GTV liquidation could hurt pay TV

February 3, 2009
Shares

, NAIROBI, Kenya, Feb 3 – Telecommunication provider Wananchi Group has cautioned that the liquidation of broadcaster GTV might affect the uptake of pay television in Kenya.

The Group’s Chief Operating Officer Suhayl Esmailjee told Capital Business on Tuesday that the pay-TV industry in the country is still in its infant stage and thus news of GTV’s insolvency might see few people subscribing to the service.

“A closure of any one company is a big issue because the industry effectively becomes smaller. This closure (of GTV) also means that the sector does not move to the maturity stage as fast as we would want. I’m sure customers will be suspicious of any pay TV’s operator,” he said.

Currently, cable TV viewership in Kenya accounts for about one percent of television ownership in the country, compared to 98 percent in the US. This has been blamed on the high cost of satellite hardware, such as satellite dishes, which make the set up costs out of reach for many Kenyans.

However, Mr Esmailjee saw this as an opportunity for the players to restore confidence in the industry.

GTV subscribers have been left holding on to obsolete satellite equipment and others have lost thousands of shillings in subscription fees following the announcement that the cable TV had gone into liquidation after being badly affected by the ongoing global recession.

Mr Esmailjee said Wananchi Group, which had a one year content re-distribution agreement with the UK-based broadcaster, had also suffered losses following the winding up of its competitors and had to downgrade their customer packages as well as refund them.

“What that means is that the content they had on their network would effectively be available on ours. We agreed that on the commercial terms based on the number of subscribers that would be using the re-distributed content,” he explained.

The deal also meant that through its triple play service dubbed ‘Zuku’, Wananchi would offer its own content combined with that of GTV.

“Following this agreement, we created two premier bouquets that included the GTV content, which was mainly concentrated on the English Premier League, where the value of the partnership lay,” the COO said of the arrangement involving four sports and three premier TV channels.

He added that GTV’s decision to dishonour the contract had led to a loss of close to Sh2million to the Group, in amounts that were refunded to the 700 customers who had subscribed to the sports package, which was priced at Sh2,999.

“We had heard a rumour that they were looking for a funding partner but we never imagined that they would wake up one morning and not just be around. We are totally taken aback,” charged Mr Esmailjee.

Although he was non-commital on what step the company would take to try and recover their money, the official disclosed that they were seeking advice from the Information Ministry on the way forward.

The Group, he said, was now focused on getting the content that it lost in a bid to keep their customers on their network. This would involve talking with content providers and those with rights to distribute that content.

Mr Esmailjee said this was line with their objective of providing of quality and affordable cable television services to the masses.

He pledged that although GTV’s withdrawal from the local market might result in an increase in the cost of installing cable television in the market, Wananchi Group would keep its prices affordable so that it can attract more customers on their service and grow the industry.

“We are not looking at a niche; we are not locking ourselves to just a few social economic groups. We want to target the masses; those who own television sets and have a disposable income of Sh500 that can go towards pay TV,” he added.

At the same time, he said that they were finalising the infrastructure needed to support the triple play product, ‘Zuku’, which offers cable television, broadband internet and voice services in one delivery system.

Shares

Latest Articles

Stock Market

Most Viewed