Naspers Is Going To List Multichoice Separately On The JSE: Another Sign Of Satellite TV’s Impending Doom?

We all know satellite TV is kinda doomed. We are not sure when the final dagger will be placed in satellite TV’s chest but we know that day is coming, and it’s coming soon. Naspers’ (the group who own Multichoice) recent move has given us another reminder that there is no light at the end of the tunnel that satellite TV finds itself.

Dramatic introduction aside, Naspers’ recently announced that they intend to list their Video Entertainment business separately on the Johannesburg Stock Exchange (JSE). The listing will take place in the first half of 2019.

The new company will be named Multichoice Group and it will include Multichoice South Africa, Multichoice Africa, Showmax Africa and Irdeto. The CEO of Naspers, Bob Van Dijk said the move was meant to empower Multichoice:

This marks a significant step for the Naspers Group as we continue our evolution into a global consumer internet company. Listing MultiChoice Group via an unbundling aims to unlock value for Naspers shareholders and at the same time create an empowered, top 40 JSE-listed African entertainment company.

Though Naspers CEO tried to put a positive spin on the move the truth of the matter is that this separation shows one thing; confidence in the growth of Multichoice is dying down and its best if Multichoice doesn’t hold Naspers back when that decline starts.  The truth of the matter is that if Multichoice was valuable and their future wasn’t uncertain Naspers wouldn’t be listing separately. That could be an overly simplistic view but that’s how I see it.

Dwindling subscribers in the high end…

In 2017, Multichoice lost 41 000 high-end subscribers YoY and this is a worrying number. Though subscribers in the lower subscription tiers rose, it’s clear some of these customers have migrated to other services such as Netflix.

Is Showmax enough?

What’s really worrying is that Multichoice has its own VoD service but that wasn’t enough to entice Naspers.

For now, DStv and Showmax (Multichoice’s VoD) can compete with the likes of Netflix because they still have enough exclusive content such as Game of Thrones to make the higher prices more palatable but in the long term one wonders if Showmax will have as much weight as Netflix when it comes to content acquisition. Showmax, may acquire African content exclusive but the question is will it be more appealing than international services such as Netflix? That’s yet to be seen but I certainly have my doubts.

Is the rise of Netflix in African territories beneficial?

Well, this is something will have to talk about in-depth in the future but some of the problems with VoD services such as Netflix is they don’t pay taxes and they don’t employ people on the scale that DStv does. So in as much as we would love Netflix to be our be all and end all when it comes to video content, the implications of such a reality might be more dire than we expect…