HUGE debts hampered financially troubled Zimbabwe Broadcasting Holdings (ZBH)’s commercialisation drive, an internal report has revealed. The report, produced last year by f
ormer chief executive officer Munyaradzi Hwengwere, says ZBH had failed to clear debts dating back several years.
This, the report says, was the biggest stumbling block to ZBH’s commercilisation exercise.
Information minister Jonathan Moyo, under whose control ZBH has deteriorated, in June transferred to the state ZBH’s $30 billion debt.
The assamption of debt has not however increased liquidity as advertising revenue has remained thin.
ZBH intends to launch another television station, NTV, which could turn out to be a monumental failure as long as it fails to attract advertising.
Hwengwere’s report states that the exercise initiated in 2001 through the Zimbabwe Broadcasting Corporation (Commercialisation) Act, had failed to work because the state broadcaster could not generate enough income.
“A major constraint to the corporation’s ability to direct resources to core business has been a huge historical and restructuring debt with a significant portion in foreign currency and local loan obligations attracting astronomical interest charges,” the report says.
“In January 2003, the corporation sought to raise money through a bond to pay off the debt. The bond was unsuccessful due to changes in market conditions during flotation. Perceived institutional instability within the corporation also contributed to the failure.”
The report provides a breakdown of income generated as well as expenditure by the state broadcaster last year, showing that it only managed to realise a profit of $937 million last year, which was significantly eroded by inflation which peaked at 622,8% in January.
Advertising, ZBH’s major cash cow, generated $4,4 billion last year, whilst licence revenue grossed a relatively paltry $68 million.
Although the ZBH’s operating expenditure was $1,7 billion in 2003, its income was gobbled up by a bloated wage bill, which at the time of Hwengwere’s employment was more than the gross income.
The report states that most of the space on both radio and television was being occupied by government’s jingles and propaganda programmes which are not paid for.
Government justifies its refusal to pay for the propaganda jingles, saying it is entitled by law to an hour’s time per week cumulatively to market its policies.
According to the Broadcasting Services Act, which governs the operations of the state broadcaster, government must be allocated a free hour every week for its programmes.
However, sources said government was utilising more time than it is entitled to.
ZBH executive chairman Rino Zhuwarara last week said the corporation was working to improve viability but refused to discuss the debt situation.