Local TV sector at war


The signing of the contract between satellite pay-TV operator MultiChoice and South
African public service broadcaster SABC, which prohibits the broadcast of SABC
channels on any digital terrestrial television (DTT) free-to-air (FTA) platform that
uses encrypted set-top boxes (STBs), has resulted in a war of words between
MultiChoice and FTA commercial broadcaster e.tv.

MuliChoice South Africa group CEO Imtiaz Patel told Screen Africa in mid-October
that the “sensationalist statements’ in the media declaring that the deal gives
MultiChoice control over the SABC are “completely devoid of truth’.

“It would be almost comical if it were not for the fact that this is part of a
considered campaign by competitors of the SABC who are hell bent on derailing the
agreement for their own competitive advantage,’ said Patel.

When asked whether the deal gave MultiChoice control over the SABC, Kaizer
Kganyago, SABC spokesperson, responded: “This cannot be true. The SABC remains
the only public service broadcaster in the country and is entitled to enter into
agreements with any broadcaster, for as long as the agreement is mutually

“Contrary to reports in the media that the MultiChoice deal was not sanctioned by
the SABC board, all the governance processes were followed by the SABC and the
interim board approved the deal.’

Bronwyn Keene-Young, e.tv’s chief operating officer, stated: “DTT STB control with
conditional access and / or encryption is government policy – a policy that was
determined in a consultative process lasting five years with input from all
stakeholders and which was driven by the SABC and the Department of
Communications. The only stakeholder which opposed encryption was MultiChoice.

“Having lost the battle in the government policy, MultiChoice has attempted to get
its way – and to subvert the policy – by requiring the SABC to make an undertaking
not to encrypt SABC1, SABC2 and SABC3 channels as a condition of MultiChoice
funding the SABC’s 24-hour news channel. Encryption on DTT for FTA channels is
critical to the future viability of FTA broadcasting as a whole, including the local
production sector which is primarily supported by the FTAs.’

Screen Africa asked Kganyago why the SABC agreed to not allow its channels on
encrypted DTT FTA STBs. He replied: “It is in the SABC’s interest that any
subscription DTT STB is capable of also receiving the SABC FTA channels. In this
case any DTT subscriber would not have to purchase an additional FTA STB in order
to receive the SABC FTA DTT channels. If the SABC channels were encrypted on
DTT by means of a particular encryption system that is different to that of a
particular subscription service, this DTT STB would not have the ability to receive
the SABC channels, hence the need for a second FTA STB.’

Patel has accused e.tv of favouring encrypted STBs as it would allow them to launch
pay-TV services, something that Keene-Young has categorically denied on several

Keene-Young responded: “The real reason that MultiChoice opposes encryption so
vociferously is that, without encryption, MultiChoice’s pay-TV M-Net division will be
able to grow its tiny base of 50 000 terrestrial households to millions. Therefore M-
Net’s STB (which is of course encrypted) will be the gateway to most South African
households for all TV – including the FTA channels.

“Without encryption, the M-Net STBs will be able to simply pick up the SABC and
e.tv free-to-air channels without any intervention, so M-Net can ride on the back of
the FTA channels which have local content obligations of 35% to 55% and are rolling
out additional local channels in preparation for DTT to drive their STBs, when their
DTT channels will be simulcasts of channels that they are running on MultiChoice’s
DStv platform.

“Therefore M-Net, which will not be investing in any new channels, will use the
SABC’s and e.tv’s new FTA channels to grow their own business. Encryption enables
FTA channels to control access by pay-TV operators to their channels and enables
them to require M-Net to compensate them for using the SABC and e.tv channels on
the M-Net STB.’

Patel has rubbished these claims stating that for MultiChoice the benefit of carrying
SABC channels is a convenience for its subscribers.

“No-one buys M-Net or DStv just to get the SABC channels. So e.tv’s argument that
we want a free ride on their channel is nonsense because FTA channels are
supposed to be available for free,’ he said.

Meanwhile, the STB encryption policy is presently under review by Minister of
Communications Yunus Carrim.

Terms of the deal

Commenting on the MultiChoice / SABC deal, Patel explained that the two
broadcasters entered into a commercial content agreement last year where the
SABC was to provide MultiChoice with a 24-hour news channel (which launched on
the DStv platform on 1 August 2013) and an entertainment channel. There was no
timeframe set for the latter.

Patel said that other “spurious claims’ circulating in the media claim that the cost to
the SABC of the news channel will exceed the costs paid to the SABC by
MultiChoice; that MultiChoice has exclusive access to the entire SABC archive; that
MultiChoice can commercially exploit the SABC trademark which is unfair; and that
the SABC was slapped with a R1m penalty because it did not launch the
entertainment channel by 3 October 2013.

“The SABC is currently sitting on a vast archive of content, an asset which is lying
fallow and has not been leveraged for additional income, partly due to the fact the
archive is not digitised. Thus, the SABC’s entertainment channel is based on using
existing archive content and leveraging that for value. MultiChoice only has
exclusivity for a small portion of this archive.

“We do have access to the SABC trademark, so as to reflect the SABC channels on
the electronic programme guide and to market the channel. This is a standard clause
in our agreements with all the channels on our platform,’ concluded Patel.


Please enter your comment!
Please enter your name here