Category Archives: dstv

Multichoice Group Spinoff and Listing

On February 27 Multichoice listed on the Johannesburg Stock Exchange, in a spinoff move by its parent company Naspers. The listing is expected to unlock value for Naspers shareholders and create an empowered African entertainment pay-TV business with strong financials and no debt to deliver returns for its shareholders.

The new company called Multichoice Group includes MultiChoice South Africa, MultiChoice Africa, Showmax and Irdeto a digital security company. It serves 13.5 million households around Africa and had a trading profit of R6.1 billion last year. Naspers itself has $20 billion revenue, and owns 31.2% of Chinese giant Tencent and large stakes in other e-commerce firms in Russia (Mail.Ru) and India (MakeMyTrip).

In 2006 Naspers facilitated the sale of a 20% stake in Multichoice South Africa to investors in a black economic empowerment program initiative and about 90,000 individual and companies bought the shares through a vehicle called Phuthuma Nathi (PN) that now owns 25% of Multichoice South Africa.  Over the years, PN’s shareholders are estimated to have got 17 times return on their investment through capital growth (from R10 per share to R130) and dividend payments.

In the listing, an additional 5% of Multichoice South Africa will go to Phuthuma Nathi at no cost and thereafter, Naspers will facilitate the exchange of a quarter of PN’s shareholding in Multichoice SA for shares in Multichoice Group.
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Similarly, in Kenya, the Group has implemented a transfer of 30% of the shares held by the Group in GOtv Kenya to a qualifying local nominee (whilst maintaining the beneficial interest in the stake) in order to comply with local ownership requirements.

Ten years ago, Multichoice’s Dstv regained the English premier league soccer rights they had briefly lost to GTV.

Dstv Pricing in Kenya

This week saw satellite TV provide Multichoice Kenya increase the price of their DSTV satellite TV subscription service, with the top (premium) package now going to cost Ksh 9,400 (~$92) per month from October – an increase of almost 15%. This has since been debated on several fronts, one of which was a cost comparison with South Africa pricing where the company is based.

WGKantai dstv

 Another was done  in terms of what paying for TV means compared to other real life costs like paying for housemaids.

In an interview on the price change, Multichoice Africa CEO Tim Jacobs cited several factors behind the increase including Kenya’s shilling which has depreciated 15% this year against the US dollar in which they buy most of their programming such as the (extremely popular) English Premier League (EPL) who’s rights were hiked 70% in the new deal signed earlier this year.

The price increase also sparked a local consumer lobby to pursue a boycott and petition and in past years, a similar dstv cost increase was debated in Kenya’s parliament. Back in April 2010, one MP asked if Kenya’s national broadcaster – KBC, who own 40% of Multichoice Kenya would consider waiving their profit so that more Kenyans could afford to watch the 2010 World Cup .

dstv maid

This may be the most significant sports television moment in Kenya since  GTV went bust after a short period of outspending dstv in the race to televise top sports events.

The new dstv cost that has a figure close to five digits per month seems to be a tipping point with many subscribers now saying that the cost is simply too much and that they plan to downgrade their subscription to a cheaper one or switch to another company.

Rival, Zuku (of the Wananchi Group) has since responded to the dstv increase with an enhancement of their channel package and offering their viewers more programming, at no extra cost, by adding as many as 19 new channels such as Nat Geo Gold, Fox Sports 2, BET, Discovery Science, IConcerts, TLC, Fox News, FX , Bloomberg, E!, Sky News and Euronews.dstv multichoice

It’s not clear how many of the 100,000-160,000 dstv subscribers in Kenya are on the premium package, but it’s clear that many of those that do, subscribe to it for the sports packages (which are exclusive to the premium tier), and also that many of the same premium dstv subscribers do enjoy watching their favorite sports teams and players with their friends and fellow fans in sports pubs, and not at home where they are paying for the sports (and face many distractions!).

DSTV Rewards

and peculiar Kenyans
This week, Multichoice Kenya launched a promotion called #DSTVrewards in which their active subscribers are eligible to win Kshs. 600,000 (~$7,000) in prizes per week for the next few months. In addition, other subscribers can win 10% discounts for paying on time or win a year’s subscription by spotting a box while watching TV (and sensing an SMS to the company)
 The competition’s launch showed some aspects of peculiar Kenyans including:
  • The love of free stuff (not an exclusively Kenyan habit, but freebies are necessities in many promotions)
  • How people operate under any name, and feel ok – as many services are pay as you go – and with DSTV, loyalty programs, subscriptions, utilities people are okay with paying and getting service, regardless of whose name in registered (landlords/relatives/previous occupants/no names) at the service providers (some of who are also  not strict about account names as long as payments keep coming in). This may change soon with the government recently undertaking a mandatory registration of all phone lines after and also other benefits that accrue to properly registered customers – and with the rewards program, the first drawn name, who was called in the presence of officials from the Betting & License Control Board (BCLB) was not the registered owner – and was thus rejected. 
  • DSTV Rewards
  • A theory of @whiteafrican was again proved as the first confirmed winner of the prize (Dr. Chris Mugambi) showed a lot of skepticism, not excitement, when told that he had won  $7,000 merely for confirming his DSTV account details over the phone. This comes  the many local stories of hoaxes,  other people are told they’ve won prizes – only to be duped of money, radio stations that make prank calls to ‘shame cheating spouses etc. As a result, some people only accept calls from people who they have in their phonebook. 
Other takeaways from the launch:
  • It’s easier for Kenyans to get ‘digital TV’ by buying a Kshs 3,000 (~$35) decoder to use with an analog TV (which 99% of Kenyans already have) than buying a new ‘digital TV’ screen that costs about a Kshs 70,000 (~$823)
  • Via @NjeriWangari @DSTV_Kenya has bought out #FilmStudios as part of a focus to generate local content and producers can take show ideas to them for discussions about developments.
  • Separately, an independent financial report,  showed that Multichoice Kenya has 100,000 subscribers representing  6% of DSTV’s Africa’s audience.


Sporting Moment: GTV Out

GTV folds
It has been a bleak weekend for Kenyan sports – Gor Mahia lost 0 – 5 to a visiting team from Rwanda, Zimbabwe has now defeated Kenya four matches in a row in Cricket at Mombasa & Nairobi, but most shocking was the sudden shutdown/collapse of GTV – who for the last two years were the main broadcasters of the English soccer premier league in several African countries.

Their statement attributes the collapse to the ongoing global credit crunch, but their demise seems similar to that of Kirch Media who spent big in the late 90’s to acquire the rights to broadcast two World Cup events and also 100 years of formula one races among other media properties – but who folded shop a few years later in one of Germany’s biggest corporate collapses.

What next? I expect Multi-choice DSTV to step in and pay the liquidators of GTV about 30% and take over their broadcast rights in Africa (and perhaps hike their prices too), while in Kenya, a successful bid for GTV’s soccer rights could also be an opportunity for Wananchi’s Zuku to make a nationwide impact.

Business impact in sports
The local impact of the economic crisis is likely to be replicated in sports.

– The local soccer league did well last year (2008) with private interests participating and sponsoring the teams & competitions – there was huge fan interest, media interest (for once local radio stations actively previewed, reviewed and encouraged attendance of local soccer matches) and a private security firm (G4S) was in charge of the ticketing and match revenue collection.

But will the economic crisis affect things? Will sugar teams like Sony and Chemelil continue to support sports when even the only profitable company in the sector (Mumias) has profits down 80% this year? And what about Sher (Flower) and other small company-sponsored teams?

– The local motoring scene was mainly supported by KCB last year and fortunately, despite the bank’s ongoing problems – particularly with a fellow sponsor (Triton), they have agreed to also sponsor the 2009 rally season. However, the loss of Paris Dakar to South America shows the global nature of sports and that events (like the Safari Rally) can be translocated elsewhere if countries don’t pay attention to details of sports management. in 2009, pressure shifts to South Africa to progressively move nearer the completion of stadiums for the 2010 world cup.

– Rugby continues to be well-organized, attract top-notch sponsors, and the annual Safari Sevens is the premier sports event(party) – with Kenya’s Sevens Team off to participate in the IRB Sevens World Series next weekend.

Bad management
Another problem in Kenya is bad management – and while every sport has behind the scenes ramblings and wrangles, Kenya is no exception with motor sports, cricket and soccer feuds that have long been a distraction for the sports.

Also, all sports go through generational changes – and in the off-season, Athletics Kenya management went through elections that were well contested. However, in Kenya we need to have longevity of athletes, not management officials; it is rare to have someone (except for Catherine Ndereba) participate successfully at more than one Olympic event. Other countries stars like Haile Gebreselassie, Hicham El Guerrouj and Kenenisa Bekele have successfully represented their countries at consecutive Olympics – while in Kenya it is sad that it is mainly the officials who show such endurance – and that people who were ‘in charge’ of sports like soccer in the 1980’s and 90’s are still in charge today (Sammy Obingo, Sam Nyamweya) – and continue to bicker and blame each other for the problems in the sport.

Having recently read Foul, FIFA comes across as a corrupt institution that does not care about individual countries attempts to improve management of their sports affairs – FIFA wants to dictate who will be the local managers of soccer, and no matter how bad or corrupt they are, they are FIFA’s people who should not be interfered with unless a country wants to be suspended from regional or international soccer competitions.

EDIT: Feb 4 2009 – South Africa based DSTV SuperSport channel reclaimed the rights to broadcast live all English premier league matches, including those from collapsed GTV in 22 African countries over the next two seasons

Mostly Safaricom

The ban on plastic paper announced in last Thursday’s budget has temporarily been reversed. It was an amorphous declaration covering all manner of plastics (consumer, industrial) that was likely to lead to unintended increase in the price of many items.

Safaricom
– Has lowered rates for phone calls and SMS from today. Mobile companies have become increasingly competitive with Celtel and Telkom Wireless – who have deployed VoIP and roaming features – nipping at the edges of Safaricom’s base. Are free weekends from Celtel the next offering?
– Safaricom has opted to recycle numbers now that they were running out of lines(prefix 0720-0729. Unused phone lines (not used/topped up) for 4 month can now be reclaimed by the company and be resold (previously they expired after 1 year)
– I’ve noticed on my recent travels in South Africa, Uganda and Tanzania – that all Vodfone affiliated networks have a cool feature that lets you know where you are (location). It was tested once in Kenya last year but the flip side to this is that it reminds paranoid people that the phone companies (and other interested authorities) know if you are at Ngurdoto mountain lodge, Johannesburg airport or the Speke hotel and that they can find you and perhaps not wanting to spook some subscribers have not activated the feature in Kenya. [Read how it affected a lion’s phone choice and more on big brother from Uganda and South Africa]
– 30% of Safaricom up for an IPO this fiscal year.

Sports TV: G TV are expected to have 80% of premiership games this year. Is that reason enough for DSTV to panic? (am not a subscriber). There’s also Oxygen (cable) TV (costs Kshs 999 per month), and free TV (Nation (with La Liga), Citizen (rename them ChelseaTV), KBC, KTN and other channels with various sports offerings. The big attraction of DSTV is sports, but also the other channels like Movies, MNET and Discovery. DSTV now assures that they will still have games of the big four (Arsenal, Chelsea, Liverpool Man U – listed alphabeticaly, not by rank)- two every Saturday, two every Sunday, and one on Monday night. So what is 80% worth if it features teams like Blackburn, Man City, Sunderland and Wigan at a cost of about Kshs 2,200 per month?