eMedia Holdings that owns e.tv, eNCA and the satellite TV platform service Openview plunged into a loss of R1.599 billion for its financial year ending 31 March 2018, from a profit of R112 million the year before, blaming the "subsidised" SABC for having TV programming that's watched more, and writing off R68.8million in purchased films due to bad content acquisition management, and writing off R31 million of subsidiary Coleske Artists.
Meanwhile the loss-making Openview still has to almost double its viewership ratings before it can become profitable.
eMedia Holdings has a 67.69% interest in eMedia Investments, the company that owns e.tv, eNCA and Openview. Despite the loss, eMedia showed a 5% increase in advertising revenue from R1 505 million to R1 573 million.
eMedia says its results were negatively impacted by its new channels carriage agreement with MultiChoice, with license revenue fees that was cut substantially. Meanwhile eMedia continues to invest heavily in its own free-to-air Openview satellite TV service that continues to be loss-making.
Andre van der Veen, eMedia CEO, says "e.tv's share of broadcast audience remains under pressure, mostly due to the popularity of local dramas commissioned by the SABC. The group has implemented various schedule changes, including the launch of an additional local drama in April 2018".
According to eMedia "while the SABC commissions a substantial amount of local programming, at much higher cost than equivalent international content, our ability to commission additional local drama is limited by our production budget and profitability."
"Our schedule will remain under pressure while the SABC continues to operate under a subsidized regime, however we are confident that our current schedule should arrest any significant decline."
e.tv wrote off R68.8 million in acquired films that was wasted, blaming "reduced movie slots".
"The reduction in the movie slots, and a detailed analysis of the movie inventory, necessitated a once-off write-down of the movie inventory of R68.8 million," says eMedia, noting that "this is included in programming costs and other cost of sales which has shown an 11% increase year-on-year."
"A new revenue and content acquisition system was implemented to ensure better content acquisition in future."
Openview meanwhile incurred operating costs of R255 million, with eMedia saying that Openview set-top box activations continue to grow at around 35 000 per month.
"At the end of the period, a total of 1 149 217 [778 493 in 2017] boxes have been activated, and a total of R74 million has been spent on retail subsidies."
"The group will increase its content investment in the Openview platform during 2019 and recently announced that it will launch a news channel on Openview (OpenNews) during the last quarter of 2018. In addition an Afrikaans block of programming, including news and current affairs, will also be launched during this time."
"While these programmes and channels will be loss-making in the beginning, they are part of the content that is required to promote set-top box uptake and viewership. Openview currently attracts about 3.5% of the television audience in South Africa and break-even is estimated to be in the region of 6%".
"eNCA (DStv 403) continues to be the most watched 24-hour news channel in the country with over 50% of the market share. As mentioned the amount received from MultiChoice has reduced this year, however costs are being well controlled in this entity."
In the past year eMedia sold the company Silverline Three Sixty and finalised the sale of its interests in Lalela Music, e.Botswana and e.tv Botswana. The office bulding in Umhlanga, Durban was sold for R25 million.
