Fresh from taking over MultiChoice, French pay-TV provider Canal+ has stunned suppliers by suspending payments and demanding a 20% discount on invoices, in a bid to save costs.
The move has sent shockwaves through companies providing services to MultiChoice, with an actors’ industry body questioning the legality of the decision. The Competition Commission — which approved the merger of the two firms under strict conditions — has vowed to “establish whether there has been a breach of the conditions of approval of the merger”.
Insiders said the request applied to all suppliers — from those providing office essentials to production houses — with new contractors also being asked for a discount.
This comes a month after the company took full control of Africa’s biggest pay-TV operator, in a R55bn ($3.1bn) transaction described as the biggest on the African media landscape. It has created Canal+ Africa, a combined entertainment giant reaching more than 40-million subscribers, under the leadership of new CEO David Mignot.
An insider at the broadcaster said the head of procurement was sitting with hundreds of unpaid invoices, as internal departments fought to secure payment for their service providers.
According to multiple sources, the situation has become so dire that the Randburg head office ran short of toilet paper last week because the supplier had not been paid.
Another service provider told Business Times the company was hostile in its approach, and “basically they have a gun to your head to force you to agree; if not, they threaten to terminate your contract if you have an existing contract.
“They demand the 20% discount despite having agreed on the amount prior to providing the service. Suppliers are strained.”
“They demand the 20% discount despite having agreed on the amount prior to providing the service. Suppliers are strained.”
The service provider said small businesses “don’t have leverage and will agree to this for their own survival, even though this move may force them to cut jobs and downsize their businesses”.
When asked about the 20% discount and payment freeze, MultiChoice said: “As has been publicly reported over the past two years, MultiChoice has embarked on a significant drive to reduce costs in the business, with the goal of driving efficiency. This has continued following the completion of the Canal+ merger, and MultiChoice is engaging with suppliers in this regard.
“Managing spend in the business is important to ensure that MultiChoice continues to play a key role in the South African and African broadcasting ecosystem over the long term.”
This would allow MultiChoice to “continue to support the numerous industries which it supports, and to fulfil its extensive public interest commitments made to the Competition Tribunal”.
In its annual report, released in June, MultiChoice noted that, “driving cost efficiencies across our business is an important part of our commitment to deliver positive operating leverage”.
However, it recognised the value and importance of mutually beneficial supplier relationships and “therefore aspire to pay a fair price for services in the spirit of collaboration and mutual sharing of risks and benefits”.
Analyst Peter Takaendesa, chief investment officer at asset manager Mergence, said he was not surprised by the cost-cutting programme, but cautioned that altering payment terms on existing contracts could prove problematic.
“The aggressive cost-reduction programme doesn’t come as a big surprise to us as the MultiChoice group is in a difficult financial position, given the large losses and cash burn from the relaunch of Showmax, as well as revenue pressure in its mature South African operations.”
The Multichoice Group had launched a rolling annual cost-reduction programme of about a billion rand a year over the past few years.
“We also believe the new owners of MultiChoice will be looking to align its operating structures with those of Canal+ over the coming 12-18 months.
“However, the issue of freezing payments due to suppliers sounds too aggressive, if true, and may be too soon to go after payment terms while asking for price discounts at the same time. This is where Canal+ may get it wrong in English-speaking countries,” Takaendesa said.
In the 2025 financial year, MultiChoice announced savings of R3.7bn, up from R1.9bn in the previous financial year. According to the annual report, the broadcaster was targeting additional cost savings of R2bn.
A manager, who asked not to be named, told Business Times that the cost savings were achieved without compromising service providers. “Even the technically insolvent MultiChoice was able to meet its payment obligations to its service providers.”
In an interview last month, Mignot said that before the takeover of MultiChoice, Canal+ was not privy to all the company’s information, and Canal+ management was now opening the engine of the business.
He said the plan was to reverse the declining customer trends, which had seen Multichoice losing subscribers in recent years due to, among other things, households cutting down on discretionary spending and intense competition from streaming companies.
However, an industry body has questioned the cost-cutting exercise, saying it flies in the face of promises from authorities who want to protect the local industry.
To secure approval from competition authorities, Canal+ and MultiChoice made supplier development commitments that included spending on local audiovisual content; the promotion of South African audiovisual content in new markets; and procurement from historically disadvantaged persons and small, medium and micro enterprises (SMMEs).
Adrian Galley, vice-chair of the South African Guild of Actors (Saga), said his organisation had flagged concerns about the merger at the time of the Competition Commission and Competition Tribunal hearings, before they rubber-stamped the deal.
“It would be interesting to understand what assurances were given regarding the vulnerability of local content creators. Saga is under no illusions that international media players have arrived on our shores bearing gifts. They are not here to play nicely, but rather to take full advantage of an unregulated industry that is ripe for the plucking.
“The question we ask is whether the competition authorities had sanctioned such a unilateral renegotiation of binding agreements. It is a general principle under South African common law of contract that payments due on invoices that have already been issued are subject to the original contract terms. No producer or other service provider is under any obligation to accede to this demanded discount,” Galley said.
The acting industry for years has called on the government to protect artists through changes in law. Saga wants the government to sign into law the Copyright Amendment Bill and the Performers’ Protection Amendment Bill to help artists secure rights and also fair pay.
“On a matter of principle, Saga finds itself on the same side as producers, many of whom have already been squeezed to the limit by the dominant role-players.”
Galley said the guild believed the actions of the media giant were legally questionable.
“Perhaps the Competition Commission will be able to shed light on the confidential aspects of the merger, specifically any commitments to existing service providers, many of whom are small and medium enterprises,” he said.
Competition Commission spokesperson Siya Makunga said on Friday the merger was approved subject to several conditions, including a commitment to procure local content from historically disadvantaged persons and SMMEs. The commission was concerned about the suspension of payments and requests for discounts, and would investigate.
“The commission will investigate these allegations in terms of the Competition Act ... to establish whether there has been a breach of the conditions of approval of the merger,” Makunga said.
MultiChoice has been under pressure in recent years as consumers switch to streaming platforms such as Netflix, which has been investing in local content production.
Mignot said previously that the rationale behind the merger of MultiChoice and Canal+ was to be at scale on content, continuing with investment in sport and general entertainment content, “because this is how you differentiate”.
The combined group serves more than 40-million subscribers across close to 70 countries in Africa, Europe and Asia, supported by a workforce of about 17,000 employees. Mignot said the company aimed to expand to between 50-million and 100-million subscribers, with a strong focus on Europe, fast-growing Asian markets and Africa.
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