The pay TV wars

2017-12-24 11:56
 

Johannesburg - It’s SABC and e.tv versus DStv as the future of South Africa’s pay TV market is being hotly contested in a discussion document. It forms part of an inquiry into subscription TV services by broadcast regulator, the Independent Communications Authority of SA (Icasa).

The central figure in the inquiry is MultiChoice, whose M-Net and DStv services control 98% of the pay TV market, with revenue believed to be up to R20 billion in subscriptions, according to an annual PwC report on consumer spend on TV.

In addition, sports rights are a particularly sore point for the free-to-air broadcasters, as well as the Competition Commission.

The submissions, made public on Icasa’s website late on Friday, reveal that MultiChoice has become so powerful that its channels are now watched in 41% of South Africa’s TV-viewing households, controlling 48% of the TV industry’s share of advertising, as opposed to SABC’s 36% and e.tv’s 16%.

Free-to-air broadcasters e.tv and SABC say they are primarily reliant on advertisers and the less of the advertising pie they get, the less likely they are to survive and educate and entertain the nation.

While e.tv raises similar concerns about DStv’s monopoly of the market, SABC’s 30-page response takes a hard line against MultiChoice, marking a shift of tone under the new board at the public broadcaster. They are supported by submissions from civil society groups the SOS Coalition and Media Monitoring Africa.

MultiChoice submitted a 600-page document in its own defence.

The SABC, in particular, suggests concrete changes to existing broadcasting regulations and legislation. The main areas of concern for e.tv and the SABC include:

Legislation

In 2006, the Electronic Communications Act attempted to cap the commercial potential of pay TV operators such as MultiChoice by legislating that their revenue from advertising may not exceed their revenue from subscribers. However, say e.tv and the SABC, the legislation is useless because DStv’s subscriptions have gone through the roof;

“Must carry” regulations

In 2008, Icasa determined that pay TV operators of a certain size in South Africa must carry the SABC’s free-to-air channels for no pay. The SABC says their shows such as Uzalo, Generations, Skeem Saam, Muvhango, Tjovitjo and Isidingo “are the most watched shows on the DStv bouquets in terms of audience numbers”, and that they should be allowed to negotiate being paid for their content on DStv;

Sports rights

A contentious issue for almost all broadcasters is MultiChoice’s total dominance of the rights to sporting events. This is made particularly difficult for the SABC, which is legally mandated to broadcast certain events. The SABC is having to sub-license rights from SuperSport, often at high rates and sometimes with the agreement that they delay their broadcasts so that they are not live. They accuse MultiChoice of “hoarding” sports rights by signing long-term deals with sports associations. They want these rights unbundled and spread between all broadcasters, a notion supported by e.tv; and

Apartheid advantage

The SABC makes no bones about how MultiChoice was “advantaged” by the apartheid government, allowing the Naspers group to diversify into TV and create M-Net, even giving it 21 years of “open time” to market its content, in turn allowing it to launch DStv in 1995.

Many players in the TV industry say in their submissions that Icasa has spectacularly failed to protect the market, and that they embarked on similar inquiries in the past, with no effect. Almost all the submissions say that Icasa’s inquiry needs to be broader than pay TV, because the TV market mutates due to the internet.

In its whopping 604-page response, MultiChoice raises numerous legal technicalities around jurisdiction, scope and market definition.

But the core thrust of its argument is that it, like all the players in the TV market, is under massive threat from internet-based over-the-top (OTT) TV services such as YouTube, Netflix, Facebook and Amazon Prime Video, which are largely unregulated in South Africa compared with the extensive regulation around traditional and pay TV. They point to how OTT content has shattered the traditional music market as viewing patterns shift online and on to mobile devices around the world. They say research indicates that South Africa has the second highest growth of mobile video consumption in the world. South Africans who are younger than 34 lead the world’s demand for streamed mobile content.

Piracy is another threat, they point out, as well as declining viewership and advertising figures, and the loss of exclusivity over content. MultiChoice says traditional TV channels on SABC and e.tv face multiple threats, not just from MultiChoice’s market dominance. The company refers extensively to emerging local OTT players and points to the massive investment it has made to offer a winning service.

MultiChoice insists it is not to blame for new players struggling to enter the market, but rather that its competitors have not made the right strategic choices. Pay TV licences have been offered by Icasa, says MultiChoice, but the winning bidders failed to launch.

Critics point out that MultiChoice has its own investments, such as Showmax, and future plans for dominating the local OTT market.

THE COMPETITION COMMISSION

In its submission, the Competition Commission says its investigations, many of which are still under way, pertain specifically to sports rights and viewers’ complaints that to watch sport, they have to pay for channels they don’t want. It says there is “a need for pro-competitive regulatory intervention” from Icasa in a market characterised by DStv, “an overwhelmingly dominant incumbent” and that there are “significant barriers to entry” for new players. It wants to see a shortening of exclusive contracts, especially for sport and Hollywood movies. It supports an unbundling of sports rights and would welcome rights splitting, through which all broadcasters get to buy a share of rights.

COMMUNITY BROADCASTING

Community broadcaster Cape Town TV makes it clear in its submission that crucial grassroots community broadcast services are at the mercy of MultiChoice, which broadcasts the channels and ploughs funds into development, but decides which players receive the most support. Community broadcasting has reached a point where it is highly reliant on MultiChoice to access its viewers and they want Icasa to ensure the playing field is fair.

WHAT THEY SAY

MultiChoice spokesperson Jackie Rakitla says that the company “has participated fully in Icasa’s inquiry since it was launched in July 2016”. It has submitted two responses to date to address “the competitive dynamics in the market”. He says MultiChoice will continue to participate in the process, which includes Icasa’s hearings, at which it will address submissions by the SABC and other participants.

The “must carry” regulations and sports of national interest regulations followed a similar inquiry and the SABC participated in this. It resulted in the final regulations that are in effect.

“These regulations are not part of this inquiry,” he says.

*Channel24 is part of Media24 a subsidiary of Naspers. 

Read more on:    multichoice  |  sabc

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