By Faramade Shoyombo



Like me, I suspect, a few of your plans for this year may be undergoing serious review. This, most likely, has been necessitated by the devaluation of the naira which, even with the flimsiest knowledge of economics, suggests that you would have to pay more for some of the goods and services that make life a lot more livable. For me, a major bother since the naira began its latest slide against the dollar, not unexpectedly, is how to fund some of my passions and habits. I have turned this over in my mind so many times that it has left my mind in a whirl.

Currency devaluation, to my not exactly economics savvy mind, connotes far-reaching negativity. It carries with it the possibility of reactions, many of which may not have the appropriate results, because the Nigerian economy mainly depends on oil.

Naira, with its current anorexic value, will drive export of local products, which are not currently available in the required volume, but will create an additional burden on the populace. The burden will come in the shape of a steep hike in the cost of goods and services across the board. As a voracious consumer of television content, especially premium entertainment and sporting content, I have wondered whether or not the subscription fees for the two services I use will not go up. Nobody, except those with other wordly incomes, is immune to a jolt when conditions necessitate a hike in the price of goods or services he or she enjoys. The best things in life, as they say, may be free but I do not think this applies to premium television content, without which the golden age television enjoys will unravel in no time. In the event that it unravels, heavens forbid, it will be a return to the age of tedium on our screens; the age of grossly limited choices in programming and, of course, grim audio-visual quality. The possibility of that should fill anybody already accustomed to a diet of top-tier television programming with dread.

Similarly, the possibility that my income could thin out a little more, on account of rising costs occasioned by devaluation, is a cause for trepidation. Is there a possibility of paying the same subscription fees pre-devaluation in an era of falling naira? I wish there was and very strongly. My heart wants that, but my head tells me that the chances of that happening are as thin as dental floss. Why? In one sentence: Television economics, especially where live sports broadcast and airing of movies are involved. Sports, for example, accounts for a huge percentage of the programming costs of TV.

TV, without a doubt, accounts for more than half the revenue of many professional sports leagues. Without television, professional sports could scarcely exist. Without sports, the cable TV bundle and the golden age of television in existence, most likely, will unravel.

Let’s take DStv and GOtv as examples. The former is an upmarket package, while the latter is a downmarket one. The subscription, whatever it is, you pay is for the programming ( the channels you watch, that is) and the distribution (the infrastructure and profits for the cable companies). So, every time you pay your subscription, the channels collect a small fee, which is called an “affiliate fee”. Affiliate fees are a way in which cable providers compensate producers of this all-important programming. Affiliate fees are the primary revenue stream that drives content development. They are basically a “share” of the subscription fee we pay to our cable or satellite operator that is then shared back to the content owner or distributor, usually on a per subscriber basis.

The most in-demand channels attract the highest fees and those tend to be entertainment channels like those of sports and movies. DStv has an array of sports and movie channels. Live football matches from the most prestigious leagues of Spain, Germany and Italy as well as of other sports competitions come with the package. With the devaluation, the implication is that DStv will have to fork out a lot more to acquire the broadcast rights to this all-important content, given that the cost of acquisition has always been huge. So will GOtv and indeed, all other pay-television providers for whatever content they bring to subscribers’ homes. It also means that the cost of doing business locally will experience an exponential jump. For those involved in the production of original African content, such as what MultiChoice makes available to viewers via Africa Magic and M-net, there are cost implications in the shape of payments to movie producers. Where will the money come from? I can think of only one source: subscribers.

A very interesting thing happened in the UK earlier this month, when the new television deal for the Barclays Premier League was signed. As a result of the fierce bidding by Sky and BT for the rights, the cost rose by 70 % to £5.14billon. The new deal, which runs from 2016 to 2019, got the alarm bells chiming among subscribers, who knew they would have to pay more to watch live football. Sky, which retained the lion’s share of the deal by agreeing to pay £4.176billion, attempted to calm frayed nerves through a statement saying its customers would not have to foot the bill for the huge outlay. But the company knew the money still has to come from the subscribers and said so in a barely disguised manner.””The company will work hard to minimise the impact of higher rights costs on customers, with the majority of the funding coming through substantial additional savings to be delivered by efficiency plans,” the statement explained somewhat disingeniously.

Working to minimise impact of the higher cost on subscribers is not the same as them having not to pay additional fees. That is what television economics demands when costs go up. The alternative is for TV companies facing this kind of situation is to retain the same subscription rates despite ballooning content acquisition and operational costs, go bust or serve dire programmes. Once the television companies wobble, content producers will also be emasculated and their capacity to remain in business will come under severe threat. That is hardly the direction to go, as it would entail job losses and other unsavoury fallouts.



• Shoyombo, a retired broadcaster, wrote in from Ilorin

The summary of this whole story is that we should expect hike in subscription fees frm dstv any moment frm now.Abi no be so?