Pay-TV competition stalls

Government's plan to inject competition into the pay-TV market has so far failed and regulatory issues will likely add further pressure.

Of the 18 companies that applied for a pay-TV licence in 2007, only four were given the green light to start operations.

However, E-sat bowed out of the race early, favouring a position on a 24-hour channel on DSTV. The three remaining licensees, Walking on Water (WOW), On Digital Media (ODM) and Super5Media (previously Telkom Media), are now facing new licence issues and have shifted starting deadlines.

Despite a promised opening date of the middle of this year, WOW has not received its licence yet.

According to the Independent Communications Authority of SA (ICASA), there are questions about the religious-themed broadcaster's business. The regulator did not indicate what these issues might be.

“The licences were issued in 2008, with the exception of WOW, which hasn't yet been issued with a licence, as there are still outstanding matters with the entity,” says ICASA spokesman Josias Mathibe.

The fully-empowered business was expected to start operating with a R49 subscription fee and intended to broadcast primarily local content. This would have been a boon for local content producers, which are facing an uphill battle to get money out of the ailing SABC.

ICASA says WOW has also decided not to use the broadcasting services offered by the Sentech-Globecast partnership, and has applied for a network licence to reduce its costs. “We have granted, but not yet issued, them the network licence,” says Mathibe.

The company was not contactable at the time of publication.

ODM is on a similar track to WOW, also asking to be granted a network licence. Its initial start date was set for the middle of this year, and was then moved to the fourth quarter of this year.

However, rumour has it the lack of a network licence has forced the business to move out its deadline to early next year. ICASA has also granted a network licence to ODM; however, it has not been issued.

In May, the company indicated it had a satellite in the air and that staff recruitment had started. It said it would be ready to offer services between October and November.

ODM planned to offer between 50 and 60 channels of content, although it couldn't indicate what that content would be. The company's various offerings would have cost between R149 and R349.

It did not respond to ITWeb's queries and its Web site has been “down for maintenance” for several months.

The former Telkom Media, now Super5Media, is also facing licensing trouble and has begun discussions with staff on possible retrenchments.

The company became Super5Media when Telkom sold its majority stake to Chinese broadcaster Shenzhen Media, in May. Since then, it has been quiet about its plans.

ICASA says Super5Media is also on the list of broadcasters looking for a network licence.

The regulator has criticised Telkom for not discussing the sale of the business and there are questions around the transfer of the broadcasting licence from Telkom to Shenzen. However, Super5Media is adamant the licence should remain.

“We have not changed the business plan and the conditions of the licence still exist,” says Super5Media spokesman Chris van Zyl. He adds that, while the company has had to look at restructuring and planning a smaller launch, it is still on track to provide competition.

Van Zyl explains that waiting for clarity regarding the company's licences and the global economic meltdown forced the new owners to look at rightsizing the company's ambitions. “We started talking to staff last month and we will follow all the processes that are required, before any actual retrenchments are made,” he adds.

The company initially had 110 employees, of which several left when uncertainty around the future of Telkom Media was high. He says it now has 78 employees and no decision has been made on the possible number of retrenchments.

However, Van Zyl says, despite the trouble, the company will have an offering on the table in the first half of 2010.

Meanwhile, ICASA says the licences issued to the broadcasters stipulate that an offering has to be ready at least a year after the licence has been issued. It appears that all the licensees have applied for extensions, as well as test network licences to get off the ground.

ICASA would not indicate whether it considered the new pay-TV market a failure.