MultiChoice acquisition: Canal+ has big plans for Africa

Since joining as chief executive officer in 2015, Maxime Saada has overseen the growth of Canal+ from 9 million subscribers to over 26.4 million in 50 countries across Europe, Africa, Asia-Pacific, the Caribbean and Indian Ocean.

He’s now leading the French multinational television company’s multi-billion acquisition of MultiChoice, which will place the group among the top five biggest entertainment companies in the world — and the biggest outside of the US.  

The M&A deal is the biggest so far this year, after BHP’s takeover bid of Anglo American collapsed.

Saada and other executives, including Anna Marsh (CEO of StudioCanal+, Canal+’s film and television studio) and Ron Halpern (executive vice president of global production and talent management at StudioCanal) from the French head office met with journalists in Stellenbosch on Thursday on the set of the StudioCanal film production Huntington. 

The revenge thriller, directed by John Patton Ford, stars Glen Powell (who had a supporting role in the 2022 blockbuster Top Gun: Maverick, and the lead in Hit Man, which is currently streaming on Netflix), Margaret Qualley (The Leftovers, Once Upon a Time in Hollywood and Maid), Jessica Henwick (Game of Thrones and The Matrix Resurrections), and Hollywood legend, Ed Harris.

Why Cape Town? 

Shooting in Cape Town has allowed the company to bring below-the-line production costs to within a $7.87-million budget — $5-million less than the original budgeted for locations in Toronto, Canada and Sydney, Australia. 

The quality and cut-price budget production capacity that MultiChoice enjoys in South Africa is one of the underpinnings of the acquisition for the French company, which was keen to show off the theoretical advantages of the tie-up.

Yet, the deal does have some question marks, notably whether even after the tie-up, the new group will have sufficient heft to take on movie streaming big gorilla Netflix. 

Netflix has just under 270-million subscribers, and even the combination of Canal+ and Multichoice will only have about a tenth of that. Disney+, Amazon Prime and Paramount+ have multiples of that. In addition both Canal+ and MultiChoice have the headache of how to manage the transition from satellite broadcasting to internet streaming. 

Still, a lot depends on content.

Although Huntington is the first Canal+ production in South Africa and unlikely to be the last, as Canal+ is already considering moving some of its existing international productions here. Halpern told journalists that moving the production to South Africa has proved to be a massive cost saving for them, with numerous benefits. Cape Town, in particular, is a sought-after film destination, with diverse locations, long filming hours, some of the best light in the world, excellent infrastructure, a highly skilled and internationally experienced crew base.  Working with Film Cape Town (a joint initiative between the City of Cape Town and the Cape Town film industry), the city’s dynamic, focussed film sector office, has been a cinch. 

For every rand spent on a production in this country, the South African Film and Video Foundation uses a multiplier of 2.89. StudioCanal says using their hedged exchange rate, this would amount to over R424,55-million generated for the local economy. 

The Huntington production employs about 305 South African crew members, including 45 local cast and 1,876 extras. Besides the film stars, only four heads of department are not South African: the director of photography, the editor, production designer and the first assistant director.

Investing in local talent

Africa is central to Canal+’s long-term strategy, with a young and growing subscriber base. In the past five years, Canal+ has doubled investment in African content — and especially languages — every year, because its experience on the continent over the past 30 years has proved that producing content locally gives it access not only to local talent, but also to growing subscribers. 

Canal+ is focused on producing and distributing high quality local content that can be aired internationally. 

To illustrate their commitment to local content, Saada said in France, they currently finance most of the country’s film productions. “Almost no movie gets made in France without Canal+. We finance 150 movies a year, covering all the spectrum — be it political, religious, all of it.

“We think artistic. We think, (it’s an) interesting proposal. We think talent. We think, let’s give this voice the ability to expand and reach more people, so we always invest in local industries.”

Netflix has also made a big shift towards international productions, driven by the need to appeal to a bigger market and save costs. This year, the streaming giant has dedicated $8-billion of its $15.5-billion content budget to international productions. This first-ever move prioritises creating locally-focused shows and movies for overseas markets or licensing content made outside the U.S.

Producing content in North America is becoming more expensive and the US market is nearing saturation, with fewer new subscribers to attract.

While Amazon doesn’t release specific figures on its international film investment, it spent $18.9-billion on video and music content in 2023.

Parrot Analytics’ Content Panorama data shows over the past year, Amazon’s US library leaned heavily on American-made shows and movies, with a whopping 53% originating from the US compared to just 38% for Netflix. However, both platforms dip into international markets for content. For Amazon, the top contributors after the US are the UK (10%), India (8%), Canada (5%), France (3%), and Germany (2%), while for Netflix, India (10%), UK (6%), Japan (5%), South Korea (4%), and Spain (3%) are in the top spots.

With English-speaking countries making up a bigger chunk of Amazon’s library, 85% of their content is in English, compared to 62% for Netflix.

Global ambitions

In the financial year ended 31 December 2023, the Canal+ Group reported revenues of €6.1-billion, serving about 26.4 million subscribers, including 17 million outside France. 

Canal+ is making a big push to compete with international media giants like Netflix, YouTube, Disney+, and Apple TV+. This strategy goes beyond MultiChoice. It is growing in existing markets, by strengthening its foothold in territories where it already operates; and entering new markets by actively expanding, both by setting up shop from scratch and through strategic acquisitions. In February, it obtained a 29.33% stake in Viaplay, the biggest pay-TV operator in Scandinavia, and in April it acquired a minority stake in Viu, a Southeast Asian and Middle Eastern streaming leader with over 13 million subscribers and 62 million monthly active users.

Diversified offering 

In Africa, direct-to-home (DTH) satellite television has the edge over streaming-only services like Netflix, Amazon Prime and even Showmax, because of the cost of data. Canal+ offers the same content package across all its platforms, whether satellite TV or streaming. 

“(On the Canal+ app), it is the same content that we have on our set-top boxes. Most of them are now connected. Even if I have a direct-to-home (DTH, or broadcast via satellite) subscriber, our set-top boxes have exactly the same offering.”

Saada said while he believes over-the-top media services (streaming) are the future, DTH is a fantastic technology. 

The group’s intended acquisition of Africa’s leading entertainment platform is strategic: while it is strong in Francophone Africa, MultiChoice dominates Anglophone Africa, so merging the two would create a powerful pan-African media giant.

MultiChoice has over 23.5 million customers in 50 markets across sub-Saharan Africa, although the latter’s focus on diversification is at odds with Canal+’s core business, which is content. 

Besides its DStv, Showmax, SuperSport and MNet media companies, MultiChoice’s diversified offering includes medical and security (Namola), cybersecurity (Irdeto), and sports betting (Betking). 

Saada said they have had discussions but have not yet done due diligence on the South African business. 

“When we go into a new business, we like to pick apart the puzzle. How, we’re not sure, because we don’t even know how to  improve the revenue. We don’t know penetration by audience, we don’t know the cost of the offers. We don’t know the situation with the minority shareholders in Nigeria and Tanzania. There’s a lot we don’t know.”

Joining forces would allow them to invest more in content creation, technology, and compete more effectively against global players.

Partnerships

Canal+ believes partnerships are critical: in many territories which it operates in, it has partnered with local players. Already, the group has received many unsolicited proposals from potential partners. “I believe that the key to success in any business is to know what you don’t know. 

“Partners are a requirement and for us, they’re not a constraint… My father is Tunisian, so I can say I’m from African descent, truly, but I don’t know South Africa. I have no clue about South Africa, except what everyone reads and what I have heard. And I don’t know this country. So, there was no way we would come here without partners. None. Zero.”

Canal+ has already invested €1.2-billion in MultiChoice. It currently owns a 45.2% stake in MultiChoice, based on its total issued ordinary shares of 442,512,678. 

‘Fair and reasonable’ 

A week ago, Canal+ and MultiChoice issued a joint circular, in which they announced that the all-cash offer of R125 per share for the remaining shares of the South African media group had been accepted as “fair and reasonable”. The offer, which closes on 25 April 2025, is subject to approval by relevant authorities.

On Friday, MultiChoice issued a trading update, warning of a 19% to 23% profit slump for the year ended 31 March 2024. The group attributed the decline to the negative impact of a weak macro-economic and consumer environment, increased investment in Showmax, and the impact of the sharp depreciation in the Nigerian naira against the dollar resulting in foreign exchange losses. 

Showmax has posted a year-on-year trading loss of over R1.4-billion.

The group’s expected loss per share has also been dented by a once-off impairment of IT systems of R1-billion, due to a “re-assessment of business needs in the context of an extremely challenging operating environment”.