CANAL+ has made a R31.7 billion offer to take control of MultiChoice, a deal that could result in the French premier television group listing on the JSE as well as providing the local pay-TV group with financial muscle to increase its broadcasting offerings in this country and in Africa.
The deal might be a big plus for MultiChoice, which operates in more than 50 African countries, as it is struggling with dwindling profit in the face of tough competition, most notably from internet streaming services such as Netflix and Amazon.
DStv operator MultiChoice recently announced the re-launch of Showmax, whose mobile app went online January 23 before the official launch on February 12.
Canal+ has been a MultiChoice shareholder for three years and owns 31.7% of its shares, making it MultiChoice’s biggest shareholder. The full terms of the proposed deal have not yet been ironed out.
Canal+ said in a statement yesterday that it was their plan to create an African media business with enhanced scale, which “can thrive in a competitive international market, better serve its consumers with a world leading offering of sports, local and global content, and ensure that Africa can tell her story to a global audience on her own terms”.
The industry in which MultiChoice operates is global and competitive, with regional media companies having to compete with the fire power of global media titans, with enormous resources to invest in content, marketing and technology. Scale is the only way to survive and thrive in this environment.
But local and African media and entertainment markets are growing faster than global averages. For instance, a report by auditing firm PwC late last year found South Africa’s entertainment and media markets are expected to outpace global markets, and Nigeria’s market is the fastest growing market within Africa.
South Africa’s media and entertainment market revenues are expected to grow 5.5% annually, on average, to R231 billion over the next five years, boosted by “intense competition among international streaming platforms – including Disney+, Netflix, Showmax, and Paramount which is expected to launch this year”, PwC said.
MultiChoice and Canal+ said the potential deal between them would put MultiChoice on a secure long-term path, and if it does not proceed, MultiChoice’s lack of scale is likely to become a more serious problem in coming years, risking its operations as a major media company in Africa.
Canal+ chairperson and CEO Maxime Saada said: “For MultiChoice to continue to thrive in Africa it will require a strategy that enhances its scale as well as strengthened local and global expertise.
“Combined with Canal+, MultiChoice would have the resources to invest in scale, local African talent and stories, and best in class technology, to allow it to grow in Africa and compete with the global streaming media giants.”
Saada said they hoped to build on their strong track record of co-operating with MultiChoice to commission ambitious and authentic African content, support more local production companies and deepen access to international sport while investing in and promoting local sport and their local stars and ambassadors.
“In turn, this will give viewers more compelling content and further enable Africa to tell her story to a global audience on her own terms,” said Saada.
* For more on the analysis on the deal, read Business Report inside.