Why DStv needs TopTV

If satellite pay-TV player TopTV topples, it may not be only consumers that lose out. It could also spell trouble for DStv operator MultiChoice. By Craig Wilson.

Added by Craig Wilson on 7 November 2012.
Saved under Craig Wilson, Opinion, Top
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MultiChoice, operator of satellite pay-television platform DStv and a unit of JSE-listed media giant Naspers, should be concerned about the financial problems at rival TopTV, owned by On Digital Media.

Competition is good for consumers and it’s important in keeping industry players at the top of their game. The rivalry from TopTV, such as it’s been, has been good for MultiChoice, which has innovated more aggressively in recent years. Naturally, this has been good for customers, too. The longer-term risk of not having a direct competitor in satellite pay TV means a greater risk of unpleasant regulatory and policy intervention down the line. Regulators hate monopolies.

The embattled TopTV said last week that it has applied for a business rescue under section 129 of the new Companies Act. This will “buy it some time to complete the search for a strategic equity partner”. In other words, the good ship TopTV is floundering and needs a deep-pocketed suitor to bail it out.

Launched in 2009, TopTV is the only licensee of five prospective operators that managed to get off the ground. The rest floundered for various reasons.

An explanation for TopTV’s woes — but by no means the only one — is that when MultiChoice realised the market was going to be opened to competition, it signed contracts with content suppliers, especially for sports broadcasting rights, to keep newcomers at bay. Live sports — particularly local football given TopTV’s target market — and new, blockbuster movies are the greatest assets for any South African pay-TV operator. TopTV has neither and this is reflected in its subscriber numbers.

The company claims to have sold 450 000 set-top boxes, but fewer than 200 000 of these are active, suggesting that many consumers buy the service only to discover they don’t like what they see and then unsubscribe.

Of course, a powerful and well-run MultiChoice isn’t the only challenge facing the troubled broadcaster. The looming switch-on of digital terrestrial television will put it under even greater strain. Because digital technology makes more efficient use of radio frequency spectrum, the switchover is going to usher in far more channels than are currently available using analogue signals.

Government has been making noises in the recent past about the need to create greater diversity and competition in the television broadcasting industry, particularly in pay TV. It’s not in anyone’s interests for TopTV to fail, least of all MultiChoice’s. If TopTV goes under, it could just make the regulator and policymakers more determined, rightly or wrongly, to intervene and to do so forcefully.  — (c) 2012 NewsCentral Media

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  • BritinSA

    ” it (Multichoice) signed contracts with content suppliers, especially for sports broadcasting rights, to keep newcomers at bay

    Top TV’s problem is that they evidently failed to see how new entrants in the UK market have (relatively) successfully challenged Mr. Murdoch’s almighty SKY.

    Unless SA lacks the regulatory framework, the FIRST order of business for Top TV should have been to launch a complaint with the competition authority or whatever gov department is the responsible for competition in SA and force the break up of these cosy contracts as uncompetitive (and have Multichoice fined into the bargain for abuse of dominant position)

    But they didn’t and now sit wondering why people didn;t sign up for a cheaper service.

    It was always simple. They need SS3 and SS4 re-broadcast rights, along with some savvy marketing.

    I’m stunned by the lack of business nous they have exhibited thus far.

  • http://www.facebook.com/profile.php?id=527737873 Vusi Sibiya

    Couldn’t agree more… to think that the regulator is now going to do something about DStv, just because of Top TV failing is wishful thinking. ICASA allowed DStv to operate for over a decade in the absence of a license and when it eventually awarded pay tv licenses, the regulator didn’t take into consideration the advantage afforded to DStv. It would’ve been to the benefit of the consumer if regulation was put in place to make all pay tv STB’s accessible to licensed players and all the consumer would have to do is insert a smart card into the available STB’s to access the service they wanted but this didn’t happen. ICASA won’t be intervening or imposing any forceful policies on Multichoice. Top TV is going to sink and that will be the end of it. SA not only lacks the regulatory framework but the same regulator can be influenced by a player with money to make sure that new entrants are destined to fail.

  • BritinSA

    A pessimistic viewpoint, which I unfortunately have to agree, is in all probability, the likely outcome.

  • http://www.facebook.com/ian.d.samson Ian D. Samson

    This is a HUGE pity; I have been with TopTV for a number of years and am very pleased with it, mainly due to DStv’s overexaggerated pricing! Please TopTV, don’t topple … what will we do without you?

  • Marianne Thamm

    One of TOPTV’s weaknesses is the inability to “sell” the package to me, a potential subscriber, I have no idea what’s on. What the channel offers or why I should care. Needs big publicity push.

  • Kgosi

    The cure for the ills of market failure is more competition and not regulatory intervention. Regulators have no more knowledge than market players to cure the failure. Competition is a process and not a hypothetical end state. Open the market for new entrants with less stringent conditions. There is a long list of new comers, entrepreneurs and innovators waiting in the wings and salivating to kick ass. Why, I ask, not invoke the Competition law to determine if the dominant firm engaged in anti- competitive practices. The role of the sector regulator is to encourage and facilitate competition and deal with bottlenecks like the STB and leave the Competition commission to deal with the delinquents – if there are any.

  • TPM2

    dstv contacts should be declared illegal

  • TPM2

    Agree

  • TPM2

    read their website, its better than dstv’s

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