MultiChoice investors wary about competition for sports rights

MultiChoice shareholders are concerned about the pay-TV group’s ability to hang on to crucial sports rights, which have allowed it to stand out amid growing competition and keep customers on its platforms. 

For years, the group has had a stated strategy of using sport, through its SuperSport offering, as the main draw to its services, particularly DStv. The same strategy is now being applied to its online streaming push. 

“As a result of global tech giants increasingly bidding for sports content, our shareholders are concerned that we could be at risk of losing key sports rights,” the group said in its recently published annual report for the year to end-March.

“This fear has been worsened by our refusal to pay unwarranted cost escalations demanded by intermediaries for broadcasting rights to certain sports events” — such as the Indian Premier League (IPL) and Afcon — “where we eventually acquired the rights on commercial terms.”

Out of the DStv operator’s total R22.48bn in operating expenses for the half year to September 2023, content was the largest chunk at R8.963bn, or 40%. While some of this is spent on local productions and original programming, the largest piece is for content rights from around the world, particularly in sport.

In a sign of the growing threat from deep-pocketed, tech-backed streaming services, the market has seen Disney+ buying up Champions League rights in Scandinavia, Netflix doing deals with the WWE and NFL, and Apple taking on baseball and soccer broadcasts. 

Though MultiChoice is the largest player on the continent with 22-million paying customers, its negotiating power is challenged by a company such as Netflix, which has 270-million subscribers worldwide and a content budget of $17bn (R322bn) for 2024.

Part of Canal+’s rationale for going after MultiChoice is to combine its 26.4-million customers to create a group with almost 50-million subscribers, which increases negotiating power.

Deep relationships

MultiChoice says it continues to take steps to mitigate the risk to sports content.

“Over the years we have derisked the business in terms of supply of sport content through our deep and long-standing commercial relationships with federations and sports rights licence holders. Testament to this is the recent launch of the Showmax Premier League offering, in partnership with the [English] Premier League, which is the first stand-alone mobile Premier League offering globally,” said the group. 

In January, the group unveiled an updated version of its video-on-demand service, Showmax. The new platform is available in 44 countries and is underpinned by technology from US giant NBCUniversal. Central to the new offering is a stand-alone Premier League plan for mobile, with all 380 games offered live on Showmax Premier League, which the group said is a “world first” for such an offering.

MultiChoice said the sport rights renewal cycle for its 2024 financial year “was a particularly busy one and included several renewals such as the Premier League, Uefa Champions League, La Liga, SA Rugby and the IPL”.

gavazam@businesslive.co.za