Be free with ‘e’?

Be free with ‘e’?

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, 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, eNCA, 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 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 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’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.”

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