12 African Business July 2019
Cover story: Broadcast media
Growing markets In Nigeria, where the population has grown from 95m in 1990 to 201m today, the TV market grew 17.1% yearon-year in 2017 to $800m, and is expected to expand to $1.2bn in 2022, according to PwC. The market in Kenya is predicted to rise by 6.1% a year to $385m in 2022, while Tanzania is expected to grow to $183m in 2022 from just $56m in 2013. Even South Africa, already the continent’s most developed broadcasting market, is expected to see the TV market increase to R40.8bn ($2.8bn) in 2022 from R32.2bn today, according to the survey. As economic growth leads to increased smartphone ownership and internet penetration ticks up, broadcasters are increasingly reaching new audiences via online distribution platforms such as YouTube.
“Mobile technology is growing rapidly, data is being consumed at a very high level and DTT [digital terrestrial television] is being launched in phases,” says John Momoh, chief executive of Nigerian news and entertainment broadcaster Channels TV. “We’re all experiencing disruption and trying to adjust to see how we can move content to the consumer to satisfy their demands.”
Yet the industry faces significant hurdles if it is to thrive amid the disruption. The switchover from analogue to digital broadcasting has been delayed in many countries, slowing advertising, product and audience growth. Low internet penetration rates, limited wifi and the high cost of data hold back the potential of online broadcasting. And muted economic growth in major markets has resulted in broadcasters chasing limited revenue in a capital-intensive industry.
“There’s a voracious appetite for entertainment services, there’s no question about it. The market may be expanding with a lot of people starting up TV and radio services but the reality is that the advertising market is very slow,” says Hanlon of the Nigerian market. “It’s a very challenging market, albeit one that has around 500 TV stations around the country and probably 2,000 radio stations, most of which are highly unprofitable. Many of them close down, new ones start up – it’s cyclical. In reality there’s a handful of operators making serious revenues in the market.”
Entertaining the masses First launched back in 1995, Channels TV has long been attuned to the rough and tumble of the Nigerian broadcasting market. As competition ramps up and sluggish economic growth continues – the IMF projects that Nigeria will grow by just 2.1% this year – Momoh says that the news broadcaster will shift some of its focus towards entertainment content in order to draw in young audiences and attract vital new revenue sources.
“Entertainment is big in Nigeria now – our next plan is for us to go into it. We’ve just completed our studios in Lagos and we have one of the studios dedicated to entertainment. Nollywood and the music industry are big, so we think the content there is well sought after. We think branching out and launching an entertainment channel and doing it properly will attract more revenues for us.”
Such heavy upfront investment and diversification is becoming common across the Nigerian industry
MTN (left) is the most admired African brand when respondents are not prompted to specifically name an African brand. Guinness (right) tops the table for the most admired alcoholic beverage.
Above: A newsroom in Nairobi. The Kenyan TV market is predicted to grow by 6.1% annually over the next four years.
as stations strive to differentiate themselves in a highly competitive market. The 2016 recession had a detrimental impact on TV advertising in the country, with revenues plummeting by 16.4% and recovering just 0.9% in 2017, according to PwC. Professionally produced entertainment and a shift to digital and HD technology are seen as crucial fightback strategies.
“You’ve got to make sure the services are of international standard, have really good picture and sound quality and really good on-air talent,” says Hanlon. “TV is a very capital-intensive business. At the moment we’re upgrading all our facilities to full HD, which is a very costly exercise – millions of dollars of investment. You have to do that to stand out in a very crowded market.”
Yet attempts to boost quality are held back by a dearth of broadcasting talent, leading to higher staffing costs and a static market for specialised labour.
“The biggest barrier to implementing standards is the level of candidates you can bring into the business,” says Hanlon. “There’s very little movement in