SABC CEO laments Olympic broadcast rights as it lost R201 million in 2022

Another struggling state-owned entity, SABC, has pointed out the factors which led to corporations’ struggles when it comes to finances.

The state-owned broadcaster, SABC’s financial struggles are well documented and it says costs associated with its public mandate – notably sports rights to broadcast the Olympics – contributed to the R201 million net loss it suffered in the 2022 financial year.

SABC’s irregular expenditure and financial losses came to the attention of the Auditor General and the Auckland-based company gave an explanation in parliament.

“The reason we had a net loss of R201 million was largely because of the acquisition of the sports rights for the Olympics, which is an obligation of the public broadcaster,” SABC Group CEO Madoda Mxakwe said.

“We used R122 million to acquire the rights, which is about 58% of the total net loss.

“As we move into the third phase, which is the growth phase, we want to break even and be profitable as an organisation.”

As the Olympics were held in Tokyo from 23 July to 8 August 2021, Mxakwe insisted that the staggering R201 million loss in 2022 was an improvement from the R530 million seen in the previous year. 

Spending on sporting rights appeared not to have translated to a rise in advertising revenue, however, as the SABC said a drop in audience share had impacted advertising revenue.

The SABC is in the process of implementing its turnaround strategy, now in place for a second year, the plan is supported by R3.2 billion in additional recapitalisation committed by the government in 2019, and is meant to improve governance and finances.

Meanwhile, the Auditor General’s office said they could not obtain sufficient audit evidence that the irregular expenditure for previous years had been accounted for.

News24 reports that one of the payments in question-related to the incorrect awarding of a security tender awarded in 2017, which was the subject of a Special Investigative Unit (SIU) probe concluded in 2019. 

Mjayeli Security Services was the losing bidder and had allegedly been preferred on the basis of pricing, but the SABC Board overlooked its score and instead awarded the contract to Mafoko Security.

“The likely loss results from the difference between these two bids incurred over the duration of the security contract awarded. As of 31 March 2022, R147 million has been paid on the contract,” according to the Auditor General.

Meanwhile, payments to SABC employees increased 3% from R2.1 billion to R2.2 billion over the year, and cash reserves were forecast to decrease from R1.1 billion to R775 million on 31 March 2023, with own cash on hand at R421 million.

Main Image: SABC/SABCNews