Will re-configured Seardel Investment Corporation - which now holds a 64% interest in Sabido Investments as its only asset - become a broadcast media giant?
Cape Town-based Seardel is controlled by empowerment giant Hosken Consolidated Investments (HCI,) while Sabido – which has Remgro as a significant equity partner – controls free-to-air broadcaster e-tv.
HCI has shown much faith in Sabido, recently underwriting a mammoth R5bn rights issue to emancipate Seardel from debt. The investment by HCI was seemingly well-timed with terrestrial television broadcasting in South Africa in an imminent phase of migration from analogue to digital platforms. The mechanism of the rollout of Digital Terrestrial Television (DTT) depends on the policy on digital migration, which is determined by the Minister of Communications.
At the time of writing Sabido had just lost its case to require encryption on government sponsored signal converters (or set-top boxes) in the High Court in Pretoria. So, as things stand, e-tv’s new multi-channel offering will be available to more screens than ever before as DTT is rolled out – just without the encryption function.
Just how much this initiative will stimulate Sabido’s revenues is anyone’s guess at this stage.
The past financial year to end February was described as a period of consolidation by acting Sabido CEO Kevin Govender – who is filling in for the more than capable Marcel Golding who exited late last year under controversial circumstances. Govender noted in his review that during the second half of the financial year management took a critical look at all of the business units.
“A strategic decision has been made to exit some non-core and certain underperforming entities within the group.”
He said some of these entities were either sold or discontinued during the current year - including the production arms of a documentary unit in Sabido Productions as well as the Natural History Unit, the eNCA Africa division, e.tv China and the Africa Channel.
Seardel also expects Sabido to exit its investments in Power and Setanta once suitable opportunities arose. This will allow the company to focus on its core SA operations - being e.tv, eNCA, e.tv Multichannel, OpenView HD (Platco) as well as its radio, production and property interests.
OpenView HD appears to be the main focus. Govender said Seardel continued with its strategy to further develop its multi-channel and OVHD platforms with an additional investment of R245m.
“This, albeit costly and currently loss making in the absence of significant revenue due to the delays in DTT and the slow box uptake, is necessary to establish these platforms for future content development and channel creation.”
The push into OpenView also resulted in significantly reduced profits for the year under review. Govender noted, though, that if the impact of the discontinued operations and the investment into multi-channel and OVHD were excluded, then the ‘normalised earnings’ for the year touched R520m. This is just 9% down on the previous year’s figure of R572m – perhaps not a bad showing in a year where the World Cup Soccer would have drawn viewers away from e-tv.
Govender said that to counter the prevailing competitive market conditions e.tv continued to invest significantly in new local programming with a new prime time schedule launched in March.
“We expect that this revised schedule will be the driving force behind a resurgent e.tv in the new fiscal year.”
He conceded that the concept of increased choice is becoming commonplace amongst South African television viewers.
“To bring viewers into the group stable e.tv’s multi-channel bouquet, currently available on satellite platform OpenView HD, is the route to providing viewers who want choice with that possibility. We expect better growth in the take up of OpenView HD set top boxes in 2015/16 and, consequently, better revenues.”