MultiChoice crushed its competitors in South Africa through a series of shrewd business moves and by offering an excellent pay-TV service in DStv.
Launched on 6 October 1995, nearly ten years after introducing its M-Net pay-TV channel, the first DStv package offered 16 channels for R175 per month.
By 2000, DStv had expanded its bouquet to 60 channels and was around R300 per month.
Viewers flocked to the platform as MultiChoice continued investing in SuperSport and acquired high-quality international content earlier than free-to-air broadcasters could.
It also capitalised and expanded on M-Net’s existing investment in local content.
M-Net had launched the investigative journalism programme Carte Blanche in 1988, a block of children’s programming called K-TV in 1990, and South Africa’s first locally produced soap opera, Egoli, in 1992.
As its subscribers grew, MultiChoice began buying exclusive regional rights to popular sports and international programming, blocking would-be competitors from accessing the high-value content.
The strategy was extremely effective in sports-mad South Africa, with MultiChoice securing the rights to the most-watched rugby, cricket, and soccer tournaments.
Sports fans knew that whether they wanted to watch the Olympics, the Sharks, the Boks, Michael Schumacher, Mike Tyson, Manchester United, or Bafana Bafana, DStv had it.
MultiChoice also ensured DStv had something for the whole family, from dedicated kids and movies channels, to popular TV shows ranging from Top Gear to Game of Thrones.
It also got into reality TV production, acquiring the rights to franchises like Big Brother and Idols.
By not resting on its laurels and entrenching its dominant position, DStv seemed unassailable by the time competitors tried to take a slice of South Africa’s pay-TV pie.
In the mid-2000s, industry regulator Icasa issued several commercial broadcasting licences to companies trying to compete with MultiChoice.
One of these was Telkom, a worthy contender as a monopoly in its own right. Telkom dominated the fixed-line telecommunications industry at the time, mainly because it had enjoyed a government-protected monopoly.
Telkom received its commercial broadcast licence in September 2007 and started to build a large company to challenge DStv with South Africa’s first IPTV service.
Its ambition was to become a triple-play provider like cable and media companies in the US and UK, offering broadband, television, and telephone services.
It planned to invest R7 billion in Telkom Media, with R3.5 billion coming from Telkom.
By March 2008, Telkom started to get cold feet, announcing it would slash Telkom Media’s funding to R2.2 billion.
Telkom pulled out soon after that, selling its stake in the media company — and its broadcast licence — to Shenzhen Media Group in 2009.
It would be rebranded Super5Media, but would also ultimately never launch.
Another contender soon emerged in On Digital Media, which launched TopTV in 2010.
By 2012, On Digital Media was in business rescue. Chinese pay-TV operator StarTimes bought a stake in the company, and TopTV relaunched as StarSat.
In addition to securing exclusive rights to popular and highly sought-after content, MultiChoice also acted against any opportunity for challengers to gain subsidised entries into pay-TV.
This included a highly controversial contract with the SABC, which blocked the public broadcaster from having its channels carried over encrypted digital terrestrial television platforms.
A News24 GuptaLeaks investigation in 2017 also linked MultiChoice to dodgy dealings between then communications minister Faith Muthambi and Gupta associates.
The investigation revealed that MultiChoice had lobbied Muthambi to push former president Jacob Zuma to transfer powers over South Africa’s broadcasting sector to her.
This was after Zuma split the Ministry of Communications in two and appointed Siyabonga Cwele as Minister of Telecommunications and Postal Services.
President Cyril Ramaphosa has since reintegrated the two ministries.
Upon receiving her powers through presidential proclamation, one of Muthambi’s first orders of business was to declare that government-issued digital TV decoders would not include encryption technology.
This was in direct contravention of her own political party’s policies.
The encryption issue was so sensitive for MultiChoice because it would’ve allowed E-tv owner eMedia a subsidised entry into South Africa’s pay-TV sector.
South Africa was busy migrating from analogue to digital terrestrial television broadcasts, and poorer households would be given a government-subsidised set-top box (STB) to allow older TVs to display the new signal.
Terrestrial television refers to signals received using a regular roof antenna or “bunny ears” rather than a satellite dish.
DStv’s existing subscribers were not impacted by this migration at all.
Regardless, there was much debate about whether the decoder-like STBs should include encryption technology to help government protect its subsidy.
The argument was that subsidised STBs could be sold below cost price in countries using the same digital TV technology as South Africa.
However, MultiChoice and eMedia’s true interest was in the opportunity and threat the boxes presented.
If government deployed decoders with encryption technology to every indigent household in South Africa, that would allow broadcasters like eMedia a government-subsidised entry into pay TV.
Where MultiChoice had to carry the cost of decoder subsidies to encourage DStv uptake, eMedia would get a free ride.
It therefore did everything in its power to block this from happening.
MultiChoice denied that there was anything untoward in its policy proposals to Muthambi.
“MultiChoice, like other companies in the sector, regularly engages the industry regulator and government on matters that affect the broadcasting sector,” it stated at the time.
“This includes making proposals that may take a specific regulatory or legislative form.”
MultiChoice said it made many such proposals, and many were also rejected.
Source
mybroadband.co.za
