Multichoice and US broadcaster pump billions into Showmax
Multichoice and US-based Comcast have invested a combined R4.9 billion into Showmax.
In 2023, Multichoice and Comcast’s subsidiary NBCUniversal Media, LLC (NBCU), and Sky partnered to turn Showmax into the leading streaming service in Africa.
Comcast, via its subsidiary NBCU, acquired a 30% equity stake in Showmax Africa Holdings Limited (SMAH) and provides ongoing support through licensing the Peacock platform and content from NBCU, Universal Pictures, Peacock, and Sky.
Multichoice, through its wholly owned subsidiary, Multichoice Group Holdings B.V (MGHBV), and Comcast, through NBCU, are providing funding to SMAH during its investment phase.
Equity funding is provided as required (either monthly or at other intervals), depending on SMAH’s working capital requirements and near-term budget, and is subject to a maximum capped amount.
Until 31 March 2024, MGHBV and NBCU provided SMAH with $120 million (R2.06 billion) in equity funding, each in proportion to its respective shareholdings.
Since 1 April 2024, MGHBV and NBCU have provided SMAH with an aggregate of $164 (R2.81 billion) million in equity funding, each in proportion to its respective shareholdings.
This means that Showmax has received R4.9 billion in funding over the last two decades.
In Multichoice’s latest results for 31 March 2024, the group said that Showmax posted a trading loss of R2.6 billion (FY2023: R1.2 billion), even if it was below the R3 to R4 billion guided range.
The overall group reported a headline loss of R3.038 billion for the year, more than double the R1.287 billion recorded in the previous year.
Sales underway
Multichoice could also soon fall under new ownership, with an independent Multichoice board recommending that shareholders accept a takeover offer from Canal+.
The independent board said that the offer consideration of R125 per share is fair and reasonable and recommended that shareholders accept it once it becomes unconditional. Multichoice’s share price currently stands at R108 per share.
Canal+ attempted to purchase Multichoice at the start of the year, with its opening bid of R54 billion rejected.
However, it then increased its shareholding in Multichoice to over 35%, meaning that it had to make an offer to buy the rest of Multichoice. The French broadcaster’s shareholding now stands at over 45%.
That said, the deal is still conditional on obtaining the approval of several government authorities inside and outside of South Africa.
Multichoice said it was working to circumvent South Africa’s foreign broadcast restrictions, which limit foreign entities from holding more than 20% of a South African broadcaster’s voting rights. The group will also aim to maintain Multichoice’s BBBEE credentials.
Shareholders have until 22 April 2025 to trade in Multichoice Shares to participate in the offer.
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