By Rob Morris
Media exec says pay-TV firms “possibly” faced financial ruin had they not merged.
Pay TV companies Showtime and Orbit “possibly” faced financial ruin had they not merged earlier this month, a media industry figure claimed on Tuesday.
Gabriel Chahine, partner and head of consumer and media at management consultancy Booz & Co, told Arabian Business that neither pay-TV company was generating solid revenues as separate operations.
“We don’t have the economics of the paid-TV networks but it would be very difficult to imagine they are making money, especially with the amount they pay for sports rights,” he said.
“The packages they put in the market place (for consumers) are very low, especially Orbit which has a $5 one in Egypt. With these packages and the content they are buying, it would be very difficult for them to make money.
He added with Showtime and Orbit struggling to make money, a merger was the best outcome for both companies.
“The merger was overdue and it makes perfect economic sense because there will be a lot of synergies around markets, sales, customer service and distribution. It will give them more bargaining power with suppliers and the big movie vehicles to negotiate better prices on the content.”
Pulling in subscribers has been an ongoing battle for the companies, with several networks in the region all vying for customers, according to Chahine.
In the Middle East, pay-TV subscribers and people with free-to-air packages have access to more than 500 channels. But Chahine said only 25 channels secure more than one percent of ratings, while the others “do not even appear on the radar”.
“The consolidation of two networks is overdue,” he said. “From an economic standpoint, three TV networks (in the Middle East) was way too much and it’s very difficult for them to differentiate their content from free-to-air.
“It’s usually sport (which sets pay-TV aside from free-to-air), but they are now losing on this side, so they face challenges competing with free-to-air.”
On July 3, Abu Dhabi Media Company (ADMC) outbid rival Showtime for rights to screen English Premier League football from August 2010.
Showtime CEO Marc-Antoine d’Halluin told Arabian Business days later that he hoped a deal to carry ADMC sports channels with Premier League matches on the pay-TV platform could be agreed.
It is unknown whether talks between Showtime, which currently owns the rights to air top English football for three seasons ending next May, and ADMC have begun.
Within days of losing the Premier League rights, Showtime announced its merger with Orbit. The combined pay-TV companies will offer 70 exclusive channels featuring sports, movies, Arabic content and international shows.
I do not subscribe either to Orbit or to Showtime primarily due to the expensive packages they offer, but also due to the fact that most programmes are re-runs as are the movies. Except for sport, these two have nothing to offer, and even the sport they carry is the unpopular content like golf, rugby, etc which caters most to the western expatriate population (though I have no gripe against that). Well I for one wouldnt have been sorry to see the two go under cause they have fleeced the populace for as along as they could. Well done ADMC for getting the EPL rights, I hope you can price it price it within reach of the population at large. Sorry to you guys at Showtime/Orbit, but it seems the good times for me and like minded people may just be beginning.
I subscribe to both Showtime and Orbit. Have regular problems, including: We lose a channel in our package. Currently, we have lost BBC Prime. They end the subscription well before the expiry. In one case, three weeks. Far too many repeats. Weak signals at peak times. Both are not customer-service-quality focused. They have had more than enough time to put their house in order. If they don't they will go out of business sooner rather than later.
for those familiar with pay TV, the customer base the mideast offers is so small that i was always surprised showtime was able to offer the great content it does, latest series, films etc. it takes much larger markets to make it viable to purchase rights for content that is priced for million plus subscribers. Showtime did afterall pay 120million USD for the EPL...what the merger will beget is yet to see, will we get the best of both worlds? i sure hope so.
Who watches showtime and orbit these days for the latest series and episodes when you have every corner shop selling you iTune cards (for a premium, the $100 cards are selling fast)?? With HD and the latest episodes online, who watches Orbit or Showtime? Besides, I see another 3rd cable/IPTV regional provider in this region. There is huge room to grow, judging from how IPTV deployments in Europe and US are concerned. But is Showtime/Orbit bothered with such innovation? Nope!