Time for MultiChoice to open up the DStv box
The expression “take it with a pinch of salt” is an English idiom suggesting that one views something with a certain scepticism.
I felt I needed at least a bucketful of salt when I read the MultiChoice spin attempting to convince us nothing was untoward in the half-a-billion-plus it paid to carry the ANN7 news channel, then owned by the Guptas.
In fact, if we were to believe MultiChoice, it didn’t even know that ANN7 was controlled by the Gupta family. It simply received an unsolicited proposal from a group of people who promised to bring “local black voices to reflect a more diverse local news coverage”, signing them up and giving them R25-million upfront, along with two Nkandlas over five years.
No due diligence was done, no checks on shareholding, management skills in running a news channel, experience or expertise — nothing.
If paying millions upfront is the normal course of business, why is doing due diligence not?
“The terms of the agreement were renegotiated and payments increased when it became apparent that ANN7 needed to improve quality on the channel,” says MultiChoice.
So when it realised that these God-sent messiahs, who coincidentally had the same idea as them, at the same time as them, who had no prior media experience, who were not black but would miraculously deliver a “black voice” to local news, were actually failing — they didn’t put them on notice, they didn’t suspend them. No, they paid them more money.
“But don’t worry South Africa, no corruption happened here. We just made a mistake. We know it doesn’t make sense, but trust us. Yes, we should’ve done better. And we will.
“In fact, here is another bag of cash to the next group of people who can give us the local black voice. Maybe this time they really will be black. And maybe they will know a thing or two about news.”
Over the years, MultiChoice has gone to great lengths to protect its dominance. However, this saga suggests that some of its tactics may have been illegal or at the very least, shady.
If MultiChoice wants genuinely to do right by all South Africans, it could start by respecting our intelligence.
In an attempt to justify the amounts paid to ANN7, the network breached confidentiality, revealing that it had paid more than R500-million to eNCA for its news channel. A day after the press release, eMedia, owners of e.tv and eNCA, disputed this, saying that what they received was “significantly below the amount suggested by MultiChoice”.
It is clear that there is just too much spin here, with everyone falling over themselves to cover up a distinctly smelly mess.
So perhaps this is an opportunity to right the wrongs of the past once and for all.
The regulator, Icasa, has made repeated attempts to introduce a competitor in the pay-TV market, to no real effect. A number of players have been issued licences, and most never launched their services. Those who did lost loads of money.
There is only one real reason behind South Africa’s failure to create competition for MultiChoice in the pay-TV space — extremely high barriers to entry built over the two decades of dominance.
This is more easily understood when it comes to content rights, especially in sport. But there is another key barrier, probably more strategic than any piece of content — access to the box.
In the early days, mobile networks enjoyed exclusivity in the handsets they offered as part of their packages. So, when a subscriber took out a contract with one of the networks, the device would not allow him or her to use a sim-card from another network. It was your device, which you were paying for, but you weren’t allowed to use another network’s SIM card in it.
The telcos fought long and hard on this matter with Icasa. Their rationale was that they were heavily subsidising the devices during the course of the contract, and allowing users simply to dump them any time they liked would materially compromise their business model, even if the subscriber honoured the contract.
The regulator heard them. And then decided they were wrong, because it was in the best interest of the consumer and competition to unlock the device. Once the customer had committed to the contract, the device belonged to him or her.
If MultiChoice truly wants to give black people an opportunity on its platform, and if Icasa sincerely wants to introduce competition in the pay-TV space, there is only one thing to do — open up the DStv box.
Much like the telco experience, new players could offer alternative content, packaged via unique bouquets at various price points, and use the same decoder currently being used in more than
4.5 million South African households.
Regulating for an open DStv box would essentially obliterate the infrastructure barrier for new players and competitors.
Just as in the case of the mobile operators, the customer has already paid for and owns the decoder, along with the satellite dish, and should now be paying for content only. There is a very strong and rational argument to allow new players to access the box.
This would create real competition for audiences, which means better quality and lower prices for consumers. It would also open up the bidding landscape for rights owners and producers of good content. The benefit to local producers and creators would be immense. Even for the really expensive content, players can suddenly compete on an equal footing because they all have access to the same platform.
Yes, I am certain MultiChoice will not like it, but the mandate of Icasa as a regulator is not to be liked. Its mandate is to “regulate both the telecommunications and broadcasting sectors in the public interest”.
Nothing would serve the public more than opening up the box. We’ve tried everything else. What do we have to lose?
Competition would bring better quality, lower prices