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MultiChoice Group (MCG) has released its financial results for the period ended September 30, 2020, demonstrating that the coronavirus lockdown and lack of live sports has had a direct impact on its subscriber mix.
The group reported a 41% increase in top core earnings compared to the prior period at R2.7 billion, with strong growth attributable to a 38% improvement in organic trade earnings and lower realized net foreign exchange losses.
The impact on business earnings from Covid-19 was largely neutral, as a revenue loss of R0.9 billion related to lower advertising revenue and subscription revenue from business clients was offset by R0.8 billion in delayed content costs.
“Despite operating in a challenging environment and being affected by blackouts, production shutdowns and outages in live sport, we are meeting all key metrics,” said Calvo Mawela, CEO of MCG.
“A strong focus on cost reduction enabled another R1 billion in cost savings during the period. We also cut losses in the rest of Africa by 59% year-on-year (or 500 million rand) to 338 million rand. “
South Africa
MultiChoice said its business in South Africa delivered strong results despite difficult weather, generating subscriber growth of 7% year-on-year, or 0.5 million subscribers on a 90-day active basis.
The impact of Covid-19 and the associated lockdown caused consumers to prioritize video services, but the lack of live sports and the inability of commercial subscribers to trade negatively affected revenue generation, the group said.
Revenues decreased 3% to R16.5 billion due to lower advertising (R 0.6 billion) and commercial subscriber revenue (R 0.3 billion).
Excluding year-on-year movements in the previous revenue categories that were affected by Covid-19, revenue growth would have been positive as healthy mass market subscriber growth and annual price increases were canceled out by a lower average Premium subscriber base in the absence of live sport.
“The continuous shift in the subscriber mix towards the mass market, combined with the impact on Premium and commercial subscribers as mentioned, resulted in the average monthly revenue per user (ARPU) decreasing 5% from R292 to R278.
The group calculates the ARPU by dividing the average revenue from the monthly subscription fee for the period.
Subscription fee income includes BoxOffice rental income, but excludes set-top box insurance premiums and reconnection fees.
MultiChoice said that business profits increased by 12% to R5.8 billion.
This higher profitability can be attributed to the duplication of the group’s cost optimization program, the non-repetition of three major sporting events uploaded in the previous comparative period, lower operating costs in a Covid-19 environment and a temporary change in the costs of content as a result of delays in sporting events, he said.
“SuperSport had to deal with no live sports for most of the first half of fiscal 2021 and adapted agilely by changing channel line-ups, airing high-quality documentaries and showing blockbuster sports movies to keep subscribers entertained. “, said.
Despite the decline in popularity of DStv Premium, MultiChoice said that connected video users on the DStv Now and Showmax platforms continue to grow as online consumption increases.
During the reporting period, Showmax launched Showmax Pro, the group’s first independent online sports offering. Showmax Pro allows subscribers to watch their series, movies, children’s and sports content on various devices, while offering a mobile option at a lower price.
The group also launched Netflix on its latest set-top box and will soon add another major international video-on-demand (SVOD) subscription service, it said.
Read: DStv launches a new set-top box with Netflix integration
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