South Africa - TopTV on life support: Can it be saved?

Broadcast

The story of TopTV's chronic failure to capture the South African pay television market has its origins in the failure by the broadcasting regulator, ICASA, to open the subscription television market to competition. ICASA has failed dismally to enable the introduction of new pay-TV players to compete with the incumbent, the dominant MultiChoice, operating under the brand name DStv, which was launched in 1995, a decade after its parent pay-TV channel, M-Net, was launched in 1986.
TopTV is the only new pay-TV player that managed to launch its service after ICASA licensed new players in 2009. ESAT, Telkom Media and Walking on Water failed to launch, citing lack funds and uncompetitive market, amongst other reasons.

It is therefore not surprising that TopTV is now technically insolvent and under a business rescue process initiated in terms of the Companies Act. According to TopTV's original business plan submitted to ICASA during the licensing process in 2006, the station had estimated to attract approximately 350,000 LSM 5-6 subscribers annually. TopTV was launched on 1 May 2010.

Fewer subscribers than expected

To date, TopTV has only managed to attract at least 166,000 subscribers. If you look at DStv, the incumbent operator has more than four million subscribers in South Africa. According to DStv, more than 40% of its subscribers are premium bouquets subscribers in the LSM 7-10. DStv, which is owned by media conglomerate, Naspers, contributed 42% to the group company revenue. According to Naspers 2012 Annual Report, the incumbent pay-TV operator revenue for 2012 was R20.5bn increasing by 16% from R17.7bn in 2011.Net profit increased by 21.5% from R3.4bn (2011) to R4.2bn (2012) as a result of organic growth. MultiChoice paid a dividend of more than R5bn to its shareholders in 2012. DStv growth in the year 2010-2012 was driven by subsidised decoders, cheaper bouquets, and premium content like sport and movies.

Read the full story here