• Market Watch

'They believe in diversification. We don't': Canal+ boss

• 5 Months Ago - 2024-06-13 00:00:00

Maxime Saada, chair and CEO of Canal+, is frank in his ambition: He wants to build one of the top-five largest entertainment groups in the world after taking over MultiChoice.
He is far more circumspect in making pronouncements about how MultiChoice will be shaped after the deal – but has indicated a preference for a more streamlined business.
Saada met with journalists in Cape Town this week, as Canal+ finally received the MultiChoice board's backing for its bid to take control of the SA-headquartered group. Together, the merged company will have 50 million subscribers (30 million in Africa) – making it the biggest entertainment company in the world that's not American.
While Canal+ has already invested €1.2 billion (almost R25 billion currently) to build a 45% stake in MultiChoice, he stressed that the company has not yet done proper due diligence and doesn't have enough information to make pronouncements about the business.
However, he highlighted that one of the big differences – "almost one of the only differences" – between Canal+ Plus and MultiChoice is that the SA group believes in diversification.
"We don't. We have chosen to focus the allocation of our resources on what we believe is our core business: distribution of content. And this is the focus. We're happy we're making [almost] half a billion euros in profits. We’re a profitable company."

Approach
Another difference is that while MultiChoice developed different platforms – like Showmax – for streaming, Canal+ offers the same package across different platforms, whether satellite television or internet streaming.
"So, if I show you the [Canal+] app now, it's the same content that I have on our set of [set-top] boxes."
"They've chosen to say: Okay, OTT [over-the-top, or online streaming] is a different market, different audience, different offer, different brand [like] Showmax. And we will address that market with Showmax. [Then] you may have a situation where Showmax is not supporting DSTV and actually may compete with DSTV. But again, I don't have enough information. Overall, I think DTH [direct-to-home, or satellite television] is an asset."
While internet streaming is the future - Canal+ and MultiChoice have been able to penetrate some African markets with affordable television via DTH, while Netflix could not offer those markets because of limited and expensive internet, he added.
Saada was also careful to speculate about the future of MultiChoice brands such as DStv and Showmax, and whether they would be replaced by Canal+.
"But I can give you my intuition. My intuition is that they have built very, very strong brands. And these are assets," he said, adding:
One thing that won't change: DStv won't start offering a sports-only package, and it also won't allow customers to put their own channel packages together.
"Everyone who has tried this has failed," says Saada.
He added that it is true that only two things drive subscriptions. Discounts and sports. When there's a specific game that everyone wants to watch, Canal+ sees a spike of thousands of subscribers.
"[But] not one movie will drive subscriptions. Still, people who like sports, they like cinema. The opposite is not true."
Movies are seen as a prerequisite for subscribers. "And the economics work because you kind of amortise one over the other," says Saada.

Ambition
Apart from the MultiChoice deal in Africa, the group recently hiked its share in the Hong Kong-based streaming platform Viu to 30% - with the option of increasing it to 50%. Viu has some 15 million subscribers in Southeast Asia and the Middle East.
This will bring Saada closer to his ambition to make Canal+ one of the top five entertainment groups, with the US included. Netflix has 270 million subscribers, followed by Amazon Prime Video (200 million) and Disney (152 million).
Saada says the new, merged company will take a "very, very different approach" than the American companies by focusing on the highest quality local content.
"And it's not necessarily very difficult, but it needs resources. And once you reach a scale of 50 million subscribers, then you have the resources."
"Partners that know the business, know the country and can help us navigate through the country."
For the same reasons, in all African countries, all the top executive positions – including CEO and chief financial officer – at Canal+ businesses are from that country.
"We don't send people from Paris, expats, to run the businesses. It doesn't make any sense."