Kenyan authorities have renewed their demand that pay-TV services provider MultiChoice re-sell its exclusive English Premier League (EPL) rights to local rivals as part of the quest to open up the market where it is dominant.
The Competition Authority of Kenya (CAK) made the demand after a two-year investigation into the local pay-TV market that found MultiChoice Kenya has a monopoly of football content that skews competition in its favour.
MultiChoice, which operates under the DStv brand, maintains a stranglehold on EPL and Kenya Premier League (KPL) matches — aired on its SuperSport channels — tilting the field against other firms such as Wananchi Group, which broadcasts through the Zuku brand.
“We have sent MultiChoice our preliminary findings, detailing the areas we found uncompetitive. We are now in the final stages of the matter,” said a source at the CAK.
Naspers, MultiChoice’s South Africa-based parent company, has rebuffed any claims of wrongdoing, arguing that exclusivity is at the core of its pay TV business and that anybody can buy the rights from the UK’s Premier League.
The response sets the stage for a major tussle that could cost MultiChoice between Sh250 million and Sh400 million in fines (based on revenue it earned from airing the EPL in Kenya in the 2014/2015 financial year) besides being compelled to resell the rights.
MultiChoice is said to have contested the findings and decided not to settle with the competition agency — a move that would have seen them, among other things, re-sell the rights to rivals at a commercial rate.
The South African company has more recently written to the CAK expressing its willingness to go for a full hearing.
DStv, which entered Kenya in 1995, has in the recent past faced mounting pressure from regulators and rivals to free up its channels and level the playing ground.
MultiChoice has used the popular English Premier League matches to maintain its grip on the local pay TV market, leaving its rivals struggling.
SuperSport spent Sh25.2 billion to secure the rights for sub-Saharan Africa between 2013 and 2016, a fee that is set to grow to Sh36.4 billion for the three-year period beginning August 2016.
Wananchi Group wrote to the CAK in 2014 demanding that MultiChoice be fined for abusing its dominance, adding that the regulator should punish uncompetitive practices.
Entrants into the Kenyan pay TV segment have for years claimed that MultiChoice is monopolising content, hampering growth of the industry and denying subscribers a variety of content at competitive rates.
Smart TV in 2012 closed shop due to low uptake of its service and inadequate funding, making it the second pay-TV operator in Kenya to exit after GTV fell into financial distress in 2009.
MultiChoice insists exclusivity is the core principle in the pay-TV industry and that its rivals are free to bid for the EPL rights whenever they come up for renewal.
The satellite television provider also contends that attempts to discard exclusivity in South Africa flopped since the value of content drastically dropped, translating to lower earnings for sporting and film firms as well as advertisers.
Naspers said it was aware of the CAK’s investigation and are cooperating.
“We do not believe there are any transgressions on our part,” Meloy Horn, Naspers investor relations officer, told news agency Reuters on Wednesday.
In June 2012, the Communications Authority of Kenya (CA) said it was preparing rules that would compel DStv to resell its content to rivals for a fee, even inviting stakeholders to a consultative meeting.
A year later, however, the telecoms industry regulator dropped the bid on grounds that a new law was needed to compel MultiChoice to share its precious content.
The CAK has now picked up the fight for control of content that has been simmering for years but now seems to have reached the tipping point.
In Nigeria, a similar battle for premium content pitted DStv against local pay-TV operator HiTV in 2010, with the latter winning the rights to air the lucrative EPL matches.
MultiChoice Kenya on October 18 announced that it was slashing its monthly fees by between five and 15 per cent due to “financial pressures” its customers are facing.
The firm, which has been facing growing competition from Internet-based streaming services, had always maintained an annual price increase policy.
The revisions were blamed on a tough working environment, especially the depreciating shilling since it bills is customers in dollars.
Subscribers on the Premium (most expensive) tariff plan now pay Sh8,180 down from Sh9,400 per month, reflecting a 13 per cent drop, while Compact Plus users part with Sh5,425 down from Sh6,400.
Customers on the Compact plan now pay Sh3,550 monthly, down from Sh3,750, while those on the Family bouquet pay Sh1,900, representing a decrease of Sh250.
Subscription fees for the cheapest package, Access, have remained unchanged at Sh1,050 per month. MultiChoice has also added between three and 11 channels to its range of bouquets.
The EPL matches are mostly aired on the Premium, Compact Plus and Compact bouquets.