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By Oluseye Ojo
Multichoice, the African media juggernaut, has been dealt a devastating blow, reporting consecutive years of losses amidst a relentless economic storm.
The company’s financial results for the year ended March 31, 2024, released this week, paint a grim picture, shattering the illusion of invincibility that has long surrounded the satellite television giant.
Contrary to the ubiquitous perception of Multichoice’s unparalleled profitability, the latest figures tell a far more nuanced and troubling story. The company has incurred a staggering net loss of 4.1 billion rand ($225.8 million), a stark contrast to the robust earnings that have historically defined its operations.
At the heart of the financial calamity lies a perfect storm of challenges, from the crippling depreciation of the Nigerian naira against the US dollar to a worrying decline in subscription fees across its DStv service.
The company’s leadership, once hailed for their visionary strategies, now finds themselves grappling with a reality that threatens to unravel the very foundations of their empire.
The Multichoice management, led by the Chief Executive Officer, Calvo Mawela, has sought to downplay the severity of the situation, painting a picture of resilience and adaptability in the face of adversity.
“The year has been like no other in terms of economic turmoil,” Mawela stated, “but we showed resilience and navigated significant headwinds – managing our business with focus, dedication, and tenacity.”
However, the numbers tell a different story, one of an organisation struggling to maintain its grip on the rapidly evolving media landscape.
The company’s revenue declined by a staggering 5.9 per cent to 55 billion rand, a direct result of the dwindling subscriber base and the crippling impact of currency fluctuations.
Mawela’s attempts to draw attention to the company’s diversification efforts, such as the growth in Showmax, SuperSportBet, and Moment, ring hollow in the face of the overwhelming financial woes that have engulfed Multichoice. The new revenue streams, while promising, have simply not been able to offset the catastrophic losses incurred by the once-dominant DStv service. The company’s own admission of the “substantial net foreign exchange translation losses” resulting from the depreciation of the Nigerian naira against the US dollar is probably a damning indictment of its vulnerability to external economic forces.
The staggering devaluation of the local currency, from a closing rate of N464. 50 per US dollar in the previous year to a staggering N1, 308 per US dollar in the current fiscal period, has dealt a devastating blow to Multichoice’s bottom line. It was further revealed that compounding the company’s troubles is the surge in general and administrative expenses, which have jumped from 16.6 billion rand to a staggering 18.4 billion rand.
The escalation, driven by ballooning employee costs and skyrocketing software licence expenses, has further eroded Multichoice’s operating profit, leaving the company in an increasingly precarious financial position. The news of Multichoice’s losses comes at a particularly inopportune time, as the company faces a legal challenge from the Competition and Consumer Protection Tribunal (CCPT), regarding its jurisdiction to entertain a price regulation matter.
Multichoice has openly disagreed with the ruling and has vowed to file an appeal, further stoking the flames of uncertainty surrounding the company’s future. Industry analysts, who have long viewed Multichoice as an untouchable titan of the African media landscape, are now openly questioning the company’s ability to weather the current storm.
“The financial results are a wake-up call for Multichoice,” says media analyst Themba Dlamini. “The company can no longer rely on its past successes to insulate it from the harsh realities of a rapidly changing market.” Dlamini’s concerns are echoed by other industry experts, who warn that Multichoice’s woes could signal the beginning of a more profound shift in the African media landscape.
“This is not just a temporary setback,” says media consultant, Anita Okoye, and that “Multichoice is facing existential challenges that could fundamentally alter the dynamics of the industry if left unchecked.” The company’s CEO, Calvo Mawela, has sought to reassure shareholders and stakeholders, highlighting the company’s focus on cost savings and its commitment to driving scale in its newer ventures, such as Showmax, Moment, and SuperSportBet. But the promises of a brighter future ring hollow in the face of the dire financial realities that have engulfed the company.
Mawela’s assertion that Multichoice’s “combined efforts will put our business in a strong position to prosper once the macro-economic environment stabilises” is met with scepticism by industry observers, who argue that the company’s troubles run far deeper than just external economic factors.
“Multichoice has been slow to adapt to the changing landscape, clinging to its legacy DStv model even as the world has moved towards more flexible and affordable streaming options,” says media analyst Tolu Adeyemi.
He continued: “The company’s failure to anticipate and respond to these shifts has now come back to haunt them, and it will take more than just cost-cutting measures to turn the tide.”
Analysts observed that as Multichoice struggles to regain its footing, the company’s once-unassailable dominance in the African media landscape has been thrown into disarray.
The ripple effects of its financial woes, according to them, are likely to be felt across the industry, as competitors seize the opportunity to challenge the company’s long-held stranglehold on the market.
The observers noted that the company must now confront the hard truths of its own failings, while simultaneously navigating a rapidly evolving media landscape that threatens to leave it behind. They were of the opinion that the stakes have never been higher, and the future of the media juggernaut hangs in the balance.
Mawela emphasised the company’s commitment to creating authentic African stories. “We are the largest producer of original content on the African continent and remain committed to creating and growing authentic African stories. We produced over 6,500 hours of local content, to bring our local content library to 84, 000 hours of content. More than half of our general entertainment budget is spent on local content.
“We know that nobody else has the content we have for the customers we serve. This puts us in a great position to prosper – by better understanding our customers’ entertainment choices, identifying their needs and tapping into the growth opportunities that arise along the way.
“In the year ahead, our focus will be to drive scale in Showmax, Moment, and SuperSportBet and to grow DStv Insurance, DStv Internet and DStv Stream. We are purposefully pursuing our vision of becoming Africa’s entertainment platform of choice with determination and vigour.
Significant progress has been made towards achieving this strategic objective. Our combined efforts will put our business in a strong position to prosper once the macro-economic environment stabilises.”
