TV Middle East and Africa MIPTV 2013

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Sub-Saharan Africa

MIPTV EDITION

OSN’s David Butorac

www.tvmea.ws

THE MAGAZINE OF MIDDLE EASTERN & AFRICAN TV

APRIL 2013

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TV MIDDLE EAST & AFRICA

FremantleMedia International In This Issue

• Bellator • XOX, Betsey Johnson

Africa Rising

The hugely popular Mixed Martial Arts (MMA) sports property Bellator is already attracting a great deal of interest for FremantleMedia International in the Middle East and Africa.The company has high hopes that its female-skewed entertainment show XOX, Betsey Johnson will also garner a high level of interest with buyers across the territories. Both the Middle East and Africa have already proven to be healthy business areas for the company, according to Jamie Lynn, the executiveVP of sales and distribution for EMEA. “As the region’s commercial channel offerings and services expand, there is increasing demand for more varied content,” he says. “In the Middle East, the Gulf territories have tended to fund the biggest commercial projects on pan-regional broadcasters, but we are seeing huge growth specifically in Egypt.” South Africa remains the leading African market, he says, adding, “we are also seeing increasing demand and new opportunities in Nigeria, Kenya, Ghana and Angola, amongst others.”

Sub-Saharan Africa’s media scene is expanding

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Interview OSN’s David Butorac

“Our biggest brands are globally recognized and their appeal in the Middle East and African regions is as strong as anywhere.”

—Jamie Lynn Bellator

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Ricardo Seguin Guise Publisher Anna Carugati Editor Mansha Daswani Executive Editor Kristin Brzoznowski Managing Editor Joanna Padovano Associate Editor Simon Weaver Online Director Victor L. Cuevas Production Director Phyllis Q. Busell Art Director

Televisa Internacional

Meredith Miller Production Associate Cesar Suero Sales & Marketing Director

• Carousel • Abyss of Passion

Vanessa Brand Sales & Marketing Manager

Televisa Internacional’s overall business in Africa has been “great,” according to Ricardo Ehrsam, the company’s general director for Europe, Asia and Africa. “Thanks to the high quality of our content, and excellent dubbing, we have been able to solidify and grow partnerships with market leaders throughout English-, French- and Portuguese-speaking Africa.” Ehrsam points to the titles Carousel and Abyss of Passion as strong offerings in that market. He says that the universal themes of love, fighting for justice and other overall positive moral messages conveyed in Televisa’s novelas lend themselves nicely to the African market. “As the African markets continue to expand and develop as a whole, there is an increased demand throughout the continent for Televisa’s content,” he says. “The transition to digital broadcasts will only add to the need for high-quality programs, and our ever-increasing catalogue of English-, French- and Portuguese-dubbed content means that Televisa is poised to meet this challenge.”

Terry Acunzo Business Affairs Manager

Ricardo Seguin Guise President Anna Carugati Executive VP & Group Editorial Director

“Due to the many similarities in cultural sensitivity, African viewers are naturally drawn to Televisa’s content.”

—Ricardo Ehrsam Carousel

Mansha Daswani Associate Publisher & VP of Strategic Development TV Middle East & Africa © 2013 WSN INC. 1123 Broadway, #1207 New York, NY 10010 Phone: (212) 924-7620 Fax: (212) 924-6940 Website: www.tvmea.ws

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AFRICA RISING Improving economies and new digital infrastructure are contributing to the

By Bob Jenkins growth of sub-Saharan Africa’s media scene. frica is poised for significant growth, and a number of social and economic factors support the optimism many in the media business have for this vast territory.

There is no doubt that this diverse continent is undergoing rapid transformation. Aside from the encouraging improvements on the human level—infant mortality and AIDS transmission rates are declining, while secondary school enrollment is up—the economies in several countries are improving. GDP is expected to grow by an average of 6 percent a year, and foreign investment in the region has increased from $15 billion in 2002 to $46 billion in 2012, according to data released by The Economist.

The reality of Africa’s boom was reflected in the attendance numbers at DISCOP Africa 2012. The seventh edition of the 342 World Screen 4/13

only content market to service the sub-Saharan region attracted 1,248 delegates, from 80-plus countries and 672 companies, representing a 150-percent increase in attendance year-on-year.

And that’s not all. Patrick Zuchowicki, the general manager of The DISCOP Organization, predicts that the eighth edition of the event, which will be held from November 6 to 8, 2013, “will see a 50-percent increase in the number of content buyers at the market. It is clear that after China, Africa has now become the world’s fastest-growing digital marketplace.”

Indeed, digital households across sub-Saharan Africa are expected to rise to 49 million by 2018. There are also indicators that are of particular interest to media companies that want to do business in the region. Over the past ten years, real income

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Fashion forward: FremantleMedia International, whose broad catalogue includes XOX, Betsey Johnson, is seeing a wealth of new opportunities in Africa.

per person has gone up by more than 30 percent. Consumer spending will double in the next decade, which will help boost the nascent advertising industries in many countries, and, more importantly for the pay-TV and on-demand businesses, the percentage of households that can afford some sort of discretionary spending is set to grow: from 35 percent in 2000 to 52 percent in 2020.

A statistic of particular note—there are three mobile phones for every four people, the same ratio as in India.The general consensus is that as this extremely young population, of which the average age is in the mid-20s, starts to have money to spend, it will reach for smartphones and tablets in the same ways its counterparts in other countries have. For international programming distributors active in the region, this opens up several interesting, if not out-of-the-box, business possibilities.

“There is increasing opportunity and growth in the African TV market,” says Jamie Lynn, the executive VP of sales and distribution for Europe, the Middle East and Africa at FremantleMedia International.

“Pay TV still has the biggest appetite for finished programming, while the myriad free-to-air broadcasters are increasingly interested in acquiring formats which are already proven successes elsewhere,” continues Lynn. “We believe mobile to be a very interesting space in the African content market, as the take-up of smartphones explodes there. In some cases, the phone is a primary viewing device, not a supplementary one, as phones can be cheaper to use and run than a traditional TV set. To this point, we are beginning to offer our buyers more content which has the flexibility to run either as traditional half hours or as ‘bite-size’ episodes of six or seven minutes.”

Of the countries in between these two extremes, the ones with the most developed media markets are Kenya, Nigeria, the Republic of Ghana and Angola.

Kenya, where Swahili and English are the major languages, has not only the public broadcaster Kenya Broadcasting Corporation (KBC) but also several free-TV channels, among them Kenya Television Network (KTN), NTV, Citizen Television and the news channel K24. Wananchi operates the pay-TV platform Zuku TV. Nigeria, where English is the official language, has one of the most vibrant media industries on the continent. The state-run Nigerian Television Authority operates numerous national and regional stations.The commercial stations include AIT Television, Silverbird TV and Galaxy TV. Nigeria is also home to Nollywood, a highly prolific feature-film-production hub.

In the Republic of Ghana, English is one of the major languages, and private press and broadcast stations enjoy significant freedom.While radio has long been the dominant medium, television is expanding its reach. State-run Ghana Broadcasting Corporation (GBC) operates Ghana TV (GTV) and a bouquet of digital networks, including the news channel GBC 24. In addition, there is Metro TV, plus TV3 and Viasat 1, which is part of Sweden’s Modern Times Group.

In Angola, the television market has been dominated by the state-run broadcaster TPA, Televisão Pública de Angola, but the first privately owned TV station, TV Zimbo, launched in 2008. Portuguese is the national language.

The leading pan-regional pay-TV platforms include DStv/M-Net, based in South Africa, Kenya’s Wananchi and

SIZE AND SCALE

Any profile of Africa must take into account the enormous disparity that marks the continent, in particular in sub-Saharan Africa. Countries run the gamut, from severely impoverished and underdeveloped with little if any media outlets, to the continent’s most mature market, South Africa, which boasts a healthy free-TV business, divided between state-run SABC and commercial stations, as well as one of the leading pay-TV companies in the world, MultiChoice, which operates DStv and M-Net.

A taste of Mexico: Televisa has built a strong telenovela-distribution business in Africa with series like Abyss of Passion.

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Ladies night: Comarex has sold numerous telenovelas into Africa, including Untamed Beauties.

StarTimes, which is run by a Chinese company. China is, in fact, investing heavily in Africa. France’s CanalSat/Canal+ Afrique is the other major regional pay DTH service.

HUNTING FOR HITS

Given the differing levels of maturity of the various African TV markets, broadcasters have divergent needs and acquisition budgets, but buyers in the region want quality shows, and like their acquisition brethren in other territories, they are looking for hits.

“Our biggest brands are globally recognized and their appeal in Africa is as strong as anywhere,” says FremantleMedia’s Lynn. “As the region’s commercial channel offerings expand, there is increasing demand for more varied content.

“We sell a full range of drama, lifestyle, entertainment, comedy and kids’ programming across the continent,” he continues. “All of our best-known entertainment shows, such as Idol, The X Factor and Got Talent, have sold both as formats and finished shows to both pay-TV and terrestrial channels.

Other programming, as diverse in style as Project Runway, the Jamie Oliver franchise and Merlin, has also sold into the region. DStv/M-Net remains the leading pay-TV platform across Africa, but there is increasing competition from regionally focused pay platforms in a range of sub-Saharan markets.”

One imported genre that has been performing exceptionally well in Africa has been the telenovela. Leading Latin American distributors have been doing brisk business across the region, including Televisa, the world’s leading producer of Spanish-language programming.

“Televisa’s overall business in Africa has been great!” says Ricardo Ehrsam, the general director for Europe, Asia and Africa at Televisa Internacional. “Thanks to the high quality of 346 World Screen 4/13

our content, and excellent dubbing, we have been able to solidify and grow partnerships with market leaders throughout English-, French- and Portuguese-speaking Africa.

“Due to the many similarities in cultural sensitivities, African viewers are naturally drawn to Televisa’s content,” continues Ehrsam. “They empathize with downtrodden heroines struggling against social inequities in order to persevere.

Moreover, the universal themes of love, fighting for justice and the other positive moral messages conveyed in our novelas lend themselves well to the African market.”

Adela Velasco, who is in charge of sales to Europe and Africa for Comarex, agrees. “African audiences are totally fascinated by the concept and attracted to telenovela stories and formats,” she says. “Business in Africa has been actively moving forward over the past few years, and we believe this is as a result of the expertise the African players have been acquiring. [Africa is] an emerging territory with great growth potential, [and] we have been in constant touch with all the channels in the region and have made inroads there by offering quality programming and great story lines.”

Brazil’s Globo is finding an equally enthusiastic reception to its product. “The region as a whole offers good business opportunities, and the economic growth has increased the demand for our products across the board, whether telenovelas, series, documentaries or one-off specials,” explains Raphael Corrêa Netto, the company’s head of international sales.

Netto reports that several of Globo’s titles are successfully playing in prime time in a number of African countries, including Kenya, Zambia and Namibia.

Traditional licensing of programming is not the only business Globo has in the sub-Saharan region. Brazil’s leading commercial broadcaster also operates a digital channel, TV Globo Internacional, available worldwide on satellite, cable and IPTV. Of the total global subscriber base of 620,000, about a third are located in sub-Saharan Africa.

PROGRAMMING PREFERENCES

There are a total of 47 countries in the sub-Saharan region of Africa.While opportunity is spreading everywhere in the region, some of the countries are developing at a faster pace and offer great potential. Micheline Azoury, the head of international sales and brand manager for Mondo TV, opines, “while it is fair to say that, right now, the entire sub-Saharan region is boiling and moving ever faster in media, South Africa and Kenya really stand out: South Africa because it is the biggest economy in the region, and Kenya because the building of digital infrastructure there will see many new channels launching in 2013.”

Africa is a focus for Passion Distribution, which specializes in factual entertainment, reality, documentaries, lifestyle and game

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shows. Rebecca Thomas, a sales manager at Passion, points to “Ghana, Kenya and, of course, the jewel in the crown, South Africa, with its strong pay sector,” as three of the most promising countries in the region. “There are countries such as Zimbabwe from which we could have hoped for more, but the region as a whole is definitely opening up.”

One of the key features of the sub-Saharan market has been the divide between regional and pan-regional channels. “Currently we work primarily with three major pan-regional channels that buy several Globo programs annually,” Netto says. He does acknowledge, however, that, “local channels do have greater traction with the audience, which does mean that, ultimately, our programs get watched by a larger audience.”

To a kids’ company such as Mondo TV, this is clearly of great significance. “While the pan-regionals have the advantage of being able to offer you a single contract at a much higher price than any of the individual terrestrial stations,” says Azoury, “they are much more selective, and they do also require a window of exclusivity, which can often be a very long one.” But for Azoury, the real advantage is the ability to work closely with the terrestrial channels. “The terrestrials all have different strategies and ad sponsorships they have to stick with, and this is a plus for us as a producer and program supplier as it enables us to work very closely with each channel to help them meet their needs.”

GAME ON

Besides telenovelas, sports programming is at the top of buyers’ lists. This is, of course, a very specialized area in which football, in particular the English Premier League, where so many Africans play, and the UEFA Champions League, dominates.

While football is universally popular, there are regional variations where it has serious competition—rugby and cricket in South Africa of course, and, to a lesser extent, cricket in Kenya.

Distance running and motor sport are also very popular across East Africa as a whole, while wrestling is massively popular in Senegal.

While finished product, notably American dramas and comedies, are very popular across the region, followed by documentaries and children’s programming from Western distributors, African broadcasters are starting to explore format and coproduction deals.

“There is a lot of interest in collaboration on scripted formats and we are currently in contact with a Nigerian production company that wants to adapt some of our telenovelas for the African market, which is a completely new development for us,” says Berta Orozco, the sales executive for Western Europe, Africa and the Middle East at Colombian distributor Caracol Television.

It is a sign of just how significantly the market in sub-Saharan Africa has developed, that coproductions and production deals are now increasingly common. Netto reports that “Globo has received many requests for co-production and exchange of expertise from many important players in the region.”

Africa has set a date of 2015 for a full switch from analogue to digital signals. While nobody thinks that many, if any, countries will make that date, it is likely that some, in particular South

Africa, Kenya and Ghana, will be close. Indeed, while describing her talks as “early stage negotiations,” Mondo’s Azoury reveals that, during DISCOP Africa last year, she “began talks for IPTV and OTT deals in South Africa and Nigeria.”

THE DIGITAL HORIZON

While cautioning that “digital television still faces structural limits in many African countries,” Netto believes that “the trend is that digital television will become increasingly common in the coming year, and we believe that consumers everywhere increasingly want access to content that is nonlinear and available on multiple screens.VOD is a natural extension of this desire.” For this reason, Globo sees VOD as important for business in this region.

According to a report published by Digital TV Research, about 35 percent of TV households in sub-Saharan Africa— 14 million households—subscribed to digital services in 2012. By 2018, the number of households is expected to jump to 95.5 percent, or 49 million households. Kenya, Tanzania, Uganda and Zambia are expected to complete their digital switchover by the end of 2015.

On the digital terrestrial television (DTT) front, two-thirds of African television homes will take both pay- and free-TV DTT by 2018, up from only 11.7 percent at the end of 2012. SubSaharan Africa will have 33.8 million DTT homes by 2018, along with 25.7 million free-to-air homes and 8 million payTV homes, up from 4.6 million in total at the end of 2012.

The most prominent DTT players are the China-based StarTimes, available in 10 countries with some 1.5 million sub-Saharan subscribers, and MultiChoice’s GOtv, which is present in five countries.

As media markets in the sub-Saharan region continue to expand, international production and distribution companies will see ever-greater potential for business in the region.

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The queen of talk: Lifestyle content like Oprah Behind the Scenes has fared well for Passion in Africa.

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By Mansha Daswani

It’s not been an easy road for pay TV in the Middle East. For years, two entities—Orbit and Showtime Arabia—fought to gain paying subscribers in a region where there is an abundance of free-to-air satellite channels, and piracy has been rampant. Orbit and Showtime decided to join forces in 2009 and the combined platform, rebranded as OSN, has made huge gains ever since. With its platform now secure—previously, signals were hacked and transmitted to Dreambox set-top boxes available across the region—OSN has been luring paid subscribers with a mix of top-notch content, local and international, and a sophisticated TV Everywhere strategy.

David Butorac, the CEO of OSN, shares the gains made by the platform over the last two years and reveals what’s in store for the future.

OSN’s

TV MIDDLE EAST & AFRICA: What are the major gains you’ve seen in OSN’s subscriber base over the last year?

BUTORAC: In December 2010 we finalized the switch of our conditional-access system to a secure silicone-based system and [that] shut down the piracy [by preventing the transmission of OSN signals to illegal set-top boxes]. Ever since then, we’ve seen a significant growth in our subscriber base. In 2012 we added more than 30 percent of the total base in one year alone. After 18 years of pay TV in the region it’s finally really taking off.

What we now see is rapid accelerated growth, some of that driven by the cut down in piracy and some of it driven by investments that we’ve made in content and in marketing the platform.

tation for the premium nature of the English-language content—first windows. We’re now running most of our U.S. series in full 1080i HD within 24 hours of the U.S. release and that has removed the imperative for download piracy.

That’s one significant step we’ve taken.

In September 2011 we launched our first Arabic-language entertainment channel, OSN Ya Hala! HD, and that immediately rocketed up the charts. It’s now our number two channel overall in terms of viewership, on a 108-channel platform. In January 2013 we launched two more Arabic-language entertainment channels. OSN Ya Hala Shabab HD is targeting a slightly younger demographic and is a little more Egyptian focused. OSN Ya Hala Arabella HD is a telenovela channel—soap operas out of Mexico, dubbed into Arabic, are hugely successful here. Investment in Arabic-language premium content has been a core strategy and it’s significantly paying off in terms of viewership and sales.

TV MIDDLE EAST & AFRICA: Tell me about

the new investments you’ve made in enhancing the channel lineup.

BUTORAC: It’s been twofold. When you look at the history of our platform, we’ve always had a repu-

David Butorac

TV MIDDLE EAST & AFRICA: You mentioned that Ya Hala! is your second highest-rated channel; what’s number one?

BUTORAC: Our Movies HD channel. Western movies are still a significant driver. We have output deals with all seven Hollywood studios.The whole concept of, you’ll always see it first on OSN, is very clearly the case with our movie content.

TV MIDDLE EAST & AFRICA: Having a platform that serves so many countries, how can you tailor your services to the unique tastes of each market?

BUTORAC: We do it in different ways. If you look at OSN Ya Hala! HD and OSN Ya Hala Shabab HD, they [each have a] slightly different focus, and different premiere times. So we will premiere more for the Gulf states on Ya Hala! and Shabab is more for Egypt, KSA [Kingdom of Saudi Arabia], and it’s styled around [those markets] from a content perspective.We do the same with our movie channels; some of our movie channels are more designed for prime time in the Gulf states and some are designed for prime time in Egypt and KSA. So yes, we do a regional feed, but we do create different imperatives for different markets in terms of program timing and the style of programming. And we do offer a mix. Our Arabic-language content is produced in the GCC [nations of the Gulf Cooperation Council, including] Kuwait and United Arab Emirates.We have content that’s produced in Saudi Arabia and we have content that’s produced in Lebanon and Egypt.

TV MIDDLE EAST & AFRICA: How has HD

take-up been?

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ethernet and a satellite connection. That allows us to open up vast libraries of on-demand content. Currently we have about 750 movie titles, free on-demand, and about 50 pay-per-view [movie] titles. There are almost 1,000 different titles of content that the consumer can watch through download off the ethernet. That product has been hugely successful. We launched it in September 2012 and already there are more than 40,000 units in the market.

TV MIDDLE EAST & AFRICA: You mentioned

Fit for the Middle East: OSN Ya Hala! has found great success with imported Turkish dramas, including Awdat Muhannad, dubbed into Arabic.

BUTORAC: HD is huge. We’re now running 36 HD chan-

nels across the platform. There are about 4 million HD screens being sold every year across this region. What we’ve witnessed (there’s no industry ratings in the Middle East, so we rely on our research) is that the viewership of our HD channels has grown by about 20 percent on each channel over the last year. We are investing heavily in ensuring that everything we do now is HD. We’re converting our own channels to HD and all the new services that we’re adding to the platform. The intention is to get the entire platform to HD. That’s not going to happen this year, but certainly as we step forward with all new program acquisitions and channel acquisitions, the focus is on HD. TV MIDDLE EAST & AFRICA: How are you allowing your subscribers to access OSN content on multiple devices?

BUTORAC: We’ve invested in two significant digital platforms. The first is OSN Play, which is our digital player available region-wide on tablets, smartphones and PCs. It has almost 100,000 registered users already and we’ve only had it in market for less than 12 months. The OSN subscriber gets the app for free and the content they can receive on the player is tied to their subscription—so if they are a movie subscriber they can watch movies, if they are a sports subscriber they can watch sports. We will continue to develop OSN Play. The next advancement is that we’ll develop significant push capabilities—we’ll allow consumers to control their home set-top box and push additional data [to the TV set] so it becomes a true secondscreen experience.

The second product that we launched was our hybrid set-top box, OSN Plus HD. It’s a terabyte PVR with an 350 World Screen 4/13

that movies are a key driver and I imagine sports are as well. How do manage the cost of escalating sports rights?

BUTORAC: We’ve taken exclusive coverage of U.S. PGA Golf off FOX Sports and it is now exclusively on OSN. We carried the Olympics to huge success on multiple platforms.We have a significant position in rugby, golf, cricket—a number of the sports that are of appeal in the region. Where the issue lies is the monies that are being paid by some of the sports broadcasters for world-class football (soccer) rights.

They are being paid at significantly uneconomic levels. We can’t afford to, nor do we wish to, pay uneconomic rates. I think some economic rationality will start to spread across the region. Two sovereignbacked sports broadcasters [Al Jazeera Sport and Abu Dhabi Sports] are certainly showing signs of recognizing they need to bring the rights costs down. The [new negotiations for] English Premier League will be of great interest. The rights haven’t landed yet and despite what we’ve seen in the press, I believe those costs are going to come down [to below] where they were under the previous deal. We’ve also proved, by increasing the size of our base by 30 percent in a single year, that the consumer wants to watch more than just sports. They want to watch television seven days a week, not just twice a week for 90 minutes at a time.That’s allowing us to continue to grow by aggregating meaningful and world-class sports alongside the best entertainment.

TV MIDDLE EAST & AFRICA: What are your priorities for the rest of this year?

BUTORAC: We will continue to develop and be innovative in content and in technology. We have a lot of room to grow the subscriber base and that’s going to be our priority.The best way to grow the sub base is to ensure that we have the best quality content, that we’re recognized for the fact that you’ll always see it first [on OSN] and that our technology platform stays innovative and world-class.

TV MIDDLE EAST & AFRICA: What’s the penetration rate for pay-TV services in the region?

BUTORAC: The total number of TV households in the region is probably in the order of 90 million to 92 million. Penetration of total TV households is very small.We see the addressable market for pay TV as being [about] 6 million households—[homes that have reached a level of] affluence such that they can afford a premier product like OSN.We’re still at a relatively low penetration rate, so that gives us the confidence to know that our business can continue to accelerate.

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