There is potentially good news for the many, many Kenyans who will try to get in front of a television screen this weekend to watch Manchester United, Arsenal, Chelsea and Liverpool battle with Manchester City for dominance in the English Premier League (EPL). DStv (owned by MultiChoice) who have the exclusive screening rights for the EPL in Kenya, may be forced to end their monopoly position and resell match coverage to other TV operators.
Hopefully this breaking of undesirable monopolistic practices will now be extended to other business sectors in Kenya, and one in particular, says the Kenya Forum.
DSTV AND COMPETITION FOR THE EPL
The Communication Commission of Kenya (CCK) is drawing up rules with the aim of cutting DStv’s dominance in the market, a subject that is now under investigation by the Competition Authority of Kenya (CAK) that was set up under the Competition Act of 2009.
DStv’s dominance in providing EPL football on our screens has resulted in a majority of Pay-TV viewers being locked into their network at a higher price (monthly subscription fees in Kenya are higher compared with other developing countries) and made it difficult for other providers such as the Wananchi Group to break into the market.
The idea now is for firms to share the exclusive rights to EPL match coverage from which DStv will derive a fee, hopefully giving viewers more choice at a lower cost, a model adopted in the UK, France, Italy and Nigeria.
OTHER MONOPOLIES IN KENYA
The Kenya Forum hopes that CAK will now wield the powers provided under the Competition Act to deal with other monopolies in Kenya, some of which you may have read about and one of which we doubt you will.
Those you may be familiar with, who certainly need investigating, include East Africa Brewers Ltd (EABL), 50 per cent owned by Diageo and the providers of Tusker beers and the Guinness brands among many others. Potential rivals Keroche breweries and Sierra have neither the reach nor the capacity to take them on.
In the telecoms sector Safaricom of course control 70 per cent of agents in Kenya and 68 per cent of the mobile money transfer market through Mpesa. The latter monopoly was quite recently cited in a World Bank report as a cause for concern.
BATA AND KPLC
From footwear to electricity supply there’s work for CAK to do.
Bata shoes’ short term rival the Servis Group pulled out of retailing in Kenya in July so a pair of Safari boots, for example, will cost you Sh2,199 when Servis’s near-identical Cheetah boots would have only been Sh1,899; and the Kenya Power and Lighting Company (KPLC but re-branded ‘Kenya Power’), the country’s only electricity distributor, continues to supply (or not) option-less customers with a poor service.
YOU MAY NOT HAVE READ THIS…
There is one group, however, who display monopolistic tendencies that you probably will not have read about in that context, not least we suspect, because our sometimes craven media dare not report it.
Scangroup, the massive media services company, by far the largest in Kenya, is also worthy or CAK considerations the Kenya Forum would suggest.
Already a hugely powerful player in the Kenya’s advertsing market in particular, Scangroup’s purchase of a 50 per cent stake in Ogilivy East Africa in 2010 further entrenched its monopolistic position, giving it access to high net-worth clients such as Barclays Bank and Kenya Airways to mention but two.
Drive down the road and the billboard you pass will probably have been placed by Scangroup. The advertisement you are listening to on the radio at the same time, likewise, and similarly with the commercial you watch on television in the evening or read in your daily newspapers.
HOW BIG IS SCANGROUP?
How dominant are Scangroup in this regard?
Well as revealed in Scangroups own annual report for 2011, the total advertising market in Kenya for the year was Sh65.44 billion, 41 per cent of which, some Sh26.8 billion, was ‘placed’ by media houses of which Scangroup placed on behalf of clients Sh21.46 billion. So Scangroup had 80 per cent of the ‘placed’ advertising market within its control in that year.
That’s good news for Scangroup and its Chief Executive Bharat Thakrar, of course. Its net profits rose by 42 per cent to Sh911.1 million. But is it good for the sector, or indeed for Kenya?
Regular Kenya Forum readers may recall that we referred to ‘ScamAd’ as they are almost universally known, in an article posted 29 December of last year, and we promised to return to the subject.
The monopolistic dominance of Scangroup and their ability to control the advertising market gives rise to many concerns on a number of levels.
As a result of Scangroup’s power media houses have to comply with their terms and conditions whilst media buyers can bring pressure to bear to ensure that media outlets do not publish adverse comments about them, including about Scangroup (that’s why you don’t get to read about it in the Nation, Star or Standard!).
Similarly, there have been allegations swirling round for at least the last two years that raise concerns at the nature of the deals done between Scangroup and, for example, some radio stations in Nairobi. Certainly greater transparency is required in this area.
CLOSE LINKS WITH BLUE CHIPS
There is also concern that Scangroup’s investors include CEO’s and managers from ‘blue chip’ companies who are also at one and the same time clients of Scangroup (so not just of interest to CAK but also the Capital Markets Authority given that Scangroup is a listed company?)
The Forum would have thought that some of these leading industry figures would also be concerned that Scangroup handle both the advertising for their company and at the same time that of their rivals.
ADVERTISING AND DEMOCRACY
Finally, there’s one area of concern that perhaps only the Kenya Forum has identified. Scangroup have 80 per cent of the ‘placed’ advertising market in Kenya in what is an election year. This we feel, is unwise.
For all these reasons the Kenya Forum suggests the Competition Authority of Kenya should take a closer look at ScamAd.