In its Annual Report released on 10 October, South African public broadcaster SABC recorded a growth in overall revenue of 9.1%, in line with inflation year on year, to R4.7bn. Overall expenditure was R4.6m, 14% up on the previous financial year. Profit after tax in 2007 was R192.8m.

The SABC’s commercial revenue grew by 11%, with TV licence revenue increasing by 8%, despite no increase in licence fees for the past five years. Revenue from classical advertising amounted to R3.1bn, representing a 14.2% increase (attributed mainly to the change in discount strategy). Advertising accounted for 81% of the corporation’s total revenue.

However, sponsorships declined by 9%, due to the decrease in aired sports events following the loss of rights to broadcast games in the Premier Soccer League. Sports revenues dropped by 23.9%. Speaking at the SABC’s head office in Auckland Park, Johannesburg, Chief Financial Officer Robin Nicholson described the past financial year as the most difficult in his time at the corporation. “The financials for the period are quite complicated for three reasons. Firstly, it’s year two and three of implementing the Independent Communications Authority of South Africa’s (ICASA) local content mandate.

Secondly, we have implemented the new SAP accounting system, which required the re-audit of all expenditure and amortisation of more than 4 000 programming projects on its books. Lastly, we implemented a very large pension fund. As a result we have seen a decline in operating profit which is a cause for concern. “The SABC’s long term strategy is to decrease its reliance on commercial revenue. However, at this stage only 20% of our funding is non-commercial. We’re not expecting strong results until the 3rd quarter of 2009, given the current economic crisis.”

According to the report, the SABC is in “a solid cash position” with R165.6m on the balance sheet and little debt. A R76m loss was reported on the cost side as programming rights the SABC has already acquired was not broadcast within the licensed period. The broadcaster also incurred expenditure during the year of R40.6m that can be classified as “wasteful” in terms of the Public Finance Management Act (PFMA). SABC Acting Group CEO Gab Mampone said the corporation was attempting to recover this expenditure.

Mampone noted that a portion of the fiscal budget had been devoted to launching a 24-hour news channel with SABC News International, broadcasting across Africa on the Vivid platform and the opening of a number of international news bureaux. “There has also been significant expenditure on technology upgrades in preparation for digital terrestrial television (DTT) and for broadcasting the 2010 FIFA World Cup. The latter prompted the order for four high definition (HD) outside broadcast (OB) vehicles.

“Included in the fiscal budget was the supply of low power transmitters in the Karoo, giving residents full access to SABC’s three TV channels for the first time ever,” noted Mampone.

The SABC reported an increase in locally produced programmes across all three TV channels – by 15.94% on SABC1, 7.07% on SABC2 and 2.29% on SABC3. Up to 80% of local programmes now utilise languages other than English.