The news on Friday that HiTv has lost the rights to broadcast the English Premier League (EPL) in Nigeria is a reminder, if any was needed, that the financial crisis has not gone away. It is also a recognition that banks which had initially extended credit are now prepared to scrutinise every deal, perhaps in a way they had not done before.
With effect from last week, the rights to broadcast EPL in Nigeria have now been transferred to DsTV after the television company paid 100 million US dollars for the rights over the next three years.
I can imagine how those in HiTv would feel now, and indeed, analysts I spoke to, hours after the news broke, all conceded that HiTv had built its pay TV model on the continuation of the broadcasting of the EPL. In the last few years, HiTv had popularised and transformed the broadcast of the EPL, and the company has now become a victim of its own success. Indeed, many thought that the EPL was not broadcast in Nigeria before HiTv. It was; but it was the company which ensured that the EPL was seen by many more than was possible when DsTv had the rights.
Now the broadcasting rights is back with DsTV, but I am sure that both DsTV and HiTv will recognize that this is not a success of one and the failure of the other. This deal only benefits the EPL. 100 million US dollars is a lot of money when the total number of subscribers is under a million.
It is early days yet to ponder how HiTv will respond to this, and I can imagine that their main bankers and lender, GTB, would have analysed the different scenarios. I say so because I initially considered it odd that GTB did not guarantee the payments that would have ensured that the rights remained with HiTv. However, it is possible that the bank may have thought it could not continue to fund the company and thus required the company to look to build its equity, rather than incur more debt. Some critics of GTB will still say that refusing one particular exposure to the company potentially jeopardizes the existing exposure. Well, only the bank can say categorically if it preferred losses on current exposure and cut its losses, to extending further exposures to the company.
For all intent purposes, I reckon that the economics of pay television will continue to unravel. As in most things technology, the arithmetic is in the numbers. In the last three years, HiTv only managed about 0.2 million subscribers, an indication of how poor we are in this country. Despite this poor numbers, the company went ahead to bid 115 million US dollars for the rights to broadcast EPL for the next three years, starting this autumn. DsTV’s bid was 100 million US dollars and it became the reserve bidder after HiTv won the bid. Now, paying about N15 billion for Nigerian rights over the next three years is quite steep, and perhaps one of the reasons why GTB would have bulked the idea of extending their exposure to HiTV.
You can now see why I argued that the beneficiary of this deal is not DsTV, and the looser is not HiTv. The only beneficiary of this deal is the EPL and we Nigerians are the ones incurring the losses. We have arrived at this point because HiTv saw the premiership as the best content upon which to anchor its pay TV subscription, and it surely did bid too much a few years ago, and the nature of these things is that the prices always go up. Even in the UK where Sky TV appears to have a monopoly, the threat that another TV could bid more always ensures that Sky bids more to retain the rights in the country.
Will HiTv collapse? I sincerely hope not because the company has shown that it can be courageous and daring, able to change the face of pay TV, indeed transform the face of pay TV in the last three years. Nonetheless, the economics are not good. The company could loose the 40 million US dollars it has paid, but since another company from Nigeria has now won the rights, I think it will be grossly unfair for the EPL to keep the money. But overall, the progress that HiTv wants to make will depend on the following: whether it gets back the money from EPL; the nature of its exposure to banks, which will affect its operations in the coming months, and whether it can develop another content strategy that will keep about 50 – 70 percent of its current subscribers. Basically, the question is whether HiTv can be like DsTV without the football.
Finally, it is interesting that since 1986, when the TV rights was a mere 6.4 million pounds, the EPL now commands about 1.7 billion pounds in TV rights worldwide. It has achieved this with careful preparation, packaging and understanding of the dynamics of the combination of TV and sports. No other football league matches the global appeal of the EPL, and you wonder if our own football administrators can set aside very short term and personal interests and develop a league that one will be proud to go and watch. Food for thought, I hope.