Let’s get straight to the point: Canal+ is getting ready to sell off parts of the MultiChoice business that don’t fit.
The biggest clue of the possible sell-off emerged at the weekend, though I saw the smoke months ago when the French media giant was finalising its takeover of MultiChoice. At the time, I noted that some parts of the MultiChoice business model would not be compatible with that of Canal+.
Speaking to the Sunday Times, Canal+ boss Maxime Saada revealed that the Showmax streaming service, MultiChoice’s much-hyped 2023 partnership with Comcast, wasn’t making money. In fact, he admitted, the streaming service was “losing a lot of money”.
Showmax is 70% owned by Multichoice, which is now owned by Canal+.
Showmax was developed in collaboration with Comcast, a global broadcasting behemoth and a direct competitor of Canal+.
Comcast, through its subsidiary NBCUniversal, acquired a 30% stake in Showmax for an undisclosed amount. It was a strategic alliance for MultiChoice, the leading African pay-TV operator, to fend off Netflix and Amazon.
Indications are that Comcast will likely take full control of Showmax. Such a sell-off seems an obvious step for Canal+
Showmax was a significant investment made in partnership with the American company Comcast. However, for Canal+, which acquired Africa’s biggest pay-TV company, Showmax is proving to be a very expensive duplicate.
Now Saada is in talks with Comcast about the next step regarding Showmax. Reading between the lines, he wants out.
Indications are that Comcast will likely take full control of Showmax. Such a sell-off seems an obvious step for Canal+.
Last year, during the takeover, Saada pointed out that MultiChoice’s “belief in diversification” was the key difference between Canal+ and Africa’s leading pay-TV operator.
In simple terms, MultiChoice had an appetite for all sorts of side businesses. Canal+ does not; it focuses only on distributing TV and film content.
After Showmax goes, other parts of the MultiChoice business will likely follow.
The French are not interested in building a tech-centric African octopus; they are interested in a profitable, focused pipeline for their content. They’re here to make the core TV business of Canal+ stronger and more profitable.
That is why I think divestment of Showmax is imminent, and this will likely trigger more sales.
Saada and David Mignot, CEO of Canal+ Africa, are not portfolio managers for a venture capital fund. They are executives tasked with making their recently acquired asset lean and mean.
They have almost certainly completed the due diligence on MultiChoice, and the noncore assets are now on the block, marked not for what they could be, but for the capital they tie up and the management distraction they represent.
The money from these sales won’t just sit in a bank. It will be used to do what Canal+ does best: invest in its core TV and streaming services.
What else could be on the chopping block? Think of all the things MultiChoice got into that aren’t really about TV. There’s SuperSportBet, the sports-betting platform. It’s actually doing quite well, which makes it attractive to a company that specialises in gambling.
MultiChoice owns a big betting operation in Nigeria called BetKing. Same story — not a TV channel, so why own it?
Then there’s a fintech venture called Moment that handles payments. It’s a good business, but it’s a tech company, not a media company. MultiChoice’s partners in that venture would probably love to buy it.
The biggest sale of all could be Irdeto, a global cybersecurity company. It’s a world leader but has nothing to do with showing movies or sports. For a tech firm, Irdeto is a goldmine. However, for Canal+, it’s just an asset they can sell to raise serious cash. And that’s the whole point of this exercise: to raise cash.
The money from these sales won’t just sit in a bank. It will be used to do what Canal+ does best: invest in its core TV and streaming services.
Selling off noncore business sections is about getting back to basics.
As the business thinker Peter Drucker once said: “The best way to predict the future is to create it.”
By selling off the distractions and nonperforming assets, Canal+ isn’t just waiting to see what happens next in the market; it is taking control.
Canal+ is building a simpler, stronger and more focused company. It is also looking to collaborate with Netflix, suggesting that Saada, Mignot and team are choosing their fights very carefully.
• Lourie is the founder and editor of TechFinancials
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