As we reflect on the success of the year which realised South Africa’s dream of hosting the 2010 FIFA World Cup™ let us also focus on the many great hills we have yet to climb... “I have walked that long road to freedom. I have tried not to falter; I have made missteps along the way. But I have discovered the secret that after climbing a great hill, one only finds that there are many more hills to climb. I have taken a moment here to rest, to steal a view of the glorious vista that surrounds me, to look back on the distance I have come...” Nelson Mandela 2010 Annual Report Contents The Annual Report of the SABC 2 Statement by the Chairperson of the SABC 4 Statement by the Group Chief Executive Officer 8 Report by the Chief Financial Officer 14 Report on the Performance of the SABC 20 Report on Mandate Performance – Public Broadcasting Services – Public Commercial Broadcasting Services – Universal Access – Local Content Delivery – News and Current Affairs 28 Report on the Sources of Revenue – Commercial Enterprises – Audience Services 32 Technology 34 Regions 36 Digital Migration South African Broadcasting Corporation Limited About the SABC 57 The Annual Financial Statements 40 Our People 114 Glossary of Terms – Human Capital Services used in the Report – Our Relationships – Organisational Structure – Composition of the Board 54 Our Awards This is the 73rd Annual Report of the South African Broadcasting Corporation Limited, referred to as ‘SABC’, ‘the Corporation’ or ‘the Company’ (Registration Number: 2003/023915/06). It is tabled in Parliament in terms of the Broadcasting Act, No 4 of 1999, as amended, and the Public Finance Management Act, No 1 of 1999, as amended. This report details the activities of the SABC for the twelve months ended 31 March 2010. South African Broadcasting Corporation Limited 1 The Annual Report of the SABC Statement by the Chairperson of the SABC 2 The year under review has been an extraordinary The Board of Directors led by Ms Mkonza served year for the SABC. The Company has had three from 1 April 2009 to July 2009. This Board was dissolved on 3 July 2009. The Interim Board of different boards of directors, taken on debt Directors led by Ms Charnley served from 10 July for the first time in more than 15 years, saw 2009 to 9 January 2010. The current Board led by declining revenue and faced some very real Dr Ngubane assumed office on 10 January 2010. challenges in meeting the expectations of all A Company such as ours with national and our stakeholders. international business presence particularly in relation to the purchase of content and the delivery of News, was bound to feel the pressure of the world economic crisis. We experienced challenges in meeting our financial obligations and were unable to meet our obligations on time. Our financial situation is improving and we continue to monitor expenditure and revenue collection. The SABC mandate remained unchanged and our commitment to entertain, inform and educate remains the same. As a Company we recognize that for many of our viewers, the SABC is the only source of affordable entertainment. The obligation to continue to provide quality entertainment, reliable information and education within an environment of limited resources is an obligation that the broadcaster will continue to deliver on, in spite of the pressure of limited resources. The SABC itself is in the throes of its own technical and digital revolution, all at great cost. The SABC has been under increasing pressure to modernise South African Broadcasting Corporation Limited The SABC will continue to improve our relationships with our stakeholders and maintain our “conversations and partnerships” and prepare our company for change. We acknowledge that change has to come. Viewers and listeners demand the change and we are committed to providing an improved quality of service and programming. Better programming requires improved communication with content providers, investment in programming requires that we engage with our content providers and take them along on the journey to an improved SABC. The SABC management and board are alive to this need for change. The formula that made us successful 10 years ago is in the process of review to bring the SABC into the 21st century. Our employees have continued to provide their best efforts in keeping programming on air. While we remain awake to the commercial imperatives of a public broadcaster we must continue to remain alive to our role in improving the lives of our audiences. This cannot be done in a single quantum leap from 20th to 21st century. It will be a journey that 3 we want to take our audiences and stakeholders equipment, roll out services to traditionally under- along with us. The journey will no doubt be costly serviced areas, improve the quality and access to and we remain mindful of this challenge. our services through new media platforms, as well as remain relevant to an increasingly sophisticated The current Board has the obligation to bring a audience. To this end we have taken delivery of continuum between the previous two Boards and the full complement of the four Outside Broadcast where the SABC needs to be. vans. We have continued with the rollout of low power transmitters. The first part of our task is to improve our relationships with our employees, organised labour, While we celebrate our achievements, we also stakeholders, audiences, local content providers acknowledge that there were some things that we and international distributors. We intend to keep did not do well at all. The Corporate Governance the conversations and communication channels challenges faced by the SABC that saw the open in an environment of mutual respect. dissolution of the Board led by Ms Mkhonza, separation with the then Group Chief Executive The current board is a new one but comprises 15 Officer, investigation by the Auditor General into experienced and knowledgeable people. I have procurement practices, policies and irregular every confidence that together we shall take the financial activities as well as a number of decisions national broadcaster to new heights. I thank the that compromised the integrity of the Board board and the management for their efforts in and the reputation of the Company; have set a difficult times. mandate for the Board to continue to monitor closely Corporate Governance practices, review I also thank all South Africans for their patience policy, delegations and continue to insist that thus far. the company abide by the provisions of enabling statutes and policies. We continue to chart a new course for our Public Broadcaster. We remain committed to improving Dr B Ngubane our service without causing disruption or Chairman interference with the service to our audiences. The Annual Report of the SABC Statement by the Group Chief Executive Officer 4 The year under review was characterised by the This necessitated that Parliament’s Portfolio crisis in the organisation that saw management Committee on Communications dissolved the Board of Directors, appoint the Interim Board and Board at loggerheads with each other. and request the Auditor- General of South Africa (AGSA) to conduct an investigation on allegations made by the former SABC Board members, unions and management. The allegations were mainly of a governance nature among others: · supply chain management issues; · matters of potential fruitless and wasteful expenditure and · Human resource-related matters. The Auditor General’s findings relating to Supply Chain Management deficiencies were predominantly due to non-adherence to policies, directives and delegated authority by senior management of the SABC. These findings pointed to inadequate monitoring and oversight by the leadership of the SABC and the creation of the environment at the SABC where the “tone at the top” is not appropriate, which in turn seems to have created a culture where management is not focused on public accountability or acting in the best interest of the SABC. South African Broadcasting Corporation Limited As part of the SABC mandate to ensure universal access, the provision of both Radio and Television services to isolated communities in various provinces by means of low-power transmitters, has significantly enriched the lives of thousands of people who previously had no or very limited access to the public broadcaster. A positive feature of 2009/2010 was the depth of planning that went into ensuring the SABC successfully fulfilled its role as the official broadcaster of the 2010 FIFA World Cup – a first for both South Africa and Africa as a continent. Project plans were finalised in the last quarter of the year under review. The SABC also took the initiative of leading the broadcasting industry by successfully implementing a DTT (Digital Terrestrial Television) Pilot Project in South Africa. The DTT Pilot Project proved very successful and the results of the research suggested a promising future for DTT with over 80% of trialists indicating that they saw value in 5 the DTT service. The project pioneered research and information on digital transmission in South Africa. The DTT regulatory processes were finally The crisis led to the application, by the organisation, completed in February 2010 with SABC being for a government guarantee amounting to R1.473 allocated at least 90% of one multiplex during the billion, which was subsequently granted. The dual illumination period. The commercial launch of approval was granted and conditions were set DTT, which was originally anticipated to be prior to for the period of the guarantee. R1 billion of the the World Cup, was delayed due to delays in the guarantee was utilised to secure a long term loan finalisation of regulations and the announcement from Nedbank. by the Department of Communications in March Performance review 2010 that the DTT standard was under review.