Canal+’s problem with MultiChoice’s business model

MultiChoice has over ten brands in its portfolio, nearly half of which fall outside of content distribution, something French suitor Canal+ disagrees with.

The French media giant has steadily bought up MultiChoice stock on the open market since October 2020 and hit a 35% threshold at the beginning of the year, triggering a mandatory buyout offer.

After some wrangling from MultiChoice and a reprimand from the Takeover Regulation Panel, Canal+ offered R125 per share, valuing the company at over R55 billion.

The buyout will cost Canal+ over R30 billion in cash. It also continued buying MultiChoice shares while its offer was being considered.

It currently owns over 45% of MultiChoice, however its voting rights are limited to 20%.

In a recent interview, Canal+ chair and chief executive officer Maxime Saada said that the French media company does not believe in MultiChoice’s approach to diversifying its brand in recent years.

Saada explained that Canal+ has remained focused on content distribution.

But despite the conflict between business models, the Canal+ CEO maintains that MutiChoice has created strong brands.

Since its inception in 1995, MultiChoice has created and acquired large stakes in several brands: SuperSport, DStv, M-Net, Showmax, Irdeto, GOtv, Namola, BetKing, Moment, and NMS insurance services (NMSIS).

M-Net was formed ten years before MultiChoice’s inception and has since become the company’s premium entertainment product, broadcasting local and international content.

It was part of an initiative by media corporation Naspers, which needed to restore revenue from its print publications and decided pay-TV was a good way to do so.

Former Naspers chair Ton Vosloo said this was a tipping point for the company as it ushered away from print media.

Having started as a standalone channel, M-Net now offers over 20 individual channels on DStv.

Award-winning actuality show Carte Blanche was launched on M-Net in 1988. Credit: MultiChoice

SuperSport started as a small offering on M-Net in 1988 when the channel obtained the exclusive right to broadcast the Currie Cup match between Transvaal and the Western Province.

The sports channel has grown substantially in its coverage, with MultiChoice maintaining its monopoly on broadcasting rights for major sports events, something other domestic broadcasters can’t afford.

MultiChoice was later formed in 1995 “to oversee subscriber management, signal distribution and cellphone operations”.

That same year, DStv (Digital Satellite Television) was introduced as Africa’s first digital satellite service and one of the first outside the US.

It initially offered 16 channels, including M-Net, SuperSport, TNT, Sky News, Cartoon Network, and CNN.

Today, DStv offers a range of bouquets, including its premium selection, DStv Premium, which offers over 135 channels and broadcasts content to 50 countries.

In 2015, it launched its Showmax streaming service in anticipation of Netflix rolling out to South Africa.

Showmax has struggled to compete with Netflix since its release in 2016. According to a recent MAPS report, roughly 6.3 million South Africans use Netflix, whereas only 3.6 million use Showmax.

Saada said Canal+ won’t get rid of either the Showmax or DStv brands after the takeover unless they really have to.

Several of MultiChoice’s notable holdings and operations outside the entertainment industry are summarised below.

Irdeto

Irdeto was put in charge of MultiChoice’s cybersecurity needs in 1995.

The security company specialises in protecting digital platforms in video entertainment and IoT-connected industries.

MultiChoice International Holdings (MIH) then acquired a 49% stake in the company in early 1997 and the rest later that year.

Namola

Namola, a safety app MultiChoice acquired in 2022, allows users to request emergency assistance from the South African Police Services (SAPS) and other emergency services.

Then-MultiChoice South Africa CEO Nyiko Shiburi said the acquisition was meant to expand the company’s ecosystem beyond entertainment and “offer a suite of consumer services.”

BetKing

In 2020, MultiChoice acquired a 20% stake in Nigerian sports betting company KingMakers, which cost R1.8 billion.

It later increased this stake to 49% the following year, costing an additional R4 billion, and introduced the BetKing platform to South Africa.

However, MultiChoice noted in its most recent financial results for the year ending March 2024 that due to the devaluation of the Naira, its investment had decreased in value by R2 billion to R4.6 billion in 2023.

This was noticed during the 2023 financial year.

SuperSportBet

MultiChoice launched another betting platform in partnership with KingMakers in January this year.

Like MultiChoice’s decision to purchase Namola, MultiChoice group CEO Calvo Mawela said that SuperSportBet reflected the company’s commitment to evolve into a platform-based business driven by innovation.

MultiChoice added that SuperSportBet placed responsible gambling at its core, with robust tools for gambling control.

These include Reality Check, Loss Limit, Timeout, self-exclusion, and account closure options.

Moment

In 2023, MultiChoice formed a joint venture with fintech group Rapyd and American venture capitalist firm General Catalyst Partners to develop an integrated payment platform for Africa.

MultiChoice said in its most recent financial report that it had successfully launched Moment along with SuperSportBet.

This has been used as a payment solution for Showmax and DStv.

NMS Insurance Services

NMSIS is a registered South African composite micro-insurer and authorised financial services provider, licensed to underwrite non-life and life insurance products.

It has been writing insurance for the past 20 years under the DStv brand of MultiChoice, focusing on device, installation, funeral, subscription waiver, and debt waiver insurance products

On 18 June, MultiChoice announced that Sanlam would be acquiring a 60% stake in NMS Insurance Services.

Sanlam will pay R1.2 billion cash upfront, with a potential performance-based cash earn-out of up to R1.5 billion.

Sanlam will oversee the NMSIS operations through its Sanlam Fintech cluster.

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Canal+’s problem with MultiChoice’s business model