Jobs on the line as DStv struggles

● MultiChoice, grappling with new competition in the form of streaming services such as Netflix, is considering job cuts as part of its plan to create a “leaner” business.

The company has asked a large number of people to reapply for their positions, said a person familiar with the matter, on condition of anonymity. As many as 200 jobs could be on the line, the person said. The business has about 7,000 employees across Africa.

“We are creating a leaner and more agile organisation in order to remain globally competitive,” a MultiChoice spokesperson said. “We are looking at different ways to transform our business into a more agile and digitally focused company.”

MultiChoice’s satellite TV business, DStv, faces its biggest existential threat since its launch 23 years ago as Netflix, Amazon Prime Video and other streaming giants wade into the local market.

The new competition — which prompted MultiChoice to launch its own streaming platform, Showmax, in 2015 — is taking its toll on DStv’s premium subscriber base. These are its most important customers as premium packages deliver higher margins and profits. In the year ended March, MultiChoice lost 41,000 premium subscribers across all its African markets.

World Wide Worx MD Arthur Goldstuck said a downsizing of MultiChoice was inevitable. “It’s an interesting stage in the company’s history in that it’s at the peak of its subscriber growth,” Goldstuck said.

While the total subscriber base is growing — MultiChoice added 563,000 in SA in the year to March — it is coming from far less profitable lower-cost packages.

“What the growth masks, although MultiChoice hasn’t tried to hide it, is the beginning of the decline in the premium packages, and that is the writing on the wall of traditional pay-TV . . . as fibre is being rolled out in SA, people are switching from expensive pay-TV to low-cost streaming services,” he said.

MultiChoice’s parent, JSE-listed Naspers, has been considering an unbundling of the company. Naspers plans to generate 100% of its revenue from the internet in the near future, CEO Bob van Dijk said in December. In the year to March, 79% of revenue came from internet services, from 73% a year before.

Van Dijk said in March if Naspers listed MultiChoice separately, that could help it to reduce the group’s valuation gap relative to its main asset, Tencent.

But it would not be an easy task. “It’s not straightforward. There are a number of considerations, for example, licence conditions and our Phuthuma Nathi [MultiChoice’s black empowerment vehicle] shareholders.”

Goldstuck said it would make sense for Naspers to sell its non-internet units. Even the internet-based Showmax faces difficult times. If Netflix started offering local content in SA, “that would be a massive threat to MultiChoice, because Showmax’s only real differentiator is local content”.