NBC finances severely strained

THE Namibian Broadcasting Corporation (NBC) appears to be in financial trouble as it tries to cancel a N$20 million a year, five-year programming contract with Rock Enterprises less than one year after it was signed.

Officials close to the corporation told The Namibian last week that the NBC had hit the limit of a N$20 million overdraft with its bankers. They claimed that its precarious cashflow position was, in fact, the cause of the withdrawal of international filmmakers Endemol from a joint venture with Rock Enterprises.But NBC Director General Gerry Munyama dismissed the information as false.He said that the State-funded corporation was already N$20 million in the red, saying the amount was the credit line available to the corporation.”That definitely cannot be right,” Munyama said in an interview on Friday, “because that [N$20 million] should be the maximum of the overdraft facility.”He did not say how far into the overdraft the NBC was, but confirmed that the corporation was forced to raise loans from the banks at the time Parliament was discussing the national Budget from which the broadcaster draws most of its funding.The NBC receives about N$6 million a month subsidy from the Government this year.But its costs continued to escalate because the monthly expenditure of more than N$13 million continued to outstrip the N$8 million of revenue made up of the subsidy plus licensing, advertising and other sources.In an apparent move to cut costs, the NBC board three weeks ago moved to cancel the contract with Rock Enterprises who were commissioned last year with the Dutch film giant Endemol to produce broadcast material for N$20 million.The Namibian understands that N$10,5 million has already been paid out to Rock Enterprises in less than a year.Other unconfirmed reports suggest that the NBC was paying N$3 million a month to Rock Enterprises, an amount dismissed by the corporation as false.The board moved to cancel the contract after a report by a joint committee of several key people in the corporation suggested that Rock Enterprises had not delivered better or particularly special programmes that could not be produced in-house.Yet Rock Enterprises appears to be in a strong position during the negotiation of the contract cancellation and to have reportedly demanded that the NBC pay up for programmes already produced but not yet broadcast.”The negotiations are more about the value of the work done than about the cancellation of the contract,” said one NBC official.A former NBC official sympathetic to Rock Enterprises said the company was being made a scapegoat for the financial troubles of the corporation and that the cancellation would not necessarily ease the cashflow problems at the NBC.NBC Board Chairman Uazuva Kaumbi declined to comment about the Rock Enterprises contract because the matter was still being discussed by the lawyers of the two parties.Managing Director for Rock Enterprises Sebastian Kamungu also declined to comment.However, he confirmed that the corporation had had to re-examine its finances after realising that its revenue projections fell short of their projections.He pointed out that the Government subsidy had gone down by N$20 million overall while the slow collection of license fees continued to strain the corporation’s finances.”I think the good thing is that we are aware of the problem,” said Kaumbi, who, like Munyama, believed there was no crisis.Munyama said the NBC was incurring high costs because of its coverage of a large number of social programmes.”We will be able to balance income and expenditure if we are correctly funded … The NBC is like a hospital.How do you expect a hospital to be a profitable institution?” said Munyama when asked whether the NBC could generate enough revenue to fund all its operations.He said that NBC would need to be elevated to another priority level if it was expected to reach all parts of the country in the same way that Air Namibia was often bailed out by Government.They claimed that its precarious cashflow position was, in fact, the cause of the withdrawal of international filmmakers Endemol from a joint venture with Rock Enterprises.But NBC Director General Gerry Munyama dismissed the information as false.He said that the State-funded corporation was already N$20 million in the red, saying the amount was the credit line available to the corporation.”That definitely cannot be right,” Munyama said in an interview on Friday, “because that [N$20 million] should be the maximum of the overdraft facility.”He did not say how far into the overdraft the NBC was, but confirmed that the corporation was forced to raise loans from the banks at the time Parliament was discussing the national Budget from which the broadcaster draws most of its funding.The NBC receives about N$6 million a month subsidy from the Government this year.But its costs continued to escalate because the monthly expenditure of more than N$13 million continued to outstrip the N$8 million of revenue made up of the subsidy plus licensing, advertising and other sources.In an apparent move to cut costs, the NBC board three weeks ago moved to cancel the contract with Rock Enterprises who were commissioned last year with the Dutch film giant Endemol to produce broadcast material for N$20 million.The Namibian understands that N$10,5 million has already been paid out to Rock Enterprises in less than a year.Other unconfirmed reports suggest that the NBC was paying N$3 million a month to Rock Enterprises, an amount dismissed by the corporation as false.The board moved to cancel the contract after a report by a joint committee of several key people in the corporation suggested that Rock Enterprises had not delivered better or particularly special programmes that could not be produced in-house.Yet Rock Enterprises appears to be in a strong position during the negotiation of the contract cancellation and to have reportedly demanded that the NBC pay up for programmes already produced but not yet broadcast.”The negotiations are more about the value of the work done than about the cancellation of the contract,” said one NBC official.A former NBC official sympathetic to Rock Enterprises said the company was being made a scapegoat for the financial troubles of the corporation and that the cancellation would not necessarily ease the cashflow problems at the NBC.NBC Board Chairman Uazuva Kaumbi declined to comment about the Rock Enterprises contract because the matter was still being discussed by the lawyers of the two parties.Managing Director for Rock Enterprises Sebastian Kamungu also declined to comment.However, he confirmed that the corporation had had to re-examine its finances after realising that its revenue projections fell short of their projections.He pointed out that the Government subsidy had gone down by N$20 million overall while the slow collection of license fees continued to strain the corporation’s finances.”I think the good thing is that we are aware of the problem,” said Kaumbi, who, like Munyama, believed there was no crisis.Munyama said the NBC was incurring high costs because of its coverage of a large number of social programmes.”We will be able to balance income and expenditure if we are correctly funded … The NBC is like a hospital.How do you expect a hospital to be a profitable institution?” said Munyama when asked whether the NBC could generate enough revenue to fund all its operations.He said that NBC would need to be elevated to another priority level if it was expected to reach all parts of the country in the same way that Air Namibia was often bailed out by Government.