MultiChoice’s new owner, Canal+ S.A., has reportedly suspended payments to the broadcaster’s suppliers and demanded 20% discounts on invoices as part of a cost-cutting exercise.
According to an insider at the broadcaster who spoke to Business Times, MultiChoice’s procurement head is currently sitting with hundreds of unpaid invoices from suppliers affected by the strategy.
The broadcasting giant said it was part of its efforts over the past two years to reduce costs and increase efficiency.
“This has continued following the completion of the Canal+ merger, and MultiChoice is engaging with suppliers in this regard,” MultiChoice said.
“Managing spend in the business is important to ensure that MultiChoice continues to play a key role in the South African and African broadcasting ecosystem over the long term.”
MultiChoice said these adjustments would allow it to support numerous industries and fulfil its extensive public interest commitments made to the Competition Tribunal.
Those commitments form part of the conditions for Canal+’s acquisition of MultiChoice, which was completed last month.
The conditions include Canal+ procuring local content from historically disadvantaged persons and small businesses.
Competition Commission spokesperson Siya Makunga told Business Times that the commission would investigate whether the acquisition’s conditions had been breached.
Canal+ Africa CEO David Mignot previously explained that the French firm did not have access to privileged MultiChoice operational information before the acquisition.
He described the start of Canal+’s due diligence on MultiChoice as “opening the engine,” presumably referring to figuring out what made the broadcaster tick and how it can be optimised.
Mergence Investment Managers’ chief investment officer, Peter Takaendesa, told Business Times that the cost-cutting programme was unsurprising.
“The MultiChoice group is in a difficult financial position, given the large losses and cash burn from the relaunch of Showmax, as well as revenue pressure in its mature South African operations.”
“We also believe the new owners of MultiChoice will be looking to align its operating structures with those of Canal+ over the coming 12–18 months.”
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