Is American pay-TV operators complaining about the rising cost of programming and the impact it is having on profits the shape of things to come for South Africa's pay-TV industry sometime in the future?
Executives in South Africa's pay-TV industry have noted in the past the forever rising cost of content - a very large chunk of that attributed to sports rights and exclusive access to certain sports programming. And in that sense South Africa is following very much in the trend of overseas pay-TV platforms - although they're just further down the line.
That begs the question: Is what is starting to happen to overseas pay-TV operators waiting to happen to South Africa?
He's not the first one to say so, but take the conference call of Time Warner Cable's CEO Glenn Britt today when he said that the rising cost of programming - specifically sports rights are affecting profits the most, and more than expected.
Time Warner Cable knows that it needs the rights, because that lures and keeps the subscribers. But the rising cost is becoming such a problem that it's eating into profits. Time Warner Cable says it has little choice but to keep paying the rising costs.
"We do not pretend that these deals are inexpensive or cheap," said Glenn Britt. "But sports is must-have programming, and the agreements minimize and stabilize the cost over a long time period."
Time Warner's programming costs have jumped 32% over the last four years. In South Africa pay-TV operators also face content costs which are growing at a much higher rate than inflation - about 16% per year in South Africa.
American operators are now threatening to dump low-rated and underperforming channels to save costs. Dish CEO Joe Clayton said at the beginning of the month in America that "spiralling programming costs" of pay-TV is at a crossroads: "We, as an industry, are rapidly approaching a tipping point: how many consumers are going to spend $100 per month for video content? I don't know, but we'll soon see."
