TopTV’s parent company, On Digital Media, recently released its Business Rescue Plan in which it is confirmed that Chinese pay-TV operator StarTimes has made an offer to become a “strategic shareholder” of TopTV and announced plans to halve prices.
This will see StarTimes buy 20% of TopTV and commit to inject enough money to “effect an arrangement or compromise of its financial obligations to creditors”, the plan said.
Despite StarTimes identifying a number of “operational deficiencies” at TopTV, the Business Rescue Plan remarked that there is tremendous potential to develop the pay TV base in South Africa.
Of the roughly 11 million households in South Africa with television sets, about 4 million are subscribers to pay television, the plan stated.
This statistic likely refers to previous Television Audience Measurement Survey data from the South African Advertising Research Foundation.
According to the document, StarTimes identified the following deficiencies in TopTV’s operations:
- Lack of scale
- Low quality programmes, high costs, inappropriate packaging and high churn rate
- High operating costs / subscribers’ development
- No differentiation advantage compared with DStv
- Insufficient management experience
According to the Business Rescue Plan, StarTimes said that it will address all these issues as follows:
- StarTimes has over 7,000,000 cable TV subscribers in China and more than 2,300,000 digital TV subscribers in Africa.
- StarTimes has coverage with C-band satellite and 8 uplink earth stations in Europe, East Asia, and West Africa.
- StarTimes has an established programme platform of 140 channels.
- StarTimes has 25 years experience in the broadcasting and television industry and over 5 years experience operating in Africa with around 2,300 employees working on the continent.
The Business Rescue Plan went on to lay out that StarTimes intends to:
- introduce human capital investments through the transfer of skills needed for the growth of the business;
- inject working capital to TopTV
- restore the TopTV brand, goodwill and confidence of its employees in the TopTV future;
- grow the subscription base, rattle the market that is currently covered by two digital television providers in Africa (one other in South Africa); and
- offer services at half their current costs and let ordinary households in South Africa pay less for good quality digital television.