Whatever happened to satellite TV competition?
A YEAR after new satellite TV licences were awarded, MultiChoice’s DStv is still the sole operator, and competition seems a distant dream. This raises the question: is the market regulated effectively?
The regulator, Icasa, announced in September last year that Telkom Media, On Digital Media (ODM), Walking On Water TV (WOWtv), and e.tv’s e.sat would all get satellite TV licences.
E.tv has since given up its licence in favour of its 24-hour news channel on DStv. Telkom Media, ODM and WOWtv all say they plan to launch in the middle of or late next year.
According to media analyst Tawana Kupe, dean of the faculty of humanities at the University of Johannesburg, the monopoly is likely to continue. “It’s not good for media diversity. We don’t get diversification of local players, and consumers are left worse off,” he says.
Kupe says the deadlock raises the question of whether Icasa has done proper due-diligence surveys on the TV licence bidders and whether business plans of successful bidders are viable. He says he doubts a DStv competitor would launch next year as the increased cost of financing has put greater pressure on business plans.
Companies need to launch their products “viably and sustainably”. “With the shrinking advertising budget, I have very serious doubts they will launch (next year),” he says.
Delays only entrench MultiChoice’s dominance. The operator has already launched several packages to extend its reach among consumers.
Last year, it scooped the Premier Soccer League broadcasting rights from under the SABC’s nose. Its cheapest package, DStv Compact, is only R20 a month. In addition, MultiChoice snaps up most of the content Hollywood produces as soon as it becomes available.
The SABC will screen some of the most popular series, but often this is only after they have premiered on M-Net.
It is still unclear how Telkom Media and ODM will source their content as pay-TV subscribers pay for premium content. WOWtv, however, will produce most of its own content locally. But broadcasting specialist David Moore, of Africa Analysis, is more upbeat. He says that of the three remaining licensees, ODM is in the best position as it has guaranteed funding in place and a set plan.
“Telkom Media was in that position, but the lack of clarity draws them down,” he says. Telkom Media cannot act until Telkom, its major stakeholder with 66% of the company, announces the sale of all or most of its stake.
Telkom has for months been trying to exit Telkom Media, but the sale has not been finalised. It planned to invest R7,5bn in the venture, but got cold feet at the beginning of the year.
An announcement was expected this Monday, when Telkom announced results, but the telecoms group would say only that negotiations with a potential buyer were progressing.
The delays have been devastating for Telkom Media as the new company has been left in limbo until the sale is finalised.
Last year, analysts saw it as the licensee most likely to be successful, but this advantage has disappeared as it failed to get off the ground.
Unlike ODM and WOWtv, Telkom Media planned to offer cutting-edge IPTV, which delivers television through the internet in addition to satellite television.
Moore says he doubts consumers will be willing to pay for the necessary equipment to receive WOWtv, although there was a market for religious programming of the type WOWtv planned to offer, which was popular in the rest of Africa.
One obstacle WOWtv faces is the lack of content that reflects its focus on family values and Christian principles. “They will have to create a lot of content themselves, and content creation is itself a massively competitive market in SA,” he says.
Luyanda Mangquku, WOWtv’s chief financial officer, says 60%-70% of the company’s content budget will be spent on content creation for the first three years of operation.
“The big problem is cracking MultiChoice. They’ve had so much time to lock up the market,” he says.
ODM, Telkom Media and WOWtv are all targeting living standard measure groups 5 to 9, which MultiChoice is already targeting. But there is still room to manoeuvre for new entrants, with up to 2-million potential households, out of 4-million, not having signed up with MultiChoice. “There is excess market to tap.”
Mangquku does not see the higher cost of servicing debt and the difficulty of getting finance as an issue for the companies, as most of the funding needed is guaranteed beforehand.
And despite the drop in consumers’ disposable income, he predicts people will still sign up for pay-TV at the right price.
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