The shock liquidation of Pan-African satellite pay-television broadcaster GTV is a lesson on how difficult it is to start such a service and correctly balance the financing with subscriber scale, an analyst says.
Last week, GTV announced it would no longer broadcast to its 100 000-odd subscribers. It closed its doors after a two-year campaign to wrestle as much of the African pay-TV market away from the domination of South African-owned MultiChoice.
GTV is an outgrowth of Gateway Communications, the Pan-African telecommunications company that is also London registered. The two entities separated legally two years ago and Gateway Communications' telecommunications business was bought by mobile network operator Vodacom late last year.
GTV did not broadcast in SA and its subscriber base was in Botswana, Kenya, Cameroon, Gambia, Gabon, Ghana, Lesotho, Liberia, Malawi, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.
Good investments
In October last year, GTV CEO Julian McIntyre said his company had set a target of signing up 250 000 subscribers. He indicated the company was well financed with a capital injection of $35 million, bringing in a total investment into the company of $200 million.
Right up until the end, GTV was still selling subscriptions to its service and gave no indication it was experiencing any difficulties.
The defunct broadcaster's model was to get as many low-paying subscribers as possible by attracting them with key content such as its signing of rights to broadcast 80% of the English Premier League's football games. GTV beat out MultiChoice in buying these rights and industry sources say the price has proven to be too high.
“Buying subscribers has its own costs and competing with an incumbent, such as MultiChoice, also means you have to have scale,” says Rajay Ambekar, telecommunications analyst at Cadiz African Harvest.
Canal Plus pulls out
Ambekar says there were rumours that French-owned pay-TV broadcaster Canal Plus, which offers a service to French-speaking African countries, had shown interest in buying GTV, but had pulled out of these talks.
He notes the global credit crisis may also have played a role, as GTV was heavily funded by loans and it meant it could have been caught in the double whammy of rising international interest rates and declining African currencies.
“I am not sure that funding was a problem directly, but it could have been a factor,” he says.
GTV's demise should be positive for MultiChoice as it could possibly pick up new subscribers who may convert, Ambekar says.
MultiChoice, which has a total of about 1.4 million subscribers across the continent, is still to issue a statement about GTV's liquidation.
However, MultiChoice executives are privately not happy about the situation.
“There is a danger that we end up looking like the bad guys because many think we can just capitalise on the situation. This is not true - GTV built up expectations and now dashed them, and we are the company that is expected to pick up the pieces, even though we had nothing to do with them,” says one MultiChoice executive.
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