Pay TV prices: Too high?

Many pay TV subscribers have voiced concern over what they perceive to be excessive pricing from South Africa’s sole satellite broadcasting provider MultiChoice.

Since 2008 the company has applied price increases to a number of its offerings, most notably its Premium DStv bouquet which has increased from a monthly subscription fee of R439 to R529 in the space of two years.

MultiChoice has in the past explained that these increases are due to the operational costs which have the tendency to increase on an annual basis in line with the country’s inflation figures.

Incoming pay TV competitor On Digital Media’s (ODM) CEO Vino Govender has however said that from ODM’s perspective the majority of operations within South African satellite broadcasting are linked to foreign exchange pricing.

This means that local pay TV operators may have benefitted with the strengthening of the Rand against international currencies such as the US Dollar and the Euro.

This does not however take into account a rise in local costs associated with running a business in South Africa. These costs are linked to the inflation rate which is calculated based on the consumer price index.

According to Liberta this number has remained relatively stable between 6% and 9% since 2007 with a spike of 13.7% in August 2008.

MultiChoice’s Premium bouquet price hikes were close to the national inflation rate, providing the DStv provider with some justification for its price hikes.

According to Govender ODM plans to follow a pricing model which will directly benefit the consumer. For this reason the broadcaster has taken out forward cover against foreign currency spikes which will protect subscribers for six to twelve months.

Govender added that “any responsible company should be keeping subscription costs in line with foreign currencies and should not be increasing”.

Pay TV prices << Discussion

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