Broadcasting
African Communications Industry is in Need of an Overhaul. Here’s How it Can be Done
By Steve Babaeko
In the last decade, advertising has taken several unprecedented turns. The disruptions caused by digitalisation, technology, and unnatural incidents on the practice as we knew it, have been immense. Also, a drastic change in consumer habits over the years has been no less impactful on how advertising is practised globally.
We continue to witness how a constant shift in digital innovations prompts the biggest advertising companies around the world to scramble to adapt and adopt new strategies to reach consumers. The recent metaverse rave, for instance, currently presents advertisers with a chance to market to consumers as they interact and socialise in virtual spaces.
We also can’t ignore how the Covid-19 pandemic has added to the dynamics of our practice. Digital streaming reigned supreme as consumers stayed at home and became committed to watching more videos and other forms of media consumption, necessitating swift actions to meet them where they are most comfortable.
It should be clear by now that advertising has become more complex than ever before, as it is a common prediction that we are yet to see the last of these types of disruptions – digital or otherwise. These indicators are why it is a special time in the history of advertising to forge and introduce strategic adaptations that will keep us a step ahead and mitigate the impact of possible disruptions in the future.
An outstanding factor we must consider in developing workable strategies to confront peculiar challenges presented by these sweeping changes in our industry is how the consumer market continues to expand, especially in Africa.
Africa, with a potential market of 1.7 billion people, is one of the fastest-growing consumer markets in the world. Consumer expenditure on the continent has grown at a compound annual rate of 3.9 per cent since 2010 and reached $1.4 trillion in 2015. This figure, to echo McKinsey & Company, is projected to reach $2.1 trillion by 2025 and $2.5 trillion by 2030. The World Bank also projects that by 2030, the largest consumer markets in the world will include Nigeria, Egypt, and South Africa, while similar lucrative opportunities will arise in Algeria, Angola, Ethiopia, Ghana, Kenya, Morocco, Sudan, Tunisia, Tanzania, and other African countries.
Of this market size, the youth population in Africa makes a significant number. Young people account for 60% of the continent’s population according to UNESCO. By 2030, there are expected to be 350 million young people aged 15-24 on the continent.
Due to their nature, developing strategies to cater to this demographic is becoming a more challenging task with each passing year. Compared to a decade ago, the younger generation, with access to the latest technology tools and information at lightning speed, react and consume differently. Young consumers’ demand and affiliation for brands that show concern for their struggles mean that it has become even more pertinent to understand them, know their interests and wants, and continuously develop strategies that align with their needs.
As such, serving a community of consumers in a multi-channel world requires the adoption of smart digital tools, the adaptation of informed social insights and verifiable data, and a deeper understanding of psychology.
These rapidly changing market dynamics are why how we do advertising must evolve. Companies like Apple, Dunkin’, Tupperware, and Domino’s that have hitherto foreseen the necessity for the evolution of advertising have done so by either making new tweaks or by way of a total rebrand.
It is important to note, however, that in adopting new advertising tactics to meet consumer demands, companies must get it right.
The world will remember how, in its bid to revamp its service for consumers in 2013, Yahoo! came under public scrutiny and heavy criticism for failing miserably in its attempted rebrand with a shoddy switch up of its logo. The rebrand fail ultimately resulted in the company’s loss of hundreds of millions of dollars a year in advertising revenue.
For X3M Ideas, our understanding of the advertising industry’s current reality in relation to the young consumer base in Africa ignites our desire to proffer solutions that will satisfy brand and client demands as we move on to our next chapter.
After 10 years of being a one-stop-shop marketing communications company that’s 100% built on ideas and leveraging partnerships that, backed by sound strategy and unique thinking, seek to deliver the most effective results, we are adopting a new proposition named ‘Finding X’.
Our adoption of this unprecedented actionable framework aims to provide unique solutions to the constantly changing consumer demands and habits in the advertising landscape. By design, our new Finding X framework, categorised into an adaptable A, B, and C formula, will unearth transformative products and services necessary for providing existing and future clients with a competitive edge and also advance global advertising practice.
With Finding X, our goal of redefining the way advertising is practised and perceived in Nigeria and Africa remains. Only that this time, we will rev up our strategy of studying and understanding the consumer. We will further expand our reach through digital and interactive media, and measure the impact of every campaign for further improvement.
Strategically, the significance of the Finding X framework is what inspires a rebrand of our logo and website, with the X in the X3M emblem now more pronounced than ever.
So, what is our X? What unique brand values do we intend to communicate? And what is our modus operandi for the next decade? The answers lie therein.
The X in X3M represents many things. The unknown – the X-files; the hidden treasure – X marks; the spot and; the magic ingredient – the X factor. We can use it in all these ways. And Finding X is tantamount to finding gold; the gold of consumer engagement. The discovery tool will allow us to find the X for our existing and future clients in the representation of their brands, products or services and by such, give them an edge over their competitors. It is a logical step, backed by research and knowledge of human behaviour, to arrive at idea spaces unique to each brand.
This framework will also prove a distinctive blueprint for advertisers in and outside Africa to maximise the continent’s consumer market potential over the next decade.
In 2020, the COVID-19 pandemic caused the African ad market to contract by nearly a quarter according to market research data. Africa was also the smallest regional ad market worldwide within the period with a $5 billion investment after advertising spending on the continent shrunk by over 23 per cent from $6.52 billion a year earlier. Projections indicate positive but low growth rates on the continent in upcoming years, with the decline unlikely to change soon.
Understanding the fastly changing market dynamics in relation to consumer engagement and satisfaction and designing strategies tailored to meet their needs will offer a sustainable pathway to turn the tides in no distant time.
X3M Ideas’ Finding X framework and rebrand are borne out of the burning desire to provide brands, clients and advertisers with these necessary creative solutions. And our commitment to further innovations and collaborations to impact the world, while staying true to the values that set us apart, is solidly unshaken as we turn the book to our next chapter.
ARISE News Channel, Africa’s premier broadcaster, has announced its expansion into South Africa and nine other Southern African countries.
The channel is now available on Multichoice/DSTV Channel 416 in South Africa, Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, Swaziland, Zambia, and Zimbabwe.
With this expansion, ARISE News Channel is now live in 54 African countries, including Kenya, Tanzania, Rwanda, Uganda, Cameroon, Sudan, Ghana, Senegal, and Cote d’Ivoire, among others.
Celebrating its 11th anniversary on January 31, ARISE News Channel continues to showcase Africa’s diversity in business, politics, technology, commerce, science, sports, show business, and fashion, while projecting the best of Africa and its cultures globally.
Nduka Obaigbena, chairman and editor-in-chief of ARISE News Channel,, expressed determination to launch the channel in all countries worldwide, stating, “The move to Southern Africa reaffirms ARISE News Channel’s position as the leading broadcaster in Africa with independence and clear thinking. We are determined to celebrate the best of Africa and tell the African story in the global marketplace.”
He added, “We shall continually showcase the emerging African century where Nigeria and other African countries will be some of the leading economies around the world. This is a marathon and not a dash: we will do for Nigeria and Africa what the CNN, the BBCs, and Aljazeeras have done for their nations and regions. In the emerging African AI- driven new information highway, no one will shape your narrative better than you.”
This week, the incredible talents of Nigerian singer, songwriter, and actress Simisola Bolatito Kosoko, better known by her stage name, Simi, will be highlighted on African Voices Changemakers, an interview program sponsored by Globacom on Cable News Network (CNN).
Simi began her career initially as a gospel singer. Her debut studio album, “Ogaju”, was released in 2008. After she got a record deal with X3M Music in 2014, she released the album “Tiff,” which was nominated for a 2015 Headies Best Alternative Song award.
Her debut studio album, “Omo Charlie Champagne”, Vol. 1, was released to mark her 31st birthday on April 19, 2019, and her second album, “Simisola”, was also released the same year. She became the CEO of her own label, Studio Brat, which she launched in June 2019.
Simi was one of the judges of the Season 7 of the Nigerian idol TV show in 2022.
Mother of a girl named Dejare, Simi married popular musician, Adekunle Gold in 2019 having graduated from Covenant University in Ota, Ogun State. Some of her works include “Joromi”, “Know You”, “Jericho”, and “Duduke”.
On Saturday at 8.30 a.m., the 30-minute magazine show will air on the global channel. Reruns can be seen on Saturday at noon, Sunday at 4.30 a.m., and Sunday at 7:00 p.m. Another rerun will air at 4 a.m. on Monday of the following week, 8.30 a.m. and 12 p.m. on Saturday, and 7 p.m. and 9.30 p.m. on Sunday.
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
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