MultiChoice has had bad years before. But few developments have so clearly exposed the structural fragilities in its pay-television model as the prospect that Warner Bros Discovery’s (WBD’s) entire channel bouquet could vanish from DStv at the end of this month.
The breakdown in renewal negotiations between WBD and MultiChoice — which comes at the same time as the corporate drama unfolding in the US between Netflix, Paramount Skydance and Warner Bros — isn’t just another licensing negotiation. It signifies something much more concerning for the Randburg-headquartered broadcaster that was recently acquired by France’s Canal+.
For years, the real heart of MultiChoice’s business has been found in sport and its homegrown SuperSport machine. But what the possible disappearance of WBD’s channels reveals is that DStv’s long tail of linear entertainment networks, once one of its most defensible moats, has eroded faster than many expected. And there is no easy way to patch the hole.
WBD’s portfolio in Africa is wide and spread neatly across genres: Discovery Channel, TLC (known for its reality shows), Real Time, TNT Africa, Cartoon Network, CNN and more. Lose those channels and DStv’s bouquets suddenly become lopsided.
The timing couldn’t be worse for MultiChoice. International studios have spent the past five years pulling back from linear networks as they chase direct, streaming-first models. Disney, Paramount and Comcast’s NBCUniversal have all slashed channel distribution outside their home markets.
MultiChoice has managed to delay that reckoning, largely because Africa’s broadband penetration made streaming adoption slower than in the US or Europe. Linear TV remained commercially viable for longer. That’s changing fast as internet infrastructure expands rapidly across the continent.
In the early 2010s, if a channel provider became difficult, a pay-TV platform could threaten to replace it. And sometimes it did. There was always another documentary, lifestyle or kids’ network waiting for carriage. Today that content cupboard is barer. And even if smaller networks could be sourced, consumers do not perceive them as equivalent. In TV, brand recognition matters.
Even if MultiChoice ramps up local production, it can’t magically replace 12 genre-spanning channels with equivalent volume
MultiChoice’s own messaging has been clear for years: sport is the engine room. SuperSport remains the strongest sports broadcaster on the continent, with rights spanning rugby, cricket, football, motorsport, and more. It is a world-class offering.
But a pay-TV platform cannot be built on sport alone — not sustainably, anyway. Most households do not watch SuperSport 24/7. Families want kids’ content; parents want movies and series; news junkies want rolling international coverage.
DStv’s tiered model relies on each bouquet feeling adequately “full” for its price point. Remove a swath of popular channels, and suddenly the bouquets feel emptier. This creates a bouquet imbalance that could force MultiChoice into one of three options — none attractive:
- Cut prices to match reduced content value;
- Bulk up with cheaper, lower-quality replacements; or
- Push more content onto Showmax, weakening linear but strengthening streaming.
Each choice has big financial implications.
It’s not as if MultiChoice can simply turn to local content — which is always popular — to plug the gap. It’s expensive to make and takes time to scale. And crucially, it does not fill 24/7 linear schedules the way a Discovery or TLC does. Even if MultiChoice ramps up local production, it can’t magically replace 12 genre-spanning channels with equivalent volume.
An interesting twist is what Netflix’s planned $72bn acquisition of WBD’s studios and streaming assets, announced last week, means for Showmax, which for years has been the “home” of HBO content such as Game of Thrones in Africa.
If the deal happens — it’s already facing a hostile counterbid from David Ellison’s Paramount Skydance — Netflix could decide to offer HBO content directly to consumers in future, and it may expand HBO Max to more territories around the world, including markets in Africa. Losing HBO content would clearly be a blow to Showmax and MultiChoice.
MultiChoice’s long-term plan — local content plus sport plus streaming — remains the right one. But the potential disappearance of Discovery, TLC, Cartoon Network, CNN and friends exposes just how vulnerable the linear side of the business has become. That’s a particular worry given that the loss-making streaming side (Showmax) is struggling to achieve meaningful scale despite hefty investment.
Over the past 10-15 years, Telkom has been forced to reinvent itself as the market liberalised and as the world moved from high-margin voice services to data.
MultiChoice faces a similarly painful transition. Whether it emerges as successfully on the other side as Telkom has done depends on how well its management team, led by Canal+, can navigate the decline of linear programming and the shift to the on-demand era of television entertainment, an era that is increasingly being dominated by a handful of giant global players with very deep pockets.
McLeod is editor of TechCentral
