Nigeria’s national TV broadcaster, Nigerian Television Authority (NTA), entered a deal with China’s originated Startimes, a PayTV company, in 2008, under a special profit sharing model where Startimes keeps 70% and NTA gets 30%. Remember, it is profit-sharing, not revenue sharing. The implication is this: Startimes can operate in Nigeria for 100 years and structurally decides not to record any profit if it wants to keep expanding and growing. With NTA not involved in backend operations, Startimes has many ways on how it spends its budgets. So, since 2010 when the service got into full force, Nigeria has not received a dime. Of course, Startimes benefits from the brand equity that it is working with a national broadcaster, helping it amass many customers in the fledgling satellite television business. Startimes offers services which are low cost.
The DG ran into trouble at yesterday’s sitting when he told the committee members that not a single dime has been realised from the joint operational venture it entered into with Startimes in 2008.
Mohammed said: “As an executive director in NTA in 2009, not a single kobo was made from the joint venture with Startimes, the same situation I met in 2016 when I returned as the DG.
“In fact, on assumption of office as the director general, that was the first question I asked, upon which records of non- profitability was presented by the NTA subsidiary outfit running it. The non-profitability status of the venture remains till today.”
My estimate is that PayTV has a market cap of $700 million pre-Covid-19 and will continue to grow in the nation. Startimes has the lion’s share in terms of absolute numbers of subscribers. MultiChoice, however, commands the bulk of the industry profit, powered mainly by its exclusivity on the highly premium European football. The low-price of Startimes offering has not brought much revenue and that affected its ability to find profits in the market. The profit-less state of Startimes/NTA joint venture remains debatable though.
Relying on the audited report of the Auditor-General of the Federation, the Senate through its Joint Committee on Finance and National Planning revealed that the NTA/Star times JV made a whopping $36.1 million (about N11 billion) in 2018; contrary to earlier claims by NTA that the business had yielded no profit in almost 12 years.
Consequently, the Senate accused NTA/Star Times of coming up with incoherent financial records to show that it spent a total of N19 billion; leaving a shortfall of N8 billion in 2018 to justify earlier claims that the business had yielded nothing.
According to the Chairman of the Senate Committee, Solomon Olamilekan said the reason NTA officials kept the account to the JV in dollar form was them to easily ship the profits outside of Nigeria in connivance with some Nigerian officials.
According to Startimes management, PayTV is capital intensive and that the firm has ploughed back all gross earnings to grow the business. So far, PayTV or variants did not work for Startimes/NTA partnership. iROKOtv has also struggled, pausing any plan to look for growth in the African market. But somehow, MultiChoice, owners of DStv and GOtv, seems to be doing well. If you check, it has better pricing power due to superior product mix. If it loses that power, it will fall into the profitless mess. That explains why the new industry code should worry DStv.