We don’t live long enough to make all our own mistakes and that’s why, if you are smart, you learn from others when they get it wrong. And that’s where the SABC has got it so right—this is a case study of note on how not to run a media business. Now to put it all down to poor corporate governance is just too easy. Sure the Board is incompetent and senior executives must be so preoccupied with (political?) survival that it is unlikely they are able to apply their minds in any meaningful way to the issues at hand. The real problem though is the cumulative effect of a bloated and inefficient bureaucracy that’s got worse over a period of years. Too harsh? Consider this for a moment: whether it is the Sunday Times, the Weekly Mail & Guardian or Matebello Motloung writing in this week’s Financial Mail (March 13, 2009) the list of infighting, incompetence and the lack of vision is clear for just about anyone to see. Of real interest to me was this statement by Motloung in the FM: ‘Advertising, which accounts for 83% of the SABC’s revenue, is drying up. Of the R783m deficit, R400m was a result of cancelled advertising’. That’s a nonsense if ever I have seen one. SABC revenue is up 9% Y/Y and yet employee costs were up by 38% in the same period. That’s big when you consider 38% was the equivalent of R410m. Add consultancy fees (up 68% more Y/Y) and the total spent on employees and consultancy costs is almost 40% of revenue. That’s up from only 28% of revenue in the previous year. The net effect is the SABC spent R500m more Y/Y on employee and consulting costs when it knew revenue was under pressure. When you look at it like this you know where to start looking for your problem: Management, not the Board. Someone didn’t manage their budget properly. Someone thinks it’s ok to offer salaries at 35% more than the market and doesn’t get the idea it will come back to bite them in the future. There is more to come ……
What can we learn from the SABC?
March 15, 2009 · 2 Comments
Categories: Case studies: business ethics · Uncategorized
Tagged: Financial Mail, SABC, Matebello Motloung, SABC and Sunday Times, SABC and Mail & Guardian
2 responses so far ↓
Malindi // March 16, 2009 at 11:44 am |
Well Graham, if you were to read the articles properly and had been following coverage on the SABC and understand its revenue mix, you’d realise that you’ve been very narrow in your understanding of how the corporation operates or better still the issues at hand.
Yes the SABC’s revenue has been growing by 9% year on year but like the articles, including the one in the FM, rightly points out, the broadcaster’s biggest expenses — employee salaries, content and marketing and consultancy fees, are what’s chowing its income.
Given that explanation, I don’t get the point you’re trying to make here about it being nonsense that commercial advertising accounts for 83% of the SABC’s revenue. Have you checked the corporation’s annual reports — last year’s and 2007’s? Do your homework first and then make comments.
Graham Willcock // March 16, 2009 at 3:49 pm |
Thanks Malindi for your response. I appreciate you taking the time to visit my site and to post a comment. I don’t actually challenge that revenue constitutes 83% of the SABC’s revenue though. My challenge is that it is the ‘drying up’ of revenue that is responsible for R400m of the R783m deficit. It’s not. The deficit is because of a lack of fiscal discipline and a bloated bureaucracy. I kind of thought I had made that point quite well actually. Anyway to reiterate, if revenue grows by 9% Y/Y and your overhead goes up by more than that you need to cut your costs – NOT after the fact but during it. If revenue is not meeting your budgeted expectations then again you need to trim your costs before the deficit nails you. Hope that clears things up for you and thanks again. Let’s hope the SABC sorts itself out soon for all our sakes.