SABC wants piece of pay-TV pie

By Christelle du Toit, ITWeb senior journalist

Johannesburg, 13 Sep 2007

The South African Broadcasting Corporation (SABC) wants the Independent Communications Authority of SA (ICASA) to determine that all newly-appointed pay-TV licence-holders have to use the public broadcaster's content.

Yesterday, ICASA awarded four new pay-TV licences to Walking on Water, On Digital Media, e.sat and Telkom Media. Incumbent pay-TV service provider MultiChoice Africa also received a licence, in order to comply with legislation.

This morning, SABC spokesman Kaizer Kganyago said the public broadcaster withdrew from the pay-TV race because it wants to position itself as a content provider to the new licence-holders.

"We have applied to ICASA for a 'must carry' principle, where we asked ICASA to make sure the pay-TV channels carry public broadcasting services," says Kganyago. He would not be drawn on what basis the SABC submitted this request, saying it was waiting for ICASA to decide on the matter.

However, the SABC is in talks with "various" pay-TV licensees about individual agreements to carry its content, should the ICASA determination not materialise. Again, Kganyago would not say which stations the SABC was talking too, explaining that if its "must carry" provision were to be approved, it would not matter anyway.

The players

Walking on Water plans to provide niche Christian content with its pay-TV licence, including educational, music, devotion and youth programmes. Media queries about the station were referred to Cornastrone Consulting, but the company had not responded to queries by the time of publication. Cornastrone is a technology and e-business solutions and services provider for southern Africa.

On Digital Media is controlled by Congress of South African Trade Unions-owned Kopano ke Matla Investment Company. The person responsible for media queries was unavailable this morning. However, it is believed the station has committed R1.2 billion for the funding of its pay-TV project and hopes to be operational by the second quarter of 2008. It plans to provide both general public and niche programming with youth, children, sport and family entertainment featuring prominently. It is reportedly targeting 1.8 million individual households.

E.sat belongs to e.tv co-owner Sabido Investments. Sabido's investments include Dreamworld Film City and other media and content aggregation businesses. E.tv said in a statement that it would evaluate the pay-TV market in light of the new licence appointments and only announce its detailed plans in about two months' time. Media reports, however, indicate e.sat aims to be operational by the first half of next year.

Telkom Media also plans to provide both general public and niche content, with children's programmes enjoying much attention. It will also carry news, lifestyle, business, sport and music content. Its licence allows for both pay-TV and Internet Protocol television (IPTV), and the company plans to offer "a range of international channels that have not been available in SA".

These channels would include niche stations, based on commercial viability and "strategic fit". Telkom Media proposes a tiered bouquet structure, aimed at the middle-income bracket. The company will also offer Web TV services, as well as music and video downloads.

MultiChoice Africa is also adopting the approach of combining general public and niche programming. Its pay-TV licence is to be used to carry entertainment, educational and "informative" programming. MultiChoice already has 1.4 million subscribers in SA and was the pioneer of pay-TV in the country. The company is conducting trials on new broadcasting platforms such as mobile TV, DStv broadband and high-definition TV.

Channel churn

Brian Neilson, a director of BMI-TechKnowledge, says there is concern over whether consumers will be required to have five different set-top boxes in order to access all the different pay-TV stations.

"Government has shown particularly strong interest in open access principles in recent months with regard to other areas of communications, notably submarine cables.

"It would be strange if five TV licences were to be awarded, and a consumer has to buy multiple set-top boxes to churn from one service to the next - this would be a competition inhibitor."

Neilson also says research conducted by BMI-T indicates the market "is unlikely to sustain more than two major players - the business case for a third or fourth player to invest to the same extent as Telkom Media, for example, has committed itself, is dubious.

"We must also note that MultiChoice will respond vigorously and the churn to other channels will not be as large as may be hoped for."

With regards to IPTV, Neilson says analysis shows it will start out being "relatively niche", but should take off domestically in about three years' time. "This, in turn, will revolutionise the way we consume TV."