On Digital Media (ODM) which is currently in business rescue and runs the TopTV satellite pay-TV service in South Africa is hoping that China's StarTimes media group which is already operating pay-TV services in 8 African countries will hopefully bail out the struggling Woodmead-based pay-TV operation with a capital injection and become an equity partner.
ODM declined comment when I asked last week about the StarTimes offer and possible deal, when a business plan will be released and when a new capital injection partner will be closed.
ODM received a signed conditional offer from StarTimes, a Chinese company which was started in 1998 as a technology company, has about 2,1 million subscribers across Africa, and is aggressively seeking to become a global leader in digital television services.
The StarTimes invested in digital television and pay-TV services and is currently operational in at least 8 African countries such as Nigeria (where it passed 1 million subscribers last year), Tanzania, Kenya, Rwanda, Uganda, Guinea, the Central African Republic (CAR), Burundi - and possibly quite soon also South Africa. StarTimes already has registered local companies in 16 African countries.
A possible StarTimes deal with ODM will give China its first real foothold in Africa's best developed pay-TV market dominated by MultiChoice and its DStv satellite pay-TV service. StarTimes already invested millions of dollars in the African pay-TV and digital television market and runs a lot of the same TV channels across various pay-TV bouquets across the continent.
Before ODM filed for business rescue at the end of October 2012 to prevent liquidation, the pay-TV business incurred a burn of expenditure over its income of R25 million per month.
ODM filed for business rescue in October, desperately looking for local investment backers to take an equity stake in the troubled pay-TV operator after its largest shareholder declined to inject any more money into the struggling operation.
TopTV will in May will be three years old since it launched its commercial operations in May 2010 with great fanfare but has since seen the company's fortunes decline. The business has since cut back on marketing and other overhead expenditure since entering business rescue, and has lowered the burn rate with the participation of trade creditors and content providers.
This also led to content cut backs such as the axing of certain TV channels - Top Junior and Top Movies +24 is for instance the latest two TV channels immediately being dropped from TopTV's channel line-up.
The proposed plan is for ODM to publish a business rescue plan this week.
According to Peter van den Steen, the business rescue practitioner appointed to try and help ODM out of business rescue, a possible rescue proposal from StarTimes was finalised at the end of March. This will give StarTimes a stake in ODM and the TopTV service.
Details of the structure of the StarTimes proposal will appear in the business rescue plan which will be published possibly sometime this week if StarTimes is able to fulfill the preconditions of the rescue proposal.
