MyBroadband recently wrote an article titled “The DStv Myth” which looked at the reasons why cancelling DStv is not always an option for people who want to save money.
This followed news that MultiChoice will increase its DStv Premium and Compact Plus subscription fees on 1 April 2020.
With a struggling economy and consumers under pressure, it surprised many people that MultiChoice increased its prices.
This raised the question: Why does MultiChoice feel confident to increase prices when it is losing DStv Premium subscribers and when consumers are struggling to make ends meet?
We found an article from David Kop in Finweek titled “As a rule of thumb” with a subsection which explained the scenario below:
A common budgeting tool is to cut luxuries, and one that comes up first is DStv subscriptions. In one consultation when doing a client’s budget, I had this exact discussion.
“Hey, if you need to free up some money, cut the DStv.” I could see my client immediately became disconnected, and so I probed deeper.
It turns out he was a massive sports fan and had to ensure that he watched his team playing live. So, if he cuts his DStv, he would go to a venue or a pub to watch the live game and be tempted to spend on food and drink. Although I saw DStv as a luxury, to him it was his essential entertainment and actually saved him money.
We felt this explained the scenario well for many sport-loving South Africans and also potentially explained in part why MultiChoice felt comfortable to increase prices.
MyBroadband subsequently wrote an article using this part of David Kop’s article, but mistakenly assumed his client referenced was in financial distress – and that it was a recent consultation.
We were alerted by Kop that the client was not in financial distress and that the consultation took place years ago.
He added that the intention of the article was to highlight the fact that financial decisions should be considered based on a person’s personal circumstances and one should not blindly follow general advice.
MyBroadband subsequently amended the article to remove all reference to Kop’s comments as requested.
It was certainly not our intention to misrepresent any information or put Kop in a difficult position, and we apologise to Kop for the wrongful assumptions about the original article.
We have also agreed to publish a statement by Kop on the matter. This is published below:
The real pity here is that the journalist from MyBroadband did either not read the article published in collective insights or did not understand it. The journalist in fact committed the very sin that I was trying to warn about in the article – when it comes to financial decisions it is a very personal choice and should be based on a person’s personal circumstances and thus you should be wary about following general advice or a rule of thumb.
The story I used about a DStv subscription was an example that I used to illustrate this point. As a financial professional, when doing a budget exercise I would ask the questions around all expenses. The example was to illustrate that without understanding a person’s needs we may just recommend to cut an expense based on a rule of thumb.
The reality is that before cutting any budget item you should examine the consequences of that decision based on your personal circumstances. In the example I used, it was not that a person was in financial distress, but rather a case of me trying to be clever (this was many years ago when I was new to financial advice).
The point of that story was that if I had rather explored my client’s needs, instead of quoting some general statement, I would better have understood that client’s needs and been able to give better advice.
I myself no longer give advice, but I hope that any advisers or consumers out there could learn from my past experience