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SABC: Over three-quarters of ZAR483m annual loss due to cost of sports rights

Financially stricken South African public-service broadcaster the SABC has said that 83 per cent of the ZAR483m (€29.7m / $32.9m) annual loss for the 2018-19 period was due to its investment in sports rights.

Speaking in front of South Africa’s Portfolio Committee on Communications, group chief executive Madoda Mxakwe said that around ZAR400m of the unaudited loss total was a “directly contributed by the cost of sports rights.”

Mxakwe frequently referenced the “exorbitant” cost of sports broadcast rights as he answered questions from the Committee. The appearance of SABC executives in front of the Commission came soon after the news that the public broadcaster had failed to strike a deal with pay-TV’s SuperSport for broadcast rights to the Rugby World Cup, which begins tomorrow.

Commenting on sports rights acquisitions in general, Mxakwe said: “The board instructed us to say that we will not sign any deal that is not commercially viable for the SABC. What has tended to happen in the past was these deals were signed without necessarily looking at the cost base for the SABC.”

The SABC was forced to turn to the South African government earlier this year for a ZAR3.2bn bailout as it fought to stave off insolvency.

Asked specifically about the cost of rights to the Rugby World Cup, Mxakwe claimed that $28m was SuperSport’s asking price for the television rights and that IMG was asking for $60,000 for the radio rights. On top of that, he said, a further $900,000 would need to be spent on production.

The group chief executive remarked: “Much as we are committed to broadcasting sport of national interest, we could not allow a situation where we get into a deal that is not financially viable.”

Mxakwe called on the Independent Communications Authority of South Africa (ICASA), the country’s media watchdog, to intervene and facilitate an unbundling of sports broadcast rights.

He said: “We would want to ensure the regulations governing sports rights are reviewed. We’ve submitted our views earlier this year. The focus there is on transparency, the need to unbundle those rights, but also to help us, as the public broadcaster, to ensure that we can fulfil our mandate without incurring all of these exorbitant costs.”

There was a free-to-air blackout of the first round of Premier Soccer League last month after SABC could not strike a sub-licensing deal with SuperSport. The public broadcaster claimed that it was being asked to pay an annual sum of ZAR280m over five years and predicted that it would only bring in revenue of ZAR9.8m per year.

In the event, and following the interventions of ICASA and the government, SABC reached a new PSL agreement with SuperSport running until the end of the 2023-24 season, paying ZAR72m per year for rights to 46 games.