Mother of all battles for African TV viewers

French media giant Canal+ is on the acquisition trail in Africa, targeting local industry leader MultiChoice. The South African heavyweight itself plans to invest US$89 million in its streaming flagship, Showmax, to stay ahead of Netflix in Africa

SPECIAL REPORT | BIRD AGENCY | A major shake-up in the African streaming market is looming as Multichoice faces a takeover bid from French media giant, Vivendi SE’s Canal+.

A tie-up could deal another blow to Netflix which lost its continental lead last November, relinquishing 5% of its share to its top rival Showmax, while Amazon Prime gained ground.

Omdia Research data shows that Netflix in 2023 lost its African lead to Showmax, which grew from 35% to 40% share, while Netflix dropped from 40% to 35%, in 2021-2023.

Showmax gained 1.7 million subscribers during 2022 alone, adding to Africa’s cumulative total of 6 million online video subscriptions for that period.

Growth across Africa for both global leader Netflix, and continental leader Showmax is expected to continue in the period to 2026, with more consumers turning to online platforms for their entertainment needs.

According to a report by Digital TV Research, the number of SVOD subscribers in Africa is expected to reach 15.06 million by 2026, up from 6.15 million in 2020.

To capture the growing market and offer diverse and quality content to the African audience, more investment is likely to be funnelled into the continent- as Canal+’s planned acquisition of MultiChoice signals.

The French media company’s bid to acquire MultiChoice, a South African pay-TV powerhouse, is worth at least 31.7 billion rand (about US$1.7 billion) – the value of an initial offer, which was rejected by Multichoice. An acceptal would have seen Canal+, which already owns over 30% of Multichoice, buy all the outstanding ordinary shares of MultiChoice at 105 rand (Approx. US$6) per share, a 40% premium over the closing price on January 31, 2024.

Canal+ has been steadily increasing its stake in MultiChoice over the past four years.

Already, it owns 140,160,277 shares of MultiChoice, equivalent to 31.7% of the total issued shares, according to MultiChoice’s latest annual report.

“For MultiChoice to continue to thrive in Africa it will require a strategy that enhances its scale as well as strengthened local and global expertise. Our potential offer, if successful, would be an important next step for MultiChoice to realise its full potential,” Maxime Saada, chairman and CEO of Canal+, said in a statement.

The French company has been eyeing the African market for a long time and has been investing in local content production and distribution across the continent.

However, the deal is not done, as it faces some regulatory hurdles, especially in South Africa, where foreign ownership of broadcasting licensees is limited to 20%.

MultiChoice has argued that this rule does not apply to its holding company but to its South African operations only. MultiChoice has not yet responded to the offer from Canal+, saying it will make a further announcement once it has considered the proposal.

If the deal goes through, it would create a dominant force in the African pay-TV and streaming market, with a combined subscriber base of millions.

The two companies would be able to leverage their complementary strengths and assets, such as their extensive content libraries, their technological capabilities, and their distribution networks.

They would also be able to offer more competitive pricing and packages to consumers, who are often faced with high data costs and low internet penetration.

However, the deal would also raise some concerns, such as the potential loss of local control and influence over the African media landscape, the possible reduction of competition and diversity in the market, and the impact on the local content creators and producers, who may have to adjust to the new dynamics and demands of the merged entity.

Meanwhile, as MultiChoice considers the Canal+ deal, it is also ramping up its investment in its streaming platform, Showmax, which it launched in 2015.

The company announced that it will inject an additional US$89 million into Showmax by March 31, 2024, as part of a US$129 million funding round by MultiChoice and NBCUniversal, which owns a 30% stake in Showmax.

The two have already invested US$20 million into the platform, which offers both live and on-demand content.

Showmax receives monthly or periodic equity funding from MultiChoice, up to a cap with the first investment of US$30 million due on February 2, 2024,

It also aims to position Showmax as Africa’s leading streaming service and plans to relaunch the platform later this month.

The relaunch will include partnerships to expand its content library and enhance its technology. Some of the proposed offerings include an English Premier League-exclusive package, data-saving streaming bundles, and content from NBCUniversal’s subsidiaries, such as SKY and HBO.

Showmax is also betting big on local content, as it has been producing and acquiring original and exclusive shows and movies from across the continent, such as Tali’s Wedding Diary, The River and The Girl from St. Agnes.

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SOURCE: Seth Onyango, bird story agency