South Africa: Multichoice Defends Pay-TV Domain with content lock-up deals

Distribution

With the long-awaited new pay-TV licences set to be announced on Wednesday next week, the only existing player in the South African market, MultiChoice, appears to be strongly defending its territory ahead of the increased competition.

"What do you expect?" asked analyst at Renaissance Asset Management Khulekani Dlamini in response to talk that the company had tied up content in exclusive deals with at least two major channel providers.

"The fact that MultiChoice was the first into this market is not enough, it was expected that they would do whatever it took to defend their space," he said.

It is thought that the Independent Communications Authority of SA (Icasa) brought the pay-TV licensing announcement forward because leaving it any later would give MultiChoice sufficient time to sign up a list of exclusive deals with channel content providers for its satellite broadcasting platform DStv.

But, according to MultiChoice spokesman Jackie Rakitla, "it's been business as usual" at Africa's foremost satellite broadcaster. "There will be some channels that do have exclusive rights and some that don't," he said. The company had not done anything "sinister" in the way it had secured channels.

GM of content Aletta Alberts echoed this, saying that while she could not give exact figures as to how many channels held exclusive rights, "it was high".

Contract terms were between three and five years and were dictated by the channel provider.

Rakitla said that tying channels into a long-term contracts was more difficult than it was made out to be.

"What you have to remember is that these channel providers are always looking for better agreements which give them more exposure."

Icasa has been overseeing the licensing process and the industry authority confirmed on Tuesday it would be issuing new licences to an unknown number of the 16 applicants next week. Originally, 18 applied for licences but two of the applicants, Worldspace and Multichannel, later withdrew their applications.

Analysts have predicted that no more than three competitors could play in the market simultaneously - for the time being - and even this could be too many.

"Aside from MultiChoice entering the market, I don't see there being space for more than one more player, unfortunately," said Dlamini. His money was on Telkom Media being that competitor. "This is really a money game and Telkom Media has deep pockets -- they've already announced that they would place R7,5bn into their offerings in the next five years," he said.

(Business Day (Johannesburg), 7 September 2007)