After a rocky start, commercial free-to-air satellite broadcaster OpenView HD, a sister company of e.tv, is adding subscribers at a remarkable rate of knots, though revenues are proving elusive.
Listed parent company eMedia Holdings revealed in its annual results for the year ended 31 March 2016, published on Wednesday, that the number of OVHD subscribers has jumped by 245% in the past year, from 112 715 to 388 812.
But OVHD is not proving to be a money spinner for the group — at least not yet.
“The group continues to invest in its multi-channel platform, OVHD, and in producing channels for the multi-channel environment. Further investment of R261,9m (2015: R245,1m) is included in the financials for this year with very little revenue recorded,” eMedia Holdings told shareholders in notes accompanying its annual results.
Although OVHD uses satellite technology for distribution, the group said the slow pace of digital terrestrial television (DTT) roll-out is also hampering its ability to generate significant revenue from a multi-channel environment. DTT allows the group to offer more than the single channel, e.tv, that is has been able to provide on analogue broadcasts.
E.tv, it said, is struggling as a “lone channel in an ever-increasing multi-channel environment”.
“Management believes that the investment in quality channels and a multi-channel platform will stand the group in good stead when the DTT roll-out ramps up.”
E.tv, which the group considers its core asset, came under pressure due to a reduction in advertising revenue after the channel lost substantial market share in the 2015 financial year.
“This necessitated that management review the schedule of e.tv and implement changes to correct the falling market share. These changes were implemented in the latter half of the 2015 financial year and the first part of this financial year. It has seen the market share of e.tv recover, once again becoming the most watched English channel in South Africa,” the group said.
“The recovery, however, came at considerable investment in local programming, which resulted in cost of sales ending the year on R1,09bn compared to R983m the previous year, an increase of 10,9%. This investment was necessary and with the market share of e.tv now stable for the latter part of the financial year, advertising revenue should once again be more reflective of market share.”
The group has warned that the performance of 24-channel eNCA may not be sustainable under a proposed new deal with DStv parent MultiChoice, currently being negotiated.
“The eNCA channel remains the most watched news channel on DStv with a share of over 50% of the viewership of all news channels,” it said. However, its long-term contract with DStv is “terminable” in May 2016.
“All indications are that DStv would like to enter into a new agreement to keep the news channel on its platform. It should, however, be noted that a new deal with DStv will not see the current performance of [eNCA parent] eSat.tv being sustainable going forward.”
eMedia Holdings, whose other assets include Yfm and Sasani Studios, ended the year with an attributable loss of R63,6m, compared to a profit a year ago of R124,8m. The loss takes into account a loss of R144,8m for discontinued operations.
Headline earnings were R32,2m compared to R169,4m in the prior year. — © 2016 NewsCentral Media