VZCZCXRO4305
RR RUEHMA RUEHPA
DE RUEHOS #0252/01 1601506
ZNR UUUUU ZZH
R 091506Z JUN 09
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0810
INFO RUEHUJA/AMEMBASSY ABUJA 0409
RUEHOR/AMEMBASSY GABORONE 0114
RUEHGB/AMEMBASSY BAGHDAD 0058
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RHMFISS/HQ USAFRICOM STUTTGART GE
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 02 LAGOS 000252 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR FOR LISER, AGAMA 
STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS 
STATE PASS TDA FOR DSHUSTER, MARIN 
STATE PASS EXIM FOR JRICHTER 
STATE PASS USAID FOR NFREEMAN, GBERTOLIN 
GABORONE PASS PDROUIN 
BAGHDAD PASS DMCCULLOUGH 
COMMERCE FOR KBURRESS, DHARRIS 
TREASURY FOR DPETERS, RABDULRAZAK 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ECPC EINV ETRD PGOV NI
SUBJECT: NIGERIA: BOOMING SATELLITE TV MARKET SHOWS GROWING 
CONSUMERISM 
 
¶1. (U) Summary:  Nigeria's direct-to-home satellite television 
industry has grown many fold over the past several years as 
providers tapped the country's expanding middle class and feed 
consumers' demand for homegrown entertainment.  Executives from both 
the South Africa-based Multichoice and Nigerian firm HiTV 
independently told EconOff they forecast continued expansion in this 
still relatively untapped market, despite raising costs due to 
exchange rate fluctuations.  HiTV lamented that US media penetration 
of Nigeria remains comparatively low and is exploring ways to 
introduce the popular programming to the country's vast audience. 
While this market is very young, it looks promising for American 
distributors who can deliver popular programming.  End Summary. 
 
Nigerians Increasingly Tuning In 
-------------------------------- 
 
¶2. (U) Multichoice Nigeria Managing Director Joseph Hundah on May 21 
told EconOff that Multichoice subscriptions had grown 300 percent 
over the last three years and now total some 370,000 prepaid 
accounts.  The South African firm entered Nigeria 15 years ago and, 
after ten years of lean growth when the firm only targeted the upper 
end of the market and broadcasted primarily South African and 
Western content, Hundah noted the firm entered a growth phase in the 
early 2000s.  Deregulation and the growth of local start ups have 
helped to expand the market to increasing numbers of Nigerian 
households.  There were no some 18 licensed pay television companies 
in Nigeria and piracy was rife.  Hundah said Multichoice would 
continue to depend on the top end of the market, but he acknowledged 
that less expensive competitors had exposed a new layer in the 
consumer market that his firm was eager to target. 
 
¶3. (U) Probably the most successful of the Nigerian start ups is 
HiTV, whose Managing Director Toyin Subair on June 1 told EconOff 
the two-year old company had some 220,000 subscribers, of which on 
average half were paid up at any one time.  Subair attributed this 
high rate of "churning" to the firm's biggest selling point in 
Nigeria - HiTV this year wrestled exclusive broadcast rights for 
English Premier League soccer away from Multichoice Nigeria and many 
subscribers suspend their accounts during the off season.  To lock 
in subscribers, HiTV is expanded the number of channels offered - 
now at 30, up from 16 ten months ago - and offering a wide selection 
of Nollywood films and Nigerian pop music, which Subair said was 
popular with the country's expanding middle class. 
 
¶4. (U) The two executives forecasted continued rapid expansion in 
Nigeria's direct-to-home television market over the near term. 
Moreover, Hundah and Subair both acknowledged their respective 
firms' difficulty in keeping pace with demand and noted that their 
core preoccupations these days were expanding their service 
departments simply to cope.  Subair estimated that in Lagos alone 
some 900,000 could afford a HiTV subscription, which costs the 
equivalent of USD 32 per month.  Both executives also noted plans to 
expand service throughout northern Nigeria, an area where they 
admitted penetration to date had been weak. 
 
Global Economic Slowdown Pinching Margins 
----------------------------------------- 
 
¶5. (U) Hundah and Subair both brushed aside concerns that the 
slowdown in the Nigerian economy would slow their industry's growth. 
 The executives added that they had yet to see a noticeable impact 
on subscriptions.  The depreciation of the naira since last year, 
however, had impact their respective bottom lines.  Some 85 percent 
of Multichoice's costs were in US dollars and, unabl to pass along 
higher costs to Nigerian consumers due to stiff competition, the 
firm's USD-denominated profits had fallen 33 percent.  Similarly, 
HiTV's costs have jumped 40 percent due to the depreciation. 
Hundah, however, noted that Multichoice's experience across Africa 
was that viewers, once hooked on satellite television, rarely cancel 
their subscription in response to an economic slowdown, suggesting 
 
LAGOS 00000252  002 OF 002 
 
 
that entertainment is seen as more than simply a luxury good. 
 
"I Want My French MTV" 
---------------------- 
 
¶6. (SBU) Subair said Nigerians had an affinity for American 
television programs but noted that the decision years ago by 
American media firms to sign exclusive pan-African distribution 
rights with Multichoice South Africa precluded HiTV and other 
Nigeria satellite companies from broadcasting popular programs. 
Subair noted these contracts were signed at a time when Multichoice 
was virtually the only satellite provider in Africa.  Accordingly, 
HiTV, in addition to producing its own Nigerian content, was 
sourcing content from other countries.  Instead of MTV and CNN, for 
instance, HiTV offered French music channel TRACE and Al Jazeera's 
English channel.  Sympathetic to the significance of promoting 
American culture abroad, Subair said Nigerian youths today for 
instance often did not know who Mickey Mouse was due to exclusive 
rights for Disney products given to the up market Multichoice.  By 
comparison, Subair reported that Chinese distributors were 
aggressively promoting among the country's more affordable satellite 
companies less popular Chinese programming, spearheaded by kung-fu 
movies.  Subair said the Discovery Channel had created a separate 
content line to distribute to HiTV and other channels on a 
nonexclusive basis while still complying with its Multichoice 
contract, a model that the he was encouraging other American firms 
to adopt. 
 
¶7. (U) Comment:  HiTV's Subair noted the growth of the satellite 
television market is a function of content more than price, and 
Nigeria's experience appears to follow that pattern.  The industry 
only boomed when satellite firms began to offer the wildly popular 
Nollywood and Nigeria pop music content.  The success of Multichoice 
Nigeria and HiTV, as well as the numerous regional cable television 
providers, is yet another indicator of growing disposable incomes 
enjoyed by middle class Nigerians, who appear to increasingly view 
entertainment as a necessity as opposed to a luxury good.  This 
market is very young and looks promising for US distributors, who 
can deliver popular programming.  End comment. 
 
¶8. (U) This cable has been cleared by Embassy Abuja. 
 
Blair