The decision by Canal+, the new owner of MultiChoice, to effectively call the bluff of Warner Bros Discovery and be willing to lose as many as 12 channels provided by the US giant has worked.
DStv told subscribers at the beginning of December that a number of channels, including Discovery HD, Cartoon Network and CNN International, would go dark at midnight on 31 December when the current carriage deal expires. Canal+ said on 31 December that it had signed a new multi-year, multi-territory agreement with Warner Bros Discovery.
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At risk was far more than just the 12 channels on DStv.
It is understood that while separate, a rights agreement for HBO as well as Warner Bros studio content, would also expire at the end of December. This would’ve had a profound impact on the M-Net channel in particular which has long been the ‘home’ of HBO content, such as Game of Thrones and The White Lotus, in South Africa. It would’ve also heavily impacted its movie offering on linear TV as well across its on-demand offerings and Showmax, with popular franchises including DC Comics, Harry Potter, and The Lord of the Rings disappearing.
Strategy
Moneyweb understands that Canal+ was using the MultiChoice agreement (or lack thereof) as leverage to agree a group-wide deal across all its European and African markets.
Canal+ already had an existing agreement for its operations. Presumably, it wanted this more expansive deal at better terms than its current ones.
Given its scale (it has 40 million subscribers), Canal+ was in a strong position.
There aren’t many other natural buyers of Warner Bros Discovery channels or licensees of its content in the markets where Canal+ operates. This scale is also critical as it allows the group to amortise content costs across its subscriber base.
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New deal
Canal+ says: “This expanded agreement covers both the distribution of HBO Max and the renewal of several Warner Bros Discovery thematic channels across numerous regions in Africa and Europe. This agreement enables Canal+ to strengthen its entertainment, kids, news, and documentary channel offerings in African markets.”
Neither party disclosed the duration of the new agreement.
What was curious is that on 31 December, only three of the 12 affected channels – Discovery HD, Food Network and Cartoon Network – were labelled for closure. On these channels, a notice appeared on its electronic programming guide from midnight on 31 December stating that “this channel no longer forms part of our content line up”.
This could suggest that Canal+ had already agreed a reduced carriage agreement for the other less prominent channels, possibly as a negotiating tactic.
It is almost certain that Canal+ managed to renew the carriage agreement at more favourable terms than both its existing one for Canal+ markets in Europe and Africa as well as the MultiChoice one which expired.
Big squeeze, and reprieve
Canal+ has been intensely focused on removing costs in the MultiChoice business, with reports that it has been pushing all suppliers to trim costs by as much as 20%.
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Expect more work on this front, especially when current sports rights deals expire. Now that there is only a single natural buyer for these rights in sub-Saharan Africa, it is in a more enviable position than the rights holders.
The 12 channels that were subject to be affected are:
• Discovery Channel (121)
• TLC (135)
• Discovery Family (136)
• TNT Africa (137)
• Real Time (155)
• Discovery ID (171)
• Food Network (175)
• HGTV (177)
• Travel Channel (179)
• Cartoon Network (301)
• Cartoonito (302)
• CNN International (401)
The new deal will also see the rollout of the HBO Max streaming app as an option on DStv products (much like the Netflix and Disney+ tiles) as well as in other Canal+ markets.
The future of Warner Bros Discovery itself is somewhat uncertain.
While it has agreed to sell itself (excluding the cable channel business) to Netflix in an $82.7 billion deal, there remain concerns that this deal will receive regulatory approval in the US.
At the same time, Paramount Skydance is trying to acquire the whole business (including the cable channels) in a hostile bid, with an improved offer likely to also be rejected according to Bloomberg.
This means this new carriage agreement is a rare win-win for both. Canal+ pays the price it is willing to (and not more), while Warner Bros Discovery gets to keep an important customer.
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Despite this last-minute deal, DStv subscribers lost as many as four channels (depending on the package) at the end of December. Following a change in strategy, Paramount shut MTV Base and BET Africa, while CBS AMC shut the CBS Reality and CBS Justice channels.
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