New TV player will cut itself a slice of shrinking ad-spend pie

24 March 2019 - 00:23 By MUDIWA GAVAZA

In an environment of slowing advertising revenue, the free-to-air television market - whose main source of income is advertising - is getting ready to have its pie shared among even more players as Kwese Free TV enters the fray. This week, the Independent Communications Authority of SA (Icasa) announced its decision to award the media consortium - 20% held by Econet Media, 45% by Royal Bafokeng and 35% by Mosong Capital - a licence to compete with broadcasters such as the SABC and e.tv after concluding an almost two-year process.This has been met with some angst from incumbents. Kwese is the first major player to enter the market since e.tv more than 20 years ago. Zolile Ntukwana, regulatory affairs group executive for Econet Media, told Business Times that their extensive research concluded that advertising spend in SA is sufficiently large for Kwese to effectively compete in the market. However, Mark Rosin, chief operating officer of eMedia Investments - e.tv's parent company - said that "Icasa has awarded this licence without undertaking the relevant market studies of the amount available for television advertising, nor an analysis of the state of the market". "The television ad cake is relatively stagnant and there does not appear to be much capacity for any significant growth in this area . we are concerned about Icasa not having looked seriously at the commercial impact of the grant of another free-to-air licence," said Rosin. Icasa said part of the reason Kwese won the licence was that it had done the best research of the market compared to the other four applicants in the running. The struggling public broadcaster, SABC, said the industry is facing anguish from tightening budgets. "Multinational as well as local advertisers have reduced their industry-wide spending over the past 24 months, so advertising revenue is a challenge all broadcasters face," said SABC spokesperson Vuyo Mthembu. Unlike e.tv and soon-to-be Kwese, the national broadcaster's revenues are helped by TV licence fees and support from the government, which recently helped it avoid a bout of retrenchments that would have shed up to 1,200 people from its payroll. Kwese's strategy is to produce high-quality content to drive viewership and entice advertisers to its platform. "If you curate the right content mix and target the right audiences, viewers will tune into your service," said Ntukwana. Kwese FTV is expected to start broadcasting in the next 24 months, subject to national plans for migration from analogue to digital television. It hopes to have a dedicated sports channel as its initial roll-out. "South Africans love sport," said Ntukwana, explaining that the rationale behind this decision has to do with Econet Media already having a sports channel on e.tv's Open View platform and a number of sports broadcasting rights such as the English FA, which it sub-licenses to the SABC. The channel will make premium sports content accessible to the public, he said. The company says it is in negotiations to close more broadcast deals. Ntukwana said Kwese's primary focus is to start broadcasting, with plans for a streaming service coming later on. He confirmed that it has no plans to offer a video-on-demand service such as Netflix or Showmax. Asked if Kwese will be made available on DStv - as is the case with other free-to-air channels, Ntukwana said it had not yet engaged with MultiChoice. Viewers may expect to see Kwese Free TV's offering on Econet Media's Kwese TV, which operates across 19 markets, but Ntukwana said that such a move would be subject to shareholder approval. "I wouldn't rule that out," he said...

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