Only one South African broadcaster is making money

Only one of the three major TV broadcasters in South Africa turned a profit in their last financial year.

The growth of video streaming services and the availability of numerous other online entertainment platforms have bruised conventional linear TV around the world.

In South Africa, the expansion of affordable uncapped fibre-to-the-home, fixed-LTE, and fixed-5G broadband have made it easier for more households to “cut the cord”.

The Internet and its plethora of video streaming services offer a much wider range of movies, TV shows, and other content than linear TV.

In most instances, it also lets users consume it on demand rather than having to follow a programming schedule.

With the number of eyes on linear TV in decline, advertising on this platform has become less lucrative.

South Africa’s public broadcaster — the SABC — reported a loss of R1.13 billion in its 2022/2023 financial year. While the SABC has not turned a profit in a decade, this loss was likely its biggest ever.

Although the broadcaster’s declining TV licence revenue is often a hot topic, its plummeting advertising revenue caused the biggest dent in its income statement.

Over the past seven years, the SABC’s advertising revenue has slumped from R6 billion to R2.6 billion. During the same period, its TV licence revenue has declined by a more modest R245 million.

While some of the SABC’s programming — like its soaps and primetime news bulletins — draw ratings-topping viewers, a lot of its public mandate content is simply not as commercially attractive.

The SABC must produce a certain amount of content in South Africa’s smaller official languages, which draws less advertising revenue.

MultiChoice much worse off

eMedia and MultiChoice have no such obligation, which is why the majority of their content is in the more prominent languages in South Africa — English, Zulu, and Afrikaans.

However, MultiChoice’s recent financial performance was even worse than the SABC’s.

South Africa’s biggest pay-TV provider recorded a loss of R4.15 billion in its 2023/2024 financial year. That follows another loss of R2.92 billion in 2022/2023.

The upside for MultiChoice is that it recorded a cumulative profit of R1.76 billion over its past financial years, while the SABC incurred a total loss of R2.85 billion.

In addition to advertising, MultiChoice primarily relies on subscription fees for revenue. Both advertising and subscription revenue declined by 7% in the most recent financial year.

MultiChoice blamed the decline in advertising on the broader weak macro trends in marketing budgets, TV ratings, and ongoing competitive pressures from digital online channels.

In subscription revenue, the company has been bleeding customers in its premium segment for years. Many of these lost subscribers have switched to video streaming services.

The decline in premium customers was partially offset by an increase in mass and mid-market customers on more affordable packages for some time.

However, whether due to affordability constraints or cheaper broadband prices and access, MultiChoice overall customer base has plummeted in recent years.

Between March 2023 and March 2024, MultiChoice lost 409,000 customers in South Africa and 1.21 million in its other African markets.

eMedia is the only broadcaster that turned a profit in the past financial year. The E-tv and Openview operator reported a profit of R333.87 million for the 2023/2024 financial year.

This was supported by overall advertising revenue resilience and over 300,000 new decoder activations.

Nevertheless, eMedia’s financials did come under pressure, as its profit declined by 11.6% from R377.69 million last year.

eMedia blamed load-shedding for a 1% decline in advertising revenue, while it also attributed part of a R31.5-million profit dip for its Media Film Service division to the Hollywood actors and writers strikes.

Its legal battle with MultiChoice over sports rights and the carriage of four of its channels on DStv also contributed an additional cost of R8.8 million.

eMedia’s combined loss of roughly R586 million over the past five years is better than the SABC’s, but falls far short of MultiChoice.

The graph below compares the profits or losses of SABC, MultiChoice, and eMedia in the past five years.

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Only one South African broadcaster is making money