Some MultiChoice shareholders have expressed relief at the offer by Canal+ to buy Africa’s pay TV giant for $2.9 billion, essentially viewing the potential deal as a vehicle for them to be rescued from an investment that has turned sour.

On April 8,, the deal inched closer to being cemented when the board of MultiChoice agreed to cooperate with Canal+, a sign that it was warming to a tie-up with France’s broadcasting conglomerate.

The board initially rejected the offer by Canal+ to buy the MultiChoice shares that it does not already own for R105 each, saying it was too low and undervalued the company’s growth prospects.

But MultiChoice has been convinced to reconsider its position after Canal+ improved the offer to R125 per share. Canal+ already owns 40.01% of MultiChoice shares on the JSE and wants to pay R35-billion to buy the rest of the company and take control of it.

The next big test is whether MultiChoice shareholders will support or reject Canal+’s offer, which requires support from 90% of shareholders to get the multibillion-rand deal over the line.

Daily Maverick canvassed the views of MultiChoice shareholders and industry players about the merits of the deal and whether they planned to throw their weight behind it when it comes up for a vote in the coming months.

Early indications are that some shareholders view the deal as a blessing and an opportunity to bail out from their investment in MultiChoice.

Before Canal+ made a move on MultiChoice, the latter’s share price had been down by 22% as its operations came under pressure from declining DStv subscriber numbers and intense competition from streaming services such as Netflix, Amazon Prime and Disney+.

Its earnings have also taken a hit of billions of rands because of the depreciation of African currencies against the US dollar, especially the Nigerian naira.

MultiChoice also had a run-in with regulators; in Nigeria, it ran into problems relating to outstanding tax payments. In South Africa, competitors including the SABC and eMedia (the owner of e.tv) have complained to regulators, accusing MultiChoice of anti-competitive behaviour and using its dominant position to restrict access to its broadcasting platforms and dictating restrictive licensing agreements.

The investment community response

Anthony Sedgwick, the cofounder of Abax Investments, was withering in his assessment of MultiChoice’s investment prospects. “Put frankly, we were relieved to see Canal+ finally step up and bail us out of the position,” he said.

According to MultiChoice’s latest annual report, Abax Investments held 0.34% of its shares. But Abax recently sold those shares, taking advantage of MultiChoice’s 25% share price jump since Canal+ initially tabled its buyout offer in February.

“We think Multichoice is a great business that produces an incredible variety of content, creates opportunities for so many talented people, supports a huge variety of good causes and is a real South African business champion.

“But it operates in unfriendly regulatory countries … and faces some headwinds from hard currency priced content and broadcast costs,” Sedgwick said.

Asief Mohamed, the chief investment officer of Aeon Investment Management, shared Sedgwick’s concerns about MultiChoice.

“My guess is that the other shareholders will likely accept the R125 offer. Governance has for a long time been a concern of some shareholders, including ourselves,” Mohamed told Daily Maverick.

MultiChoice’s latest annual report puts Aeon’s shareholding in it at 0.43%.

Merits of the deal

Canal+ has argued that the aim of buying MultiChoice would be to combine both businesses to create an entertainment giant that can survive a market facing intense competition and declining advertising revenue.

A combined Canal+ and MultiChoice will boast media businesses in many African countries, from South Africa and Nigeria to Senegal and Cameroon.

Not all investors are pessimistic about MultiChoice, its business fundamentals and investment prospects. In fact, when MultiChoice ran into tax troubles in Nigeria in July 2021, which precipitated a steep decline in its share price (to a low of R115), Argon Asset Management saw it as a buying opportunity. It bought MultiChoice shares and has since maintained its holding in the company to about 0.41%.

Asked why Argon remained bullish about MultiChoice, the asset management firm’s equity analyst, Richard Court, said: “Simplistically, there are two parts to MCG [MultiChoice Group]. There is the mature South African business, which, for the most part, was highly profitable and cash-generative.

“Then there is the business that MCG is building in the rest of Africa, which was actually a drag on profitability, and it was still quite small in the life of MCG from a bottom-line perspective. Nigeria takes up a lot of the bandwidth.

“We think the market was overly pessimistic on the prospects of the rest-of-Africa segment. We thought the market was overreacting to the possibility of a tax penalty coming out of Nigeria. The share price fell back and we just took the buying opportunity. We thought that MCG share was worth more than the levels at the time.”

Court said MultiChoice had managed to defend its premium TV segment (consumers who subscribe to DSTV premium packages) despite the arrival of international streaming services in South Africa.

“It did quite well in the lower segment and in the lower-cost offerings by growing subscriptions in those markets. Management was doing the right thing strategically and executing quite well on that strategy,” he said.

MultiChoice’s investments into Showmax strengthened its defence position, he said.

Argon’s house view is that Canal+’s R125 offer undervalues MultiChoice and its growth prospects.

“At the moment, we are unlikely to accept at R125. In a few years from now, if they’re able to build Showmax and if Nigeria stabilises, which we can’t say when, then I think the outlook for MCG is going to be a lot rosier than what it is now. I think the market would recognise that and that should reflect in the share price,” Court said. He was unwilling to comment on what he thought would be a fair offer from Canal+.

Canal+ said the media industry in which MultiChoice was operating “is becoming increasingly globalised and competitive, with regional media companies having to compete with the firepower of global media titans, with enormous resources to invest in content, marketing and technology…”

With a customer base of 22 million, MultiChoice’s growth strategy involves investing in local and international content for its streaming service, Showmax, and Canal+ is likely to provide capital to fund the growth.

Peter Takaendesa, the head of equities at Mergence Investment Managers, has argued that only companies with scale and a strong balance sheet are likely to survive changes in the entertainment industry.

“Canal+ and MultiChoice can leverage content and financial strength. However, there is still no guarantee of success, as the fight against global streaming giants is intense.”

Other large MultiChoice shareholders are yet to opine on the deal. They include the Public Investment Corporation (PIC), which holds 13%, M&G Investments (more than 7%) and Allan Gray (6%). Allan Gray declined to comment to Daily Maverick, and M&G and the PIC were not available to do so.

Another MultiChoice shareholder that is not ready to express its view on the Canal+ deal is Sanlam Investments, which has a 1.9% interest in the broadcasting company. Sanlam said it opted not to express its stance or intentions “considering the sensitive nature of ongoing negotiations” pertaining to the deal.

“While we understand the importance of transparency and accountability, we believe it is essential to maintain confidentiality and prudence when dealing with such matters,” Sanlam said.

The MultiChoice-Canal+ deal is likely to take two years to be completed, as it still requires regulatory approval.

Credit: Daily Maverick

FemyWalsh Limited, media conglomerate, is set to launch its flagship FM terrestrial radio station as it receives its licence from the National Broadcasting Commission (NBC).

This adds yet another media asset to the FemyWalsh group, which already comprises SOUQ News TV, Walsh Radio Online, Terminal Seven Audio-Visual Studio and Walsh Photography.

Victor Walsh Oluwafemi, company CEO, and Dr Idahosa Osamhanze, vice president, were presented with the operational licence by Mr Charles Ebuebu director general NBC at the commission[s  office in Abuja.

This move marks a significant expansion in FemyWalsh’s media footprint and paves the way for broader audience engagement and impact. With the addition of this new licence, FemyWalsh is poised to reach even more viewers and listeners across Nigeria.

The company’s commitment to delivering high-quality content and innovative programming remains unwavering.

According to Oluwafemi, acquiring the terrestrial FM radio licence underscores the group’s ambition of being the largest and most impactful media network across Nigeria, as well as the African region.

“Getting into the terrestrial radio space and securing the operational license represents a pivotal moment for the FemyWalsh group as we continue to evolve and innovate in the media landscape. Radio has long been a powerful medium for reaching diverse audiences, and we are thrilled to leverage this platform to amplify further our mission of empowering SMEs and driving economic growth in Nigeria.”

For his part, Osamhanze, who is the Vice President of the organisation, also made it known that this was a dream come true, and a representation of the company’s dedication to the long-term development of the Nigerian media space. “With this new initiative, FemyWalsh Limited is poised to make a significant contribution to the future of Nigerian media. We are thrilled for the opportunity to foster a thriving media landscape for years to come.”

FemyWalsh Limited is the owner of SOUQ News TV, a digital satellite channel licensed for broadcast in Nigeria and the United Arab Emirates.

The radio licence acquisition comes at a time when SOUQ News TV is experiencing rapid development and expansion, building on its established reputation for excellence in journalism and commitment to serving its viewers.

Climate Action Africa (CAA), a leading advocate for climate resilience and sustainable development in Nigeria, has called for a more impactful and inclusive approach to tackling the country’s pressing climate challenges. This was the focus of the climate change media briefing held in Lagos, Nigeria, today.

With Nigeria facing significant vulnerability to rising temperatures, erratic weather patterns, and environmental degradation, CAA emphasizes the need for a united front across all stakeholder groups. Developing countries like Nigeria, and many others across Africa, face unique sets of challenges when it comes to climate change.

“Nigeria’s unique position and vast resources necessitate a comprehensive strategy that leverages the expertise and commitment of every sector,” says Grace Oluchi Mbah, Co-Founder and Executive Director at Climate Action Africa.

“From government and industry leaders to scientists, community organizations, and individual citizens, we all have a role to play in building a more resilient and sustainable future.”

The importance of fostering collaboration in areas like policy development and implementation, innovation and technology, community mobilization and education, and investment and financing were highlighted during the media briefing. These are the challenges that the Climate Action Africa Forum 2024 (CAAF24) is set to address.

The upcoming Climate Action Africa Forum (CAAF24), scheduled for June 19-20 in Lagos, serves as a testament to CAA’s commitment to fostering collaboration. The forum will bring together key stakeholders from across Africa to discuss innovative solutions and develop concrete action plans for tackling climate change.

The forum will introduce the Deal Room, a dynamic marketplace connecting Africa’s brightest innovators with forward-thinking investors to accelerate impactful deals for climate action and sustainable development. Following the conference, CAA will partner with Silicon Valley based Founder Institute, the world’s largest startup accelerator to provide ongoing support to African innovators in a post accelerator programme.

“CAAF24 provides a valuable platform for knowledge sharing, collaborative problem-solving, and forging strategic partnerships,” says Mbah. “By working together, we can ensure that Nigeria, and Africa as a whole, emerges as a leader in building a sustainable and climate-resilient future.”

Climate Action Africa urges all stakeholders to take a proactive stance in addressing the climate crisis. Through collaborative efforts, innovation, and a shared commitment to a sustainable future, Nigeria can mitigate the impact of climate change and pave the way for a more prosperous and resilient tomorrow.