Portrait | Why the French are so keen to snap up DStv

WHEN M-Net saw the light of day in 1985, South Africans could for the first time see things on TV that PW Botha and the SABC did not directly control. A year later, SuperSport was launched under M-Net's banner; and it wasn't long before Carte Blanche put paid to the idea that actuality programmes should not be part of a private pay channel's offering.

Then MultiChoice was established to more or less manage the administrative side of the business. Eventually, it became the umbrella name for all these operations. Among them is DStv, one of the first companies outside the US to distribute television signals using satellite technology. By 1995, MultiChoice Africa had opened offices or started franchises in countries such as Namibia, Botswana, Ghana, Nigeria, Tanzania, Uganda, Kenya, Zimbabwe, Angola, Mozambique and as far north as Ethiopia.

With Naspers's money behind it, MultiChoice became one of the first South African businesses to achieve broad success on the rest of the continent. For more than a decade, it was a cash cow with no significant competitors and richly rewarded Naspers shareholders.

But those days are over. New technology and new types of mass media mean more competition and tighter margins. DStv today offers more channels than ever before but just about all of them now have competitors in the form of streaming services such as Netflix, Amazon Prime and Disney+, or platforms like YouTube that often offer the same content much cheaper or even free.

For a middle-class family in Nairobi or Luanda who are getting broadband internet for the first time, the option of a rooftop dish and an expensive monthly DStv subscription is not nearly as appealing as before. And a decent data package for your phone is more important to many people than being able to choose from 400 channels on the TV in the living room.

In 2019, MultiChoice was listed on the JSE as an independent company and for the first time foreign companies could buy shares directly in the business that owns DStv. Previously, you could invest in DStv only via Naspers, which meant you also shared in a large number of other businesses that you might be less interested in.

A company that immediately started taking advantage of this opportunity was Canal+, a subsidiary of the French media conglomerate Vivendi. In terms of subscription television, Canal+ is as dominant in Francophonic central and western Africa as MultiChoice is in Anglophonic southern and eastern Africa.

Canal+ started buying shares in MultiChoice. By October 2020, it  owned 6.5% of the company and clearly wanted more. Why was this, if the best days of pay TV were already over?

Well, new technologies and a changing media landscape also bring new opportunities. Canal+ already has a strong presence in Europe, but in Africa there are far more opportunities for expansion and profit growth. By taking over MultiChoice and thereby eliminating a competitor, a lot of money can still be made in Africa from subscription TV as well as from newer ways to entertain the masses.

In the era of Netflix and other streaming services, you have to do things on a global scale or you're not going to make it. And you have to have deep pockets to create your own content or purchase it from the US. MultiChoice's Showmax is a good example of this dilemma, and the South Africans understand perfectly well what other benefits a joint venture will bring.

But Canal+ can make this happen only if MultiChoice shareholders and the South African authorities go along with the plan. Local legislation restricts media ownership in foreign hands, and a broadcasting licence may only be granted to a South African entity.

Consequently, MultiChoice pointed out early in the process that it would be able to limit Canal+ voting rights as a shareholder to 20% of the total. It might also become necessary to involve a local empowerment partner so a new company would still be South African enough to comply with all the regulations. Patrice Motsepe's name pops up regularly in these kinds of conversations.

Anyway, Canal+ kept buying MultiChoice shares. By February, its shareholding stood at 35% and it made a public offer to buy the rest of the shares for R105 each, valuing the business at about R46 billion. MultiChoice's board rejected the offer as too low, but there is nothing to stop individual shareholders from accepting it. The share price has also risen steadily since then.

This is when things started to get messier. The Takeover Regulatory Panel complained that it was not kept in the loop and MultiChoice accused Canal+ of failing to act in the spirit of the talks between them, which by that point had been going on for more than a year.

The Canal+ shareholding in Multichoice rose to 45% last week. Once it reaches 50%, it is legally seen as a merger, which means the Competition Tribunal will have to give its approval.

The bottom line is that between all the international and local laws and regulations and panels and tribunals and billionaires who can be further “empowered" and shareholders who all want to make sure they don't get the short end of the stick, the whole thing could still take months or even years to complete.

But if it can be done, a global media giant will come into being that will be able to compete with the major American studios, networks and producers, Maxime Saada, the Canal+ CEO, said in an April interview. And he foresees that such a joint business will have a dual listing in Europe (France?) and Johannesburg.

It's hard to overlook all the ironies of a French business and a South African company with roots in Afrikaans print newspapers banding together to entertain the people of Africa in their homes. Some day, someone may make a great movie about it all.

♦ VWB ♦

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