The public hearings to select South Africa’s new Pay-TV operators claimed further casualties this week, with yet another applicant withdrawing and another breaking into tears under cross-examination.
The hearings, held by the Independent Communications Authority of South Africa (Icasa), were fraught with interested parties trying to cut others down to size.
The most aggressive applicant this week was E-Sat’s lawyer Dan Rosengarten, whose cross-examination of Q Digital Cable Vision’s CEO Majota Kambule, also known as Phat Joe, resulted in the TV and radio star being reduced to tears.
When the hearings began last week 18 applicants were vying for the valuable subscription broadcasting licences that will give them an opportunity to make their fortune in the billion-rand pay-TV industry.
The 18 have been reduced to 16 with the withdrawal of Worldspace SA, following instructions to Icasa by Minister of Communications Ivy Matsepe-Casaburri to allow Worldspace to continue broadcasting without a licence.
This was followed this week with the withdrawal of Multichannel Television, which abandoned its application before it had even presented its proposal to the Icasa panel.
Although the panel should be lauded for its thorough interrogation of the applicant’s proposal, its task was made that much easier by rigorous cross-examination by Rosengarten.
Q Digital Cable Vision was not the only applicant to see its proposal implode this week: the Absa- and MTN-backed Max TV bid also came under heavy fire when it failed to produce proof of secured funding, and the people behind Black Earth Communications (BEC) bit off more than they could chew with their radical proposal for “The TV that cares”.
BEC’s product offering, which included a prison TV network, a drug channel and channels dedicated to HIV/Aids and Afro-environmental issues, was interrogated by other applicants, who felt the product was better suited to a public service channel.
Goal Technology Solutions’ application was struck a deadly blow when the Icasa panel pointed out that the Electronic Communications Act stipulated that Power Line Communication technology could not be used for broadcasting purposes.
However, the hearings sprang back to life on Tuesday with two professional presentations by On Digital Media (ODM) and E-Sat, a sister company of e.TV.
E-Sat’s panel, which included HCI’s Marcel Golding and John Copelyn, were confident and cocky as they faced questions from the Icasa panel and fellow applicants.
The Icasa panel appeared to be concerned about the advantage that E-Sat’s broadcasting experience and its e.TV structures would afford it, and raised a number of issues regarding cross-subsidisation.
Once again confidentiality was the buzzword this week, with substantial portions of the E-Sat application unavailable because it had been granted confidential status.
Members of the Icasa panel became visibly frustrated during the week as the confidential nature of certain sections of the applications prevented them from interrogating the proposals more rigorously.
At one point Icasa counsellor Marcia Socikwa vented her annoyance by saying that the regulator would have to reconsider grants of confidentiality as they prevented the panel from doing its work properly.
ODM raised the stakes with its presentation on Tuesday afternoon when it wheeled in more than eight state-of-the-art television screens, presumably to make it easier for the Icasa panellists, who had to strain their necks to peer at the large screen that had sufficed for the other applicants.
They then packed the front rows with ODM staff and officials dressed in black suits and matching ties.
ODM’s proposal was highly professional, a fact that could be gauged by the limited cross-examination by Rosengarten.
ODM’s programming offering appeared sound and Socikwa lauded its research, describing it as “amazing”. It did, however, face a grilling over its BEE status.
The hearings wrap up next week with the Telkom Media presentation, after which applicants can expect a lengthy wait until the successful licences are announced.
Attempts by the Mail & Guardian to contact Kambule (Phat Joe) were unsuccessful this week.
Who’s who in the pay-tv zoo, Part two
In the second of a two-part series the Mail & Guardian profiles the applicants vying for subscription broadcasting licences. We bring you the contenders, the pretenders and the also-rans.
Contenders
Multichoice Africa: Multichoice is firmly rooted on the African continent and broadcasts in more than 50 countries. For the past 10 years it has provided its South African subscribers with a wide array of movie and sports channels on the DSTV platform. Besides offering existing pay TV and internet subscriber services to more than one million customers, it intends including up to 30 video and audio channels to its existing DSTV bouquet. In addition, Multichoice has asked Icasa for authorisation for a mobile broadcasting service. Multichoice’s latest company, DSTV Mobile, plans to broadcast a four-channel package of entertainment, music, news and sport to cellphones if granted a licence. Multichoice, owned by Naspers, and headed by Koos Bekker (above), will be financially self-sufficient and claims to have a R600-million bank facility in place when the need arises. With a large subscriber base, solid financial backing and existing infrastructure, its chances of being awarded a licence by Icasa are substantial.
E-SAT: E-SAT is a sister company of e.TV, which is bidding for a subscription broadcasting licence. During its presentation, HCI CEO Marcel Golding (left) admitted that if e.TV was to remain sustainable in South African broadcasting, it would have to exist in a multichannel environment. It is proposing a 21-channel pay-TV package based on movies, sport and a 24-hour news channel. Details of its secured funding were kept confidential but, with shareholders like HCI and Venfin and its experience in broadcasting, it is expected that it is aware of the huge capital expenditure that would be required. Its business plan looks solid and is cautiously conservative, while its presentation was professional. One issue that might scupper its plans is whether Icasa agrees to exempt it from legislation that aims to prevent broadcasters holding more than one licence.
On Digital Media: On Digital Media (ODM) flexed its muscles this week with a highly professional presentation. ODM is proposing a 40- to 50-channel service that will range in price between R149 and R369 for a full offering. South African consumers will be glad to hear that ODM is proposing a system where users pay only for what they want, which will allow subscribers to create their own bundles. ODM appears to have secured more than R1-billion in start-up capital through its shareholders, Absa and the Development Bank of South Africa. ODM’s shareholders include Cosatu’s investment arm, Kopano ke Matla, and the Industrial Development Corporation, as well as the African subsidiary of European satellite giants SES. Headed by Dimitri Martinez (right), ODM’s BEE credentials have been queried because certain BEE shareholders come on board only after the issue of a licence, which means its credentials as an applicant are substantially weaker.
Pretenders:
Max TV: Max TV was specifically established for the purpose of subscribing to the Icasa broadcasting licences. Its stakes are high. The black-empowered company is aiming at a subscriber base of 1,9-million viewers in eight years at a total cost of R14-billion. It wants to offer up to 120 video and audio channels across three subscription packages priced between R99 and R299. It could not, however, provide evidence of its secured funding, despite stating that Absa Capital and MTN had agreed to participate as shareholders in Max TV. Outdated and unsigned letters as proof of financial backing leave serious doubts about the viability of its proposal.
Goal Technology Solutions: Goal Technology Solutions (GTS) has proposed using power line communication (PLC) to deliver a triple play offering to the home. It already offers voice and broadband via this technology. GTS is proposing a video-on-demand offering, too. However, its proposal might have come unstuck when Icasa pointed out that although the regulator was meant to remain technology-neutral, the Electronic Communications Act appeared to forbid the use of PLC for broadcasting. GTS’s audience research and subsequent business model projections came under heavy fire, with a member of the Icasa panel questioning whether it was a “thumbsuck”.
Sentech: Sentech and SABC intend holding 50% each in a company to be formed called Holdco. This company will hold 51% in a subsidiary called Newco. If the licence is granted, it will be transferred to Newco, which will operate the service known as Viewsat. They believe they can serve the “emerged and emerging” black middle class or LSM bands five to eight. Their offering, which will be delivered by satellite, will be tiered, starting with an entry-level version, after which other channels can be added.
African Spirit: African Spirit is made up of a collective of former SABC and DSTV employees, who are planning to offer a 12-channel service to LSM bands five to nine. Its offering will be driven by its 24-hour news channel and current affairs content. It will offer sport and movies. Its shareholders are confidential and it is unclear how much funding has been secured. African Spirit spokesperson Judy Nokwedi said it expects the funding to roll in once the licence is granted.
Also-Rans
Q Digital Cable: Q Digital Cable deserves to be relegated to the also-ran section of applicants purely based on its proposal to roll out a cable network to deliver its multi-channel TV service. Rolling out a cable network is costly and will take substantial time, making this proposal a non-starter.
Quantic TV Network: Multichoice’s refusal to feature Quantic’s proposed “lifestyle channel with family-friendly content” on DSTV in 2000, should have served as a warning for the Christian-backed company not to try to compete against the serious players.
WOW (Walking on Water): WOW will be a niche broadcaster that plans to take the home entertainment industry “to a higher level by enriching homes and building families on a rock-solid foundation, Jesus Christ”. It aims to offer a wide range of programmes based on “Christian Lifestyle Principles”, saying that 80% of the South African population is Christian. It plans to deliver its content via satellite. — Lloyd Gedye, Matthew Burbidge & Thijs Van Der Post