eMedia Holdings, the free-to-air broadcast group that owns e.tv, eNCA and OpenView, is to make a diversion into the pay-television market dominated by MultiChoice’s DStv.
In eMedia’s just released annual report, CEO Khalik Sherriff said the group would contest the pay-TV market from 2023. No further details were given, and, for competitive reasons, Sherrif was reluctant at this early juncture to disclose too much. But he told Business Day the envisaged programming would be highly niched and pitched at affordable monthly premiums.
The move by eMedia comes as market incumbent MultiChoice, with about 9-million subscribers in SA, has been under pressure from online entertainment offerings like Netflix and Amazon Prime.
Significantly, eMedia’s advertising revenue stream on its OpenView platform has been threatened by a decision by MultiChoice not to renew the contract to carry four of its entertainment channels (eExtra, eMovies, eMovies Extra and eToonz) on certain DStv bouquets. The Competition Commission ruled against the interim relief sought by eMedia, and the matter is on appeal.
Online entertainment
The pay-TV move might have been inspired by eMedia’s eVOD online entertainment channel launch in August last year. Sherrif said the number of registered viewers to date had been encouraging, with almost 500,000 registered users in a year. “The eOriginals offering on eVOD is the leading audience generator on eVOD, making the group bullish about investing a further R100m in local original content, which will be amortised across the group’s platforms and channels.”
The pay-TV move also follows a strong financial showing by eMedia, which boasts large investment firms Hosken Consolidated Investments and Remgro as its biggest shareholders.
In the year to end-March, eMedia racked up net profits of R420m off record revenue of R3.2bn. The group scored from a resurgence of television advertising revenue (following the easing of pandemic restrictions) on the back of a marked increase in its share of prime-time audiences from 29.6% in March 2021 to 34.1% in March 2022.
Sherrif said this made eMedia SA’s biggest broadcaster in audience share in this category in SA. He said the pay-TV thrust would not require a huge capital investment.
Billing engine
eMedia is not widely covered by institutional investors, but one investment analyst who asked not to be named said how the group ran the billing engine for pay-TV would be interesting. “If we assume 1-million viewers are hooked to e.tv’s dailies, then a subscription as low as R10 a month could make a big difference to eMedia’s ebitda [earnings before interest, taxation, depreciation and amortisation].”
The shift into pay-TV might not be that surprising considering the innovations by eMedia now that its free-to-air satellite platform OpenView, which has almost 3-million users, has found traction. The group plans to launch “a few more channels” in the new financial year.
Sherrif noted in the annual report: “eMedia continues to live the mantra that technology and premium local content will keep the group as the front-runner in an extremely competitive market for ‘eyeballs’.”
Aside from the pay-TV pitch, he said eMedia would launch a new “smarter” set-top box including built-in Wi-Fi and the capability for the group to be innovative with ad revenue.
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