MultiChoice has lost more than 20% of its subscribers in the past year, making for a tough interim earnings report to end-September.
While disappointing, the group’s performance is largely in line with global peers and it could be argued that the DStv operator has fared better than those that have cut jobs and entire business lines along the way.
MultiChoice head Calvo Mawela thinks the group has seen the worst of the crisis, particularly in Nigeria, which accounts for a large portion of the financial strain on the business due to currency devaluation in that country.
Mawela said consumers adjusted their lifestyles according to the costs they incurred on a day-to-day basis and at some stage they would “be able to come back and add our services as part of their entertainment needs. So when I look at Nigeria, I think the worst is over”.
If true, MultiChoice operations across Africa will be spared the jobs bloodbath seen elsewhere in the world. Last year was an especially painful year for US broadcasters as they instituted job cuts.
According to research firm Statista, the US media industry, including broadcast, print and digital outlets, collectively saw more than 21,000 job losses in 2023. This was a large increase compared to previous years, with job cuts up by 467% compared to 2022. The news sector alone experienced 2,681 job cuts, which was more than in 2022 or 2021.
Like MultiChoice, US broadcasters have struggled with a decline in traditional TV viewing in favour of video on demand and online streaming services.
Disney, the $211bn behemoth that is home to the Disney Channel, ESPN, National Geographic and the lucrative Marvels movie franchise went on a heavy cost cutting push last year that saw 7,000 positions axed, a reported 3.2% of the group’s workforce.
In September, the trend continued with 300 more people laid off from its corporate office. A month earlier, in August, about 2,000 roles or 15% of Paramount Global’s staff complement faced layoffs, while in July Warner Brothers Discovery shed about 1,000.
In the UK, state broadcaster BBC announced in July it would cut 500 people from its ranks.
MultiChoice, the subject of a takeover bid by French broadcaster Canal+, cut R1.3bn worth of costs in its operations in the half year, with a target of reaching R2.5bn by the year’s end.
While the strain on broadcasters in developed countries has been attributed to the rise of streaming and shifting consumer preferences, Africa’s largest pay-TV operator has been battered by a number of factors. These include a cost-of-living crisis — during which consumers cut entertainment budgets — and high inflation. The latter has pushed up operating costs across the company’s 50 markets, while shifting consumer preferences have seen people turning to gaming and social media.
Deep-pocketed competition
MultiChoice has also had deep-pocketed international streaming giants such as Netflix, which see Africa as their next frontier for growth, to contend with.
While facing a bleak outlook, some are upbeat about the prospects for local broadcasters, if they can adapt to the times.
In a recent report, PwC said the broadcast sector remained important for advertisers, a crucial revenue source for the sector.
“The emergence of streaming services has applied pressure to traditional TV services, with many now forgoing them and paying for services that instead provide an abundant amount of on-demand video content,” PwC said.
The consulting firm said total TV advertising revenue contracted by 3.3% in SA for 2022, predominantly due to falls in terrestrial TV advertising. But this was expected to be temporary, with the segment set to rebound in 2024 and forecast to see an overall 1.2% compound growth annual rate through to 2027.
“Linear TV remains key for brand awareness and reaching audiences, while digital advertising offers short-term boosts. Broadcasters need to engage with younger audiences and make their online video streaming platforms more compelling.
“As digital linear alternatives like free ad-supported streaming TV grow, traditional broadcasters must incorporate offerings that satisfy both requirements,” PwC said.
Against this backdrop the group sees investment in online streaming as the best way to ensure its future.
This comes as MultiChoice said “unprecedented foreign exchange volatility” combined with macroeconomic challenges sent its annual profit, or adjusted earnings per share, nosediving from R1.5bn to R7m.
Subscriber numbers — measured on a 90-day active basis — fell 11% (or 1.8-million) to 19.3-million, from 21.7-million in the previous comparable period. In SA, the group has lost 400,000 customers from a year ago, with the biggest drop being in premium subscribers.
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