Tuesday, March 30, 2010

Story by BusinessDay: Cachalia cancels CNBC contract

by Sibongakonke Shoba Published: 2010/03/30 06:38:34 AM

Gauteng economic development MEC Firoz Cachalia. Photo: Sowetan

GAUTENG economic development MEC Firoz Cachalia has cancelled a 3m-a-year contract that international business channel CNBC Africa had signed with the Gauteng Film Commission (GFC).

Cachalia’s spokesman, Mandla Radebe. said the contract was terminated in January as part of a general review of contracts. “The MEC received a legal opinion that this contract was entered into contrary to the provisions of the Public Finance Management Act.”

The cash-strapped Gauteng government is reviewing all contracts in an attempt to cut costs and direct resources to new priorities such as education, health and job creation. The review has saved up to R8bn and the government said it could save an additional R3bn once the process is completed.

The CNBC Africa contract was entered into during Paul Mashatile ’s reign as MEC of economic development and when Mbhazima Shilowa was premier. This is not the first contract entered into on Mashatile’s and Shilowa’s watch that Cachalia has cancelled.

Earlier this month he announced that he would fork out R117,5m to cancel motorsport contracts.

According to a senior government source, the contract was entered into to entice CNBC Africa to be based in Gauteng.

It was expected that CNBC Africa would give the province exposure and that local film producers would benefit. “But it was not adding value,” said the official.

On top of the 3m a year, the economic development department was expected to encourage other departments to advertise on the channel to bring it revenue.

“The contract was biased against the department,” said the source.

Radebe said the contract with CNBC Africa was entered into by GFC CEO Tony Sauls in 2005, but was launched in 2007.

“This was a five-year contract and it guaranteed CNBC Africa revenue of 3m a year in the event that both the GFC and CNBC Africa are unable to attract sufficient advertising revenue agreed upon by the two parties,” said Radebe.

He said no amount was paid to CNBC Africa for the cancellation.

The South African Screen Federation (Sasfed) welcomed the termination of the contract, saying this money should be made available to Gauteng-based companies in the independent production sector.

“CNBCA does not act to promote local content production, especially in the independent production sector,” said Sasfed spokesman Marc Schwinges.

“Sasfed is heartened that such a large budget, has now been freed up within the GFC to the benefit of the Gauteng-based industry,” he said.

“We have no comment about that,” said CNBC Africa chief operating officer Gary Alfonso.


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