- of Canal+'s CEO wants to build one of the top five entertainment groups in the world after acquiring MultiChoice.
- Maxime Saada said due diligence on the South African-based business has yet to be carried out and that will determine any future decisions.
- But he added that unlike MultiChoice, Canal+'s strategy is focused solely on content and content distribution, not diversification.
- For more financial news, News24 Business top page.
Canal Plus Chairman and CEO Maxime Saada has been outspoken about his ambitions: after acquiring MultiChoice, he wants to build one of the top five entertainment groups in the world.
He has been much more cautious in speaking about what MultiChoice will look like post-acquisition, but has indicated he wants a more streamlined business.
Saada spoke to reporters in Cape Town this week after Canal+'s bid to take control of the South African-based group finally won the backing of the MultiChoice board. The combined company would have a combined 50 million subscribers, including 30 million in Africa, making it the world's largest entertainment company outside the United States.
Canal Plus Group Chairman and CEO Maxime Saada. (Canal Plus/Courtesy)
Offering
Canal Plus has already invested €1.2 billion (currently about R25 billion) to acquire a 45% stake in MultiChoice, but the company stressed that it has not yet carried out proper due diligence and does not have enough information to make an announcement about the business.
But he stressed that one of the big differences between Canal+ Plus and MultiChoice – “almost one of the only differences” – is the SA group's belief in diversification.
“We don't think so. We have chosen to focus our resources on our core business, which is content distribution. And this is our focus. We are [almost] Profits of 500 million euros. We are a profitable company.”
He added:
They are [MultiChoice] They have a different approach. They have diversified into home security, fintech, insurance, gambling, etc. We have discussed it. Of course, they believe they are right. We are not sure if they are right. But maybe they are. And we will look at all the businesses. And if it makes sense, then again, maybe they are right. But we don't know yet.
Apart from entertainment platforms such as DStv, Showmax and SuperSport, MultiChoice also owns cybersecurity company Irdeto, health and security services app Namola and Nigerian sports betting group BetKing.
MultiChoice warned on Thursday that its total losses would rise by up to 140% to a loss of more than R3 billion in the year to the end of March, but excluding the impact of currency fluctuations, its trading profits appeared to be improving, albeit lower.
Read | MultiChoice warns losses will more than double due to Showmax spending and currency effects
Another difference is that MultiChoice has developed different platforms such as Showmax for streaming, while Canal+ offers the same package on different platforms such as satellite TV and internet streaming.
“So, I'm going to tell you [Canal+] The app is the same content that is now in our set [set-top] “It's in a box.”
“They chose to say, ‘Okay, OTT. [over-the-top, or online streaming] Different markets, different customers, different offers, different brands [like] Showmax. And we'll address that market with Showmax. We may end up in a situation where Showmax doesn't support DSTV and actually competes with DSTV. But again, there's not enough information. Overall, I think DTH is [Direct-to-Home, or satellite television] It’s an asset.”
He added that while internet streaming is the future, Canal+ and MultiChoice have been able to enter some African markets with affordable TV over DTH, Netflix has not been able to serve those markets due to limited and expensive internet.
Saada also speculated cautiously about the future of MultiChoice brands such as DStv and Showmax and whether they will be replaced by Canal+.
“But my instinct is: They've built a very strong brand, and that's an asset,” he said, adding:
So we don't throw away assets, unless we have to. It's true that we're only facing companies. [like Netflix, Apple, etc.] It's a company with a brand. And that makes the company strong. But if you asked me today what I would do, I would never change the brand. They are very strong brands.
One thing remains the same: DStv will not start offering dedicated sports packages, nor will it allow customers to put together their own channel packages.
“Everyone who has tried this has failed,” Saada said.
Indeed, he added, there are only two drivers of subscriptions: discounts and sports. If there's a particular game that everyone wants to watch, Canal+'s subscriber numbers will increase by several thousand.
“(But) one movie doesn't translate into more subscribers. Still, people who like sports also like movies, not the other way around.”
Movies are considered a requirement for subscribers, “and the economics work because you can amortize them more than other movies,” Saada said.
ambition
Apart from its MultiChoice deal in Africa, the group recently increased its stake in Hong Kong-based streaming platform Viu to 30%, with an option to raise it to a further 50%, which has around 15 million subscribers across Southeast Asia and the Middle East.
The deal brings Saada one step closer to his ambition of making Canal+ a top-five entertainment group, including in the U.S., where Netflix has 270 million subscribers, followed by Amazon Prime Video (200 million) and Disney+ (152 million).
Saada said the combined company would take a “very different approach” to its American counterparts by focusing on the highest quality local content.
“That's not necessarily very difficult, but it takes resources. And once you get to that 50 million subscriber scale, you have the resources.”
The merger of Canal+ and MultiChoice is expected to lead to billions of dollars in cost savings through the consolidation of technology spending (including set-top boxes and cloud computing), content production and acquisitions.
On Thursday, Saada visited the Canal+ film production site. Huntingtonactor Glen Powell (Top Gun: Maverick, Anyone but you), Margaret (Poor thing, Maid) and Ed Harris (The Truman Show).
The film, which is set in various locations in the United States, was shot entirely in South Africa – with Cape Town, Stellenbosch and Melkboschstrand standing in for New Jersey, Manhattan and Long Island – and cost $7 million to make, which producers say is $5 million less than the original budget, which had been set to shoot in Toronto, Canada and Sydney, Australia.
Canal+ is currently designing a structure to satisfy local regulators regarding black ownership requirements and restrictions on foreigners obtaining local broadcasting licences (capping voting power at 20 percent).
“Once the structure is in place, and we hope that will happen soon, we will then go to regulators and test the solution with them.”
Read | French giants Canal+ and MultiChoice optimistic after hitting milestone
Saada said the group has received a number of unsolicited proposals from potential local partners, and Bloomberg previously reported that the group was in talks with billionaire Patrice Motsepe.
“A partner is a requirement. And for us, it's not a constraint,” he said, adding:
My father is Tunisian, so I would say I'm African. Really. But I don't know anything about South Africa. I don't know anything about South Africa other than what you've read or heard. And I don't know the country. So there's no way I would come here without a partner. Zero.
“A partner who knows the business, knows the country, and can guide you around the country.”
For similar reasons, in African countries, all the chief executives of Canal+ operations, including the CEO and the CFO, are from the country.
“We're not going to send foreigners from Paris to run the business. It just doesn't make sense.”
