Softening the blow
M-NET HOPES THAT programming initiatives that it began putting in place two years ago in preparation for losing its freeto-air two-hour window, Open Time, will “at least” halve the revenue knock it anticipated would be the case without any changes.
CEO Glen Marques says M-Net had faced the choice of investing in new content or cutting costs to mitigate the loss in revenue. It chose the former. Open Time ended on 31 March.
Marques said M-Net could have lost between R80m and R90m in revenue (more than the R60m it thought at the time of the ruling against it) from reduced advertising income due to lower subscriber numbers between 5pm and 7pm. But it hoped the creation of another new soap – Binnelanders – would boost viewership and even attract new subscribers.
Marques says that could be considered a risky strategy, as a new soap required significant investment. Binnelanders was also in competition with the highly popular SABC soapie Sewende Laan but, so far, M-Net has been pleased with the response to its new series.
M-Net recently moved Binnelanders into a daily half-hour slot after moving Egoli from its hour-long slot on Thursday evenings. With Open Time in place, M-Net used the 5pm to 6pm slot as a “promotional window” for programmes on some of the niche DStv channels, such as kykNet and GO. However, most viewers would in future have access to those, says M-Net, so it would from now on re-screen the previous evening’s Prime Time series for those who missed it the night before.
By closing its Open Time window – started in the early days to help M-Net build its subscriber base – and in the run-up to competition in the pay-TV space, MultiChoice created a DStv “lite” option for subscribers. The option – DStv Compact – costs R199/month for 26 channels plus an hour of Egoli and Binnelanders every weekday. The full service offering – DStv Premium – costs R439,90/month for more than 70 video and audio channels.
Marques says though it’s still too
early to tell, it will be watching viewership patterns closely to see if its strategy is paying off. It also hopes to lure new subscribers.
MultiChoice, M-Net’s host platform, had 1,3m subscribers in SA at end-September 2006 (parent Naspers has just closed out its full-year period to end-March and will report on the latest numbers in June). Both the compact offering and the number of PVR subscribers had reached 65 000 at that stage.
Naspers is ultimately M-Net’s controlling shareholder (also Finweek’s parent company) and should soon own almost all of the shares in M-Net and SuperSport if SA’s competition authorities give it the thumbs up for the acquisition of Johnnic Communications’ 38,65% stake.
M-Net had two years to prepare for the loss of Open Time but was warned as early as 2002 that the regulator would review its licence conditions. An Icasa process decided the fate of the free-to-air window in June 2005 after the SABC, e.tv and Caxton lobbied for the window to be closed. They said it gave M-Net an unfair advantage as far as advertising revenues were concerned.
Icasa chairman Mandla Langa said at the time of the ruling that though many of the 248 000 free-to-air viewers who watched MNet during Open Time would probably be disappointed, as 41% of those fell into the upper income band of consumers, they could easily afford an M-Net subscription.
The Department of Communications (DoC) recently released a discussion document on its plans to migrate from an analogue to a digital terrestrial TV environment. The document suggested that the process of licensing new pay-TV players should be put on hold until after that and gave the industry two weeks to respond to its proposals.
That suggestion provoked much consternation. Caxton journalism Professor at the University of the Witwatersrand, Anton Harber, wrote in a column in Business Day that the industry was “reeling in shock” at the minister’s barging in on Icasa’s licensing process and treating with “contempt” those who wanted to invest billions in SA’s media industry.
But DoC spokesman Albi Modise says the document is “not sacrosanct” and will take the industry views and those of other relevant players into account. The DoC had no intention of disrupting the processes of the regulator and wouldn’t put the pay-TV licensing processes on hold if industry and other relevant players disagreed strongly.