by Thinus Ferreira
When Canal+'s takeover of MultiChoice is done - a deal where it's all about money and not about average consumers - pay-TV in South Africa won't be better or mean improved content.
Here I highlight how and why MultiChoice, taken over by Vivendi's Canal+, will be a net negative for South Africa in terms of content contraction, how South African TV news will effectively come under French control, together with predicted corporate downsizing and job losses at MultiChoice in South Africa and across the African continent.
Also spare a thought for South Africa's mangled media regulations which will be left in tatters in the buyout's wake - regulations which will have proved fruitless in preventing foreign media ownership of the local broadcasting space.
"Will we get better content with Canal?" a DStv subscriber asked me in an email. I smiled. It's one of several that asked about the same thing.
While average TV viewers and DStv subscribers are under the impression that Canal+'s buyout plan of MultiChoice is some benevolent action to create a better DStv, improve content or the traditional pay-TV customer experience, the reality is that it's all about mega-mergers, acquiring corporate scale, and above all - making money.
Neither Vivendi's Canal+, nor MultiChoice care in the slightest about how a corporate take-over and MultiChoice falling into a French company's hands will affect or "improve" DStv. It's all just about money, honey.
Canal+ (that just like MultiChoice) sees the writing on the world as far as legacy media and broadcasting companies are concerned, must "grow" and radically change amidst the epoch change of video streaming led by the Netflix, Disney+ and Amazon Prime Video of this new dispensation.
With Canal+ even more constrained in Europe than MultiChoice in Africa when it comes to growth opportunities to build scale, the other option in the merger and acquisition (M&A) playbook is to just go buy something.
Canal+ is playing Walmart here, trying to gobble up parts to expand when organic growth is no longer a viable option.
MultiChoice shareholders will cash in - literally - in a Canal+ buyout: Those looking to leave and get rid of their investments in legacy media and those just ready to make a profit will all simply say sayonara and laugh all the way to the bank. And as a sidenote: MultiChoice actually wants shareholders to approve the Canal+ deal.
And from the small print: Keep in mind that there are massive cash retention bonuses that MultiChoice CEO Calvo Mawela and Tim Jacobs as chief financial officer will pocket upon the Canal+ takeover going through to the tune of R15 million.
While MultiChoice and Canal+ might make noises that there won't be downsizing - or no corporate downsizing for a stipulated period - after the buyout sale is concluded, you can bet your bottom euro that MultiChoice staff will be let go sooner or later. MultiChoice in staff size won't remain that size after a Canal+ transaction goes through.
Similar to when a company like Ster-Kinekor in South Africa gets a new (foreign) owner - or mega buyouts and mergers happen in America like Disney with Fox, Warner Bros. and Discovery, or when Viacom and CBS were put back together to create Paramount Global - the result is always job losses.
The corporate speak is always: "We are rightsizing the new company to enhance efficiencies and eliminate redundancies". The market by the way - where again, it's all about money - loves corporate downsizing and less being paid to salaries because it means ... more possible profit.
Content creation and contraction
When it comes to Canal+ content, it's like Princess Leia said to Han of the Anoat system in Star Wars: The Empire Strikes Back: "There's not much there".
What does Canal+ have in terms of broad, general entertainment, sport or other mass-market international content that MultiChoice doesn't already have or the licensing rights to? Nothing much.
And Canal+'s French and European rights doesn't extend to Africa, anyway - they're bought for France and Europe.
MultiChoice and M-Net will continue to acquire content and licensing rights for South Africa and the Rest of Africa (RoA) territories as they've been doing, so Canal+ wouldn't make that "easier", except for perhaps the bulk-buying of global sports rights.
Will Canal+ taking over MultiChoice suddenly lead to this massive influx of new content, new popular shows that DStv subscribers haven't seen before and a boost for Showmax as its streaming service? Absolutely not.
More likely Canal+ will, after its acquisition, make MultiChoice close some content taps or turn some down to a trickle. After an M&A, the buying company looks for aggressive cost-cutting in the company it acquired. And what's in MultiChoice's store and on the shelves are ... content.
Since there can't be underperforming store closures (except in places like Ghana where there is a MultiChoice office and a Canal+ office that would surely merge leading to one building closed down), Canal+ might look to cull and "rationalise" on things like TV channels.
It will be interesting to see what happens after Canal+ grabs the crown to the number of M-Net Movies or Africa Magic TV channels for instance, and if there is a decrease in what is bought from international distributors and American studios.
What would really be bad and sad is if Canal+ ends up gutting or changing what remains of M-Net, becoming a Roman regional outpost in Africa to Canal's French empire
News questions
What would the feeling be if MultiChoice were to take over and own the French TV news channels France24, Canal+'s CNews, or Altice Media's BFM TV news channel?
With the Canal+ takeover, South Africa's SABC News (DStv 404), eMedia's eNCA (DStv 403), and Thokozani Nkosi and Thabile Ngwato's Newzroom Afrika (DStv 405) will all effectively "belong" to a French company.
The South African public broadcaster's SABC News channel can't exist or function without the millions paid to it annually by MultiChoice. It was in fact MultiChoice that set up the channel and asked the SABC to produce it. Without MultiChoice's influx of cash, the SABC News channel can't survive on its own.
eMedia's eNCA as a TV News channel was exclusively created, and is paid by MultiChoice, to be an exclusive pay-TV news channel for just DStv.
Similarly, Newzroom Afrika was commissioned by MultiChoice to be an exclusive DStv channel and is paid and funded by MultiChoice. Not one of these three TV news channels can function without MultiChoice.
Where is the Independent Communications Authority of South Africa (Icasa) on the issue of another country's private company, effectively through proxy, holding and being able to exercise total control of three South African TV news channels and the possibility of editorial news interference?
Canal+ will say they don't own these news channels. But Canal+ will own MultiChoice, and MultiChoice pays eNCA, SABC News and Newzroom Afrika to exist.
Toothless regulations?
Speaking of Icasa - it is South Africa's Icasa that has oversight of ensuring compliance with South Africa's Electronic Communications Act (ECA) - regulations that prohibit foreign entities from holding more than 20% of the voting rights of a South African broadcaster like MultiChoice.
According to the ECA, no foreign company or foreigner may have control over a commercial broadcasting licensee like MultiChoice in South Africa, and neither may a foreign company or foreigner have any financial interest, or an interest in either voting shares or capital of more than 20% in a commercial broadcasting licensee.
Canal+'s possible takeover deal of MultiChoice will also be subjected to several other regulations and approvals - including South Africa's Takeover Regulation Panel and the country's Competition Tribunal, the Johannesburg Stock Exchange (JSE), as well as the Financial Surveillance department - but the ECA is perhaps the most important one.
Once Canal+'s takeover of MultiChoice is complete, what will that say about South Africa's "regulations" and the strength and functionality of the regulatory framework to act as a bulwark to prevent what it's supposed to prevent?
Canal+ wants MultiChoice. Regulations prohibit that. Canal+ eventually gets MultiChoice. The regulations ... why do they then even exist?
If the deal goes through, it will be proof that despite regulations, any foreign company can in full effect swoop in and buy and own a South African broadcast media company. The existing regulations will have been exposed as being essentially worthless.
In the end, if or when Canal+ swallows MultiChoice, it won't be about "better" or more content.
It will be about two premium pay-TV companies combining to decrease costs, consolidate infrastructure, trying to scale up to become a bigger fish in an ocean where similar megalodons are facing extinction, trying to scale up to try and survive in a Netflix-world. And about money.
