Nigeria’s national TV broadcaster, Nigerian Television Authority (NTA), entered a deal with China’s originated Startimes, a PayTV company, in 2008, under a special profit sharing model where Startimes keeps 70% and NTA gets 30%. Remember, it is profit-sharing, not revenue sharing. The implication is this: Startimes can operate in Nigeria for 100 years and structurally decides not to record any profit if it wants to keep expanding and growing. With NTA not involved in backend operations, Startimes has many ways on how it spends its budgets. So, since 2010 when the service got into full force, Nigeria has not received a dime. Of course, Startimes benefits from the brand equity that it is working with a national broadcaster, helping it amass many customers in the fledgling satellite television business. Startimes offers services which are low cost.
The DG ran into trouble at yesterday’s sitting when he told the committee members that not a single dime has been realised from the joint operational venture it entered into with Startimes in 2008.
Mohammed said: “As an executive director in NTA in 2009, not a single kobo was made from the joint venture with Startimes, the same situation I met in 2016 when I returned as the DG.
“In fact, on assumption of office as the director general, that was the first question I asked, upon which records of non- profitability was presented by the NTA subsidiary outfit running it. The non-profitability status of the venture remains till today.”
My estimate is that PayTV has a market cap of $700 million pre-Covid-19 and will continue to grow in the nation. Startimes has the lion’s share in terms of absolute numbers of subscribers. MultiChoice, however, commands the bulk of the industry profit, powered mainly by its exclusivity on the highly premium European football. The low-price of Startimes offering has not brought much revenue and that affected its ability to find profits in the market. The profit-less state of Startimes/NTA joint venture remains debatable though.
Relying on the audited report of the Auditor-General of the Federation, the Senate through its Joint Committee on Finance and National Planning revealed that the NTA/Star times JV made a whopping $36.1 million (about N11 billion) in 2018; contrary to earlier claims by NTA that the business had yielded no profit in almost 12 years.
Consequently, the Senate accused NTA/Star Times of coming up with incoherent financial records to show that it spent a total of N19 billion; leaving a shortfall of N8 billion in 2018 to justify earlier claims that the business had yielded nothing.
According to the Chairman of the Senate Committee, Solomon Olamilekan said the reason NTA officials kept the account to the JV in dollar form was them to easily ship the profits outside of Nigeria in connivance with some Nigerian officials.
According to Startimes management, PayTV is capital intensive and that the firm has ploughed back all gross earnings to grow the business. So far, PayTV or variants did not work for Startimes/NTA partnership. iROKOtv has also struggled, pausing any plan to look for growth in the African market. But somehow, MultiChoice, owners of DStv and GOtv, seems to be doing well. If you check, it has better pricing power due to superior product mix. If it loses that power, it will fall into the profitless mess. That explains why the new industry code should worry DStv.
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And these are the people pushing for non exclusive rights, lecturing us on why it’s in the national interest to give what is holy to the dogs? If we still have some sense left in our brains, we should do everything possible not waste tax payers money in the entertainment and broad media industry; it should be purely private sector-driven. The five hundred million dollars we are borrowing to waste on NTA is enough damage on its own, because there’s no way to recoup the investment; we do not need to sink deeper.
Perhaps the 30% NTA is hoping on is just for providing brand equity, without financial investment, and the smart Chinese decided to dribble it out of profit sharing; Nigeria is legendary in making bad deals. Another entity in the UK is listing our properties for auctioning there, a court hammered Nigeria again, while that of nine billion dollars is still pending.
Since any venture Nigeria touches dies, it will be in our best interest to stay from the media/entertainment industry, as we cannot add value there, we do not need to destroy it either. Free market, private sector-driven, so that best players can win; anything short of this is disaster.
NTA is doing the heavy lifting and the Chinese company is leaking the juice alone. In a normal country Startimes should be paying NTA but here we are, a government sponsored entity called NTA is working for a privately owned Chinese company for “nothing”. We have not been told the whole story! There are underlying conditions. If we have any pride left, the so called profit sharing agreement between NTA and Startimes should be terminated before nightfall.
My question is based on the excerpt below . So for Startimes a combined force of lion’s share in terms of absolute number of subscribers +low pricing offering hasn’t brought much revenue and affected its ability to find profits in the market? Please I will appreciate answers because it’s seems highly conflicting .
“My estimate is that PayTV has a market cap of $700 million pre-Covid-19 and will continue to grow in the nation. Startimes has the lion’s share in terms of absolute numbers of subscribers. MultiChoice, however, commands the bulk of the industry profit, powered mainly by its exclusivity on the highly premium European football. The low-price of Startimes offering has not brought much revenue and that affected its ability to find profits in the market.”
Apple sells say 1,000 iPhone for $1,000,000 at $1,000 each. Tecno could sell 10,000 phones at $50 and come down to $500k. Apple’s margin could be $400 per phone while Tecno could be $2. Here, Apple wins on revenue and profit. Startimes may be pushing everyone in Nigeria and price where it cannot make profits. DSTv focuses on upper middle class and cleans up.
Is a case of the more you look ,the less you see. But I will like to ask why every thing in Nigeria is always shabby,discrete , incoherent, fraudulent and corrupt laden. Who will deliver us from this curse? Imagine NNPC,NTA,NDDC,EFCC,FIRS,even Aso Rock are striken with corruption..Oh God , destroy our leaders and let us start afresh.