Q: What just happened?

French TV operator Canal+, owned by Vivendi, has tabled a $1.7b bid for all remaining shares in South African-based pay TV giant MultiChoice, offering a premium of 40% to MultiChoice’s closing share price on 31st January 2024. Canal+ has been steadily increasing its share in MultiChoice since 2020, becoming its largest shareholder in September 2021. 

Q: Why is Canal+ interested in MultiChoice? 

As it looks to reduce its dependency on the French market, Canal+ has been investing significantly in TV players in its core regions over the last year, acquiring significant shares in Viaplay in Europe, Viu in Asia and upping its stake in Africa’s MultiChoice to 31.7%. Africa represents Canal+’s largest global region outside of France, with around 7m subscribers across 20 markets.

While Canal+ dominates the TV landscape in French- speaking African markets, MultiChoice holds sway over the rest of the continent through its satellite and terrestrial pay TV services, DStv and GOtv, as well as regional subscription OTT service, Showmax. Between them, Canal+ and MultiChoice hold over half of pay TV subscriptions in Sub-Saharan Africa. A merger between the two groups would be mutually beneficial given their overlapping interests and business models, potentially creating a dominant force in the African TV markets. 

As global pay TV penetration is set to fall from 2024, Canal+ is focusing on regions where pay TV is expected to grow. Africa has seen the largest growth rate in pay TV subscriptions of any global region since 2016, with subscribers doubling during the period. Growth in pay TV subscriptions will continue to outpace SVoD subscriptions in Sub-Saharan Africa, as streamers face the challenges of limited Internet access, lower ARPUs and poor payment infrastructures in the region. 

Q: Why has Canal+ opted for a full takeover now?

Perhaps the biggest factor behind Canal+’s latest acquisition offer is an attempt to head off competition in the region. Notably, Canal+’s bid coincides with the relaunch of MultiChoice’s local subscription OTT platform, Showmax, in partnership with Comcast, which brings Peacock’s technology and a host of NBCUniversal content to a revamped platform. Through this strategic partnership Comcast has taken a 30% share in the new Showmax Group, with MultiChoice holding the remaining 70%. With MultiChoice reportedly open to Comcast further increasing its stake in Showmax, the timing of Canal+'s takeover bid indicates its desire to cement its position in the region amid growing interest from US players. 

However, a full takeover of MultiChoice is likely to be challenging due to South African law restricting foreign investors to 20% of voting rights when it comes to local broadcasters. While the government has proposed increasing this limit to 49%, to stimulate investment, this is unlikely to come into play anytime soon.

Note: This article was updated to clarify that the amount offered by Canal+ was $1.7b, valuing the total MultiChoice Group at $2.5b.