eMedia has a range of media interests, of which e.tv is the most significant. e.tv is the only independent free-to-air television broadcaster in South Africa.
eMEDIA investments PROPRIETARY Limited (eMEDIA)
Remgro has an effective interest of 32.3% in eMedia that has a range of media interests, which include South Africa’s only private free-to-air television channel, e.tv, its sister news service, eNews Channel Africa (eNCA), free-to-air satellite platform Platco Digital, Gauteng-based radio station, Yfm, and various studio facilities and production businesses.
eMedia has a March year-end and therefore its results for the 12 months to 31 March 2016 have been included in Remgro’s results for the year under review. eMedia’s contribution to Remgro’s headline earnings for the year under review amounted to R28 million (2015: R69 million).
Despite e.tv’s advertising revenue being under continued pressure due to a sharp drop in market share in its previous financial year, eMedia’s revenue increased from R2 390 million to R2 431 million. Management reviewed the programme schedule of e.tv and implemented changes during the latter half of the 2015 financial year and the first half of the current financial year to reverse the falling market share. The changes in schedule lead to the recovery of e.tv’s market share: e.tv once again became the most watched English channel in South Africa. The schedule changes necessitated a considerable investment in local programming, which resulted in cost of sales amounting to R1 091 million (2015: R983 million). With the market share of e.tv stable for the latter part of the financial year, advertising revenue should be more reflective of e.tv’s market share.
eMedia continued its investment into the multi-channel business as e.tv struggles as a lone channel in an environment where consumers prefer multi-channel options. eMedia invested R262 million (2015: R245 million) in its multi-channel platform, OpenView HD (OVHD) in producing channels for the multi-channel environment. This investment was necessitated by the slow roll-out of Digital Terrestrial Television (DTT). OVHD has seen the number of activations increase by 245% from 112 715 to 388 812 at the end of the financial year. Management believes that the investment in quality channels and a multi-channel platform will stand eMedia in good stead when the DTT roll-out ramps up.
eSat.tv continued to perform well and the eNCA channel remains the most watched news channel on DStv with a share of over 50% of the viewership of all news channels. The long-term contract with DStv came to an end during May 2016. eMedia is currently negotiating a new contract with DStv and the outcome may affect the future financial performance of eNCA.
Sasani Studios, Silverline 360 and Yfm delivered strong performances during the year under review. Management decided to exit non-core and non-profitable investments, which resulted in a loss from discontinued operations amounting to R145 million. eMedia will, for the near future, concentrate on its core South African assets with ever-increasing competition from non-linear broadcasting platforms. The current year’s results also include the impairment of a loan receivable of R48 million that resulted from the sale of The Africa Channel (UK) as the purchaser has failed to deliver on payment.
These “once-off” factors, together with the pressure on revenue, have had a negative impact on the results of eMedia. Management however believes that with the stabilisation of the e.tv market share, the continued investment in the multi-channel business and the continued need for content, eMedia is poised to achieve better results going forward.