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Africa shaken by GTV's collapse

BY PAUL VECCHIATTO , ITWEB CAPE TOWN CORRESPONDENT

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Canal Plus pulls out

Cape Town ITWeb, 3 February 2009 ] - The shock liquidation of Pan-African satellite pay-television broadcaster GTV is a lesson on how difficult it is to start such a service and correctly balance the financing with subscriber scale, an analyst says.

Last week, GTV announced it would no longer broadcast to its 100 000-odd subscribers. It closed its doors after a two-year campaign to wrestle as much of the African pay-TV market away from the domination of South African-owned MultiChoice.

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GTV is an outgrowth of Gateway Communications, the Pan-African telecommunications company that is also London registered. The two entities separated legally two years ago and Gateway Communications' telecommunications business was bought by mobile network operator Vodacom late last year.

GTV did not broadcast in SA and its subscriber base was in Botswana, Kenya, Cameroon, Gambia, Gabon, Ghana, Lesotho, Liberia, Malawi, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.

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In October last year, GTV CEO Julian McIntyre said his company had set a target of signing up 250 000 subscribers. He indicated the company was well financed with a capital injection of $35 million, bringing in a total investment into the company of $200 million.

Right up until the end, GTV was still selling subscriptions to its service and gave no indication it was experiencing any difficulties.

The defunct broadcaster's model was to get as many low-paying subscribers as possible by attracting them with key content such as its signing of rights to broadcast 80% of the English Premier League's football games. GTV beat out MultiChoice in buying these rights and industry sources say the price has proven to be too high.

“Buying subscribers has its own costs and competing with an incumbent, such as MultiChoice, also means you have to have scale,” says Rajay Ambekar, telecommunications analyst at Cadiz African Harvest.

Canal Plus pulls out

Ambekar says there were rumours that French-owned pay-TV broadcaster Canal Plus, which offers a service to French-speaking African countries, had shown interest in buying GTV, but had pulled out of these talks.

He notes the global credit crisis may also have played a role, as GTV was heavily funded by loans and it meant it could have been caught in the double whammy of rising international interest rates and declining African currencies.

“I am not sure that funding was a problem directly, but it could have been a factor,” he says.

GTV's demise should be positive for MultiChoice as it could possibly pick up new subscribers who may convert, Ambekar says.

MultiChoice, which has a total of about 1.4 million subscribers across the continent, is still to issue a statement about GTV's liquidation.

However, MultiChoice executives are privately not happy about the situation.

“There is a danger that we end up looking like the bad guys because many think we can just capitalise on the situation. This is not true – GTV built up expectations and now dashed them, and we are the company that is expected to pick up the pieces, even though we had nothing to do with them,” says one MultiChoice executive.

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Aggrieved customer sues liquidated GTV company

A DAR ES SALAAM resident has sued the pan-African pay-television service GTV for breach of contract in a move that could trigger a wave of similar lawsuits against the company that has now gone into abrupt liquidation.

Rahm Akbar is demanding over 120m/- in damages from the UK-based broadcaster, which lured a significant number of customers in Tanzania and elsewhere on the continent through its exclusively live broadcast of key matches in the English soccer premier league.

The suit against GTV Tanzania Limited, a subsidiary of Britain’s Gateway Broadcast Services, has been filed at the Kisutu Resident Magistrate’s court in Dar es Salaam.

Advocates Fayaz Bhojani and Gaudiosus Ishengoma filed the case under certificate of urgency on behalf of their client.

The lawyers asked for an order obliging GTV Tanzania principals to appear before the Kisutu court and show cause why they should not ’’furnish security for satisfaction of the decree’’ which may be passed against them.

If the respondents fail to show such cause, the advocates demanded that the court issues an order for attachment of the company’s main satellite dish and transmitter, pending judgment of the main suit.

They also asked the court to order GTV to produce and place the satellite dish and transmitter located at GTV Tanzania Limited offices along Bagamoyo Road at the disposal of the court, a court broker, or any other person to be appointed by the court for safe custody, pending hearing and determination of the main suit.

In the main suit, the aggrieved customer is seeking payment of 2.5m/- being value of the satellite equipment, plus general damages to the tune of 100m/-.

His lawyers stated that under the contract entered between Akbar and GTV, the pay-TV firm was supposed to provide satellite services upon payment in advance of 146,000/- monthly. The contract was renewable.

Other terms and conditions of the contract were for Akbar to purchase from GTV necessary equipment for provision of the said services.

’’In the performance of the contract, the plaintiff (Akbar) incurred costs of purchasing a decoder, dish and other incidentals, and has since then been paying, in advance, the monthly payment of 146,000/-,’’ says the lawsuit.

It adds: ’’Despite the plaintiff’s exemplary performance of the contract, the defendant (GTV) has without notice, and any color of right or good cause, stopped its services, thereby breaching the contract and occasioning loss to the plaintiff.’’

’’As a result of the said breach of contract, the plaintiff has suffered a loss of the satellite equipment and the value thereof, which because of the cessation of the defendant’s services have become useless and worthless, and resulted in an abrupt change of way of life, thereby causing great inconvenience and embarrassment to the plaintiff and his family,’’ concludes the lawsuit.

Aggrieved customer sues liquidated GTV company

A DAR ES SALAAM resident has sued the pan-African pay-television service GTV for breach of contract in a move that could trigger a wave of similar lawsuits against the company that has now gone into abrupt liquidation.

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