m, compared with the R336m for the year ending March 31 2019.

“Year-on-year fruitless expenditure has decreased by 87% and that equates to R27m,” Mxakwe said.

He said R26m of the R27m was incurred by the SABC from interest and penalties due to late payments caused by cash-flow constraints within the organisation.

Mxakwe said there was a huge focus on emerging revenue generation opportunities.

“We note that the dependence on our classic revenue is not working. We are transitioning to ensure that we can get more adspend on digital platforms.”

Mxakwe said the SABC needed to invest in compelling content so that it could increase audience ratings, leading to better pricing.

He said migration to digital platforms was key to the SABC strategy and it was driving this aggressively.

SABC CFO Yolande van Biljon said the broadcaster continued to spend more than it earned.

“For every R1 we earn, we are spending R1.10c. That does not make sense. It is worse than the years before,” Van Biljon said.

She said the main cost drivers for the SABC continued to be the payroll, its content investment and signal distribution costs.

“What is important to note is that public commercial services made a small profit in the past financial year, and public broadcasting services made a loss. You would want to be more sustainable on the commercial side,” she said.

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