Friday, July 4, 2014

SABC says paying for sports rights is putting the SABC under financial pressure, public broadcaster can't afford to pay R500 million every year.

Paying for sports rights is putting the SABC under financial pressure, the SABC told parliament's portfolio committee on communications.

Tian Olivier, the SABC's acting CEO told parliament that the SABC will eventually run out of money if the South African public broadcaster has to continually pay sports rights totally R300 million to R500 million per year.

"The sports item puts us under pressure. If we have to continuously fund sport with R500 million or R300 million of our own cash year after year, eventually we will run out. It's not a difficult calculation to make," Tian Olivier told parliament.

"The cost of sports rights are very high. Unfortunately the revenue that we derive from this sports coverage does not cover the cost, and we need to talk about the sustainability of how we pay for sports rights going forward in the future," said Tian Olivier.

"If we look at all the sports rights that we have to take because it's mandated items and the production cost of those rights, sport will require R930 million in the financial year [2014/2015]".

"We are able to provide in revenue terms R418 million or half of that amount. In sport we have a shortfall of R500 million," said Tian Olivier.

"Given the cash flow position fo the SABC at the moment we can sustain sport for a year but not for longer than that. The acting chief operating officer [Hlaudi Motsoeneng] is working on looking for sponsors for sport so that he can bring back that R500 million in sport so that we can spend it again".

"We either need to find commercial funding for sport or we need to relook the regulations that we do not have this huge burden or mandate on us, or if possible, funding from the national treasury," said Tian Olivier.

"I've given an analysis to show how the cost of sports rights have increased before and after the Icasa regulations came into effect. The total mandated sports for the five years before the Icasa regulations came into effect those sport items we had to show cost us R670 million in total".

"The five years after the regulations came into effect, the same five items cost us R1,3 billion - an increase of 49% in the rights fees," said Tian Olivier.

"The cost of sport and the [planned] SABC Sport channel" is a budget risk for the SABC, said Tian Olivier.