When the Gupta-owned news channel ANN7 loses its R50-million a year contract with DStv, can it survive?
Scarred by brand damage, DStv wants to get out of the contract, which comes up for renewal in June next year with negotiations set to start by February.
ANN7's cowboy broadcasting style has seen DStv face a number of complaints to the industry regulator, the Broadcasting Complaints Commission of South Africa (BCCSA). In addition, the Gupta family is central to the story of state capture in South Africa and DStv, which belongs to the global multinational Naspers. It faces reputational risks similar to those facing McKinsey and KPMG, which have been synced with the state capture story.
DStv is a household South African brand, and it is being lashed on social media for keeping the channel.
Media diversity and plurality
But media freedom organisations have also met with DStv and insist that ANN7 has a place in the TV landscape to satisfy the requirements of media diversity and plurality.
"When a channel keeps dragging you through the mud, you have to consider, 'is there a way out?'" said executive sources at DStv, who briefed HuffPost SA on condition of anonymity. "It's the broadcasters who take the rap," said one executive, who explained that while there had been fewer than 10 complaints about ANN7 to the BCCSA, this was still regarded as too many. The complaints related to ANN7's perceived factionalism and its broadcasting of alleged propaganda.
ANN7's cowboy broadcasting style has seen DStv face a number of complaints to the industry regulator.
"But we recognise that we also have a duty to support free expression. We want the news to be fair and not be antagonistic to individuals," said a second DStv executive. ANN7 has taken to lobbing digital missiles at individuals who take on the Gupta family: former tourism minister Derek Hanekom has been attacked and former finance minister Pravin Gordhan is under constant fire.
South Africa's broadcasting regulations are not as laissez-faire as the U.S.'s and set strict parameters on fairness and against hate speech. While ANN7 started broadcasting on the standard principles of television balance and fairness, it has thrown out the rulebook as its former owners, the Gupta family, face deeper and deeper scrutiny.
SA's Fox News
Even under the new owner, Mzwanele Manyi, the station is often likened to the U.S. cable station, Fox News, which is a partisan praise singer to U.S. President Donald Trump.
In addition to complaints to the regulator, DStv has also faced petitions from its subscribers who want ANN7 to be removed from the platform; but it has also received a few petitions from viewers who want it to keep broadcasting.
The #Guptaleaks emails have revealed the confidential details of how much DStv pays ANN7 to host its news channel on the continent's leading subscription television network: a whopping R50-million a year.
The leaked emails reveal that the Guptas wanted to sweeten the deal to R150-million a year. ANN7 attracts very little advertising, so you can extrapolate that its running costs are funded by the DStv contract payment.
The leaked emails reveal that the Guptas wanted to sweeten the deal to R150-million a year.
Chris Botha, the group managing director of The MediaShop, a leading media buying agency, says "ANN7 needs a carrier platform -- they would not be able to run their own platform."
Can ANN7 survive?
DStv is the most powerful platform in South Africa because 5.2-million households have one or multiple subscriptions. ANN7 has the option of migrating to OpenView HD, the DStv competitor, but it has a much lower market penetration into only 1-million South African households, says Botha. It would, therefore, be unlikely to pay as much as DStv does.
What about going straight to internet TV? Across the world, cable and terrestrial television are feeling the competition from streaming television. In South Africa, the market is still young. "In addition, in internet TV you are competing with the whole world. In South Africa, Netflix and ShowMax are doing [well], but video is data-heavy and you don't get the viewership numbers," says Botha.
Audience numbers given to the HuffPost SA by The MediaShop shows that ANN7 makes up a small percentage of the DStv total audience, but that it is quite competitive among news channels.
When President Jacob Zuma gave ANN7 an interview November 2013, it outstripped the viewership of CNN megastar Christiane Amanpour's popular programme that week. An estimated 54,000 viewers watched, compared with 42,000 viewers for Amanpour in the period between October and November measured.
Over the period, eNCA presenter Joanne Joseph's programme on Jacques Pauw's best-selling book, "The President's Keepers", was the runaway best-watched on the news channels with 131,000 viewers glued.
eNCA is the best-watched of the news channels on the DSTV platform, but Business Day editor Tim Cohen reported this week that it earns less than ANN7 does.
We want more
Cohen said that ANN7 was getting more than its due. "The owner of eNCA, e.tv, gets about R450-million per year from DStv, and it provides five channels. It's deliberately designed so you can't break down the payment due to each of those five channels individually, but assuming the news channel is due to a fifth of the total, e.tv is getting royally screwed." DStv disputes this and says eNCA makes much more from being hosted on the Multichoice-owned platform than ANN7 does. This is because the e-tv owned channel delivers a much larger audience.
Gary Naidoo, spokesperson for Infinity Media, which owns ANN7, says: "The commercial relationship between Infinity Media and DStv is private and confidential.
Suffice to say, at the appropriate time next year Infinity Media would engage DStv on the renewal of the contract."