MultiChoice to increase investment in local content for DStv

DStv operator MultiChoice Group said in a financial report for the six months ended September 2020, that it exceeded the 20 million subscriber milestone for the first time. The group added 1.2 million 90-day active subscribers year-on-year (YoY), to close the period on 20.1 million households. The customer base is split between 11.4 million households (57%) in the Rest of Africa (RoA) and 8.7 million (43%) in South Africa.

Core headline earnings were up 41% on the prior period at R2.7 billion, with the strong growth attributable to a 38% improvement in organic trading profit and lower net realised foreign exchange losses, it said.

Headline earnings per ordinary share climbed 68% to 572 cents per share, while operating profit was up 17% to R5.77 billion. The trading profit impact of Covid-19 was largely neutral, as a R900 million revenue loss relating to lower advertising income and subscription revenues from commercial customers was offset by R800 million in delayed content costs.

“Despite operating in a challenging environment and being affected by lockdowns, production stoppages and disruptions to live sport, we delivered on all key metrics,” said Calvo Mawela, MCG chief executive officer. “A strong focus on cost reduction allowed for a further R1 billion in cost savings during the period. We also narrowed the losses in the Rest of Africa by 59% year-on-year to R338 million.”

Revenue increased 2% (-1% organic) to R26.1 billion, with subscription revenues of R22.2 billion increasing 5% (3% organic) YoY. Top line momentum was significantly impacted by Covid-19, the group said. Advertising revenue declined R572 million YoY, mainly due to a lack of sports advertising and a generally softer advertising market resulting from lower economic activity. Excluding the impact of Covid-19, MultiChoice said that revenue would have grown 6% YoY.

The group said it continued its strategic focus of investing in local content and produced 1,870 additional hours, despite disruptions caused by strict early Covid-19 lockdown measures. The local content library is now close to 59,000 hours.

On Thursday 12 November, the group announced the launch of the DStv Explora Ultra, its next generation decoder. “As part of the new experience, Netflix will now available for the first time on the Ultra decoder, which goes on sale next week” it said.

MultiChoice said that its South African business delivered a ‘resilient performance’ in a tough consumer climate, reporting subscriber growth of 7% YoY or 500,000 subscribers on a 90-day active basis. The impact of Covid-19 and the associated lockdown saw consumers prioritise video services, but a lack of live sport and the inability of commercial subscribers to trade negatively impacted revenue generation, it said.

Revenue declined 3% to R16.5 billion, affected by the lower advertising and commercial subscriber revenues. Trading profit increased 12Looking ahead, MultiChoice said that the group’s focus for the full year, subject to a stable regulatory environment and potentially adverse consequences of Covid-19, will be to further scale its video entertainment platform across the continent, focusing on both traditional broadcasting and streaming services, and to increase its investment in local content.% to R5.8 billion.

“This higher profitability can be attributed to a doubling down on the group’s cost optimisation programme, the non-recurrence of three major sporting events expensed in the comparative prior period, lower operational costs in a Covid-19 environment and a temporary shift in content costs as a result of delays in sporting events.”

Source: Business Tech