Have a great idea, create a business, build it into a substantial operation and then, when latecomers look on your success and complain they can't get a slice of the action, you face potential regulation to level the playing field. That is how MultiChoice, which owns M-Net, DStv, SuperSport and Showmax, might be viewing things lately, especially after the Independent Communications Authority of SA (Icasa) last week released its draft findings on the inquiry into subscription TV broadcasting services.
But it's not that simple: a big business can limit competition simply due to its entrenched position, and that is what Icasa is looking to remedy in order to rectify the current practice of "winner takes all".
Unsurprisingly, Icasa's report says MultiChoice has "significant market power on the basis of high market shares and the nature of its vertical integration", which it considers to "harm competition".
There is a lot to mull over in this 184-page document, but some of the salient points include possible remedies such as limiting exclusive contracts "entered into by a licensee with significant market power" to three years and prohibiting the automatic renewal of contracts, to allow others an opportunity to bid for sports, series or movies.
MultiChoice agreements with the Premier Soccer League run for five years, to 2023/2024, and its English Premier League contract has been renewed until 2022. This locks out other broadcasters for years.
The broadcasting of sport in SA, which MultiChoice has on lock-down, is one of the key issues raised in the report. But shifting the balance of power when it comes to sports content may not be that easy to address. Sport federations rely on income from selling broadcasting rights, and they should be able to sell to the highest bidder.
Business Times reported earlier this year that just over half of SA Rugby's 2017 revenue of R1.2bn was derived from broadcast rights, while for soccer, broadcasting brings in R600m out of R938m annual revenue. MultiChoice spent R2.3bn on local sports content.
Even so, sport federations' bargaining power is limited, given the small pool of possible buyers for their pricey content. And the Icasa report highlights that it is not just about who can afford sports broadcasting rights - when it comes to local sport, it is also about whether a broadcaster has the capacity and expertise to broadcast live matches and can deliver large audiences for sponsors.
For international sport content, deep pockets also count. The cost of broadcast rights for English Premier League soccer is said to have increased 30-fold over the 25 years to 2017, the report says. E.tv lost the rights to Uefa in 2017 due to high costs.
One of the possible remedies is the unbundling of sport rights - meaning that more than one buyer, such as a subscription service like SuperSport, free-to-air such as SABC and an over-the-top service provider such as Vodacom's Video Play, can secure the rights simultaneously for, say, the Premier Soccer League. Another proposal is splitting rights, whereby the owner of the rights splits the content and sells different aspects to different broadcasters.
And when it comes to movies, one possibility is that MultiChoice would only be allowed to sign content agreements with a limited number of Hollywood studios, the report said.
Given the raft of regulations that MultiChoice faces, it may have been an opportune time for Naspers to hive off this business.
For now, investors in the group, which listed on the JSE in February, seem to regard this decades-old company as still having good growth prospects, but will they feel the same way once more players get a bite at the action?
• Enslin-Payne is acting editor of Business Times..