Here’s how a regulator plans to break DStv's stranglehold – including letting it buy only half the movies Hollywood makes

Business Insider SA
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  • The Independent Communications Authority of SA (Icasa) has just published its draft findings on competition in the pay-TV market.
  • The regulator is worried about DStv owner Multichoice's dominance of the market – despite competition from the likes of Netflix.
  • Among Icasa's plans: letting DStv buy the rights to only half of Hollywood's movies, and making big sporting matches available on both TV and online streaming from different providers.

Broadcast regulator the Independent Communications Authority of SA (Icasa) is considering restrictions on MultiChoice, the owner of DStv, intended to break its stranglehold on South Africa's pay-TV market.

Those could include limiting the number of Hollywood movies for which MultiChoice is allowed to buy the rights, and stipulating that the right to broadcast major sporting events must be split so that an online streaming service can carry it at the same time it is broadcast on DStv.

Multichoice recently listed on the JSE after being unbundled by former parent company Naspers.

See also: DStv’s owner is heading to the JSE – but there are wildly divergent views on what it’s worth

Icasa published the draft findings of its inquiry into subscription television broadcasting services after three years of occasionally hard-fought battles between the likes of DStv and its competitors, both online and those who broadcast free-to-air television.

During the process MultiChoice argued that its dominance of pay television by way of satellite should be seen in the context of the major threat it faces from the likes of Netflix – but Icasa largely rejected that argument.

Young people, Icasa said, may stream television via the internet, but in South Africa the use of services such as Netflix "is still muted, given the relatively limited level of internet access, the high cost of data and low average internet speeds".

The lock-in that DStv has on sports content is also a constraint on streaming services, Icasa said.

Meanwhile, a decision to not allow encryption (and so pay services) on digital terrestrial television services due to launch in South Africa means it "will have a minimal impact on satellite-based subscription television services", the regulator said.

That leaves MultiChoice's current dominance to be dealt with by way of licence conditions Icasa can impose.

"In all the identified markets where there is ineffective competition the Authority found that MultiChoice possesses a significant market power on the basis of high market shares and the nature of its vertical integration which the Authority considers to harm competition," Icasa said.

In order to break the DStv stranglehold, the regulator proposes stark limits on the kind of content a dominant operator – such as MultiChoice – may buy.

When it comes to the right to secure what is know as "first subscription pay-TV window" rights to Hollywood movies, "a licensee with significant market power should have access to or only be able to enter into agreements with half of the movie studios at a time," Icass said.

"This frees up the other half to competitors."

On sporting rights, across everything from local rugby tournaments to major European soccer events, Icasa proposes limiting DStv to three-year exclusive contracts only – and to broadcasting only on TV.

At the moment, the regulator said, MultiChoice buys the rights to all distribution platforms. It would like to see instead that MultiChoice gets the rights only to broadcast matches via DStv, while a different streaming operator makes them available online.

Future measures may include forcing DStv to allow its decoders to be used by competitors, but that would be subject to a separate process. 

For more, go to Business Insider South Africa

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