Before he became the Managing Director of Multichoice Nigeria, the practice was to have expatriates’ from other African countries head the company. Today, John Ugbe has held that position for almost six years. In this interview with journalists, he discusses the company’s business model, its unwavering confidence in the economy despite the impact of the nation’s last recession on its business as well as the company’s various interventions in different sphere of the nation’s life. Olaseni Durojaiye was there and brings excerpts.
It’s been six years since you took over the reigns of Multichoice Nigeria, how has it been running the company?
As with every business, definitely there are challenges, but as you rightly put it. Nigeria is a very dynamic country, so I guess being Nigerian is very helpful. But I think the principle of business is the same everywhere, you have to adapt to your environment and try to provide the best service.
It’s been an exciting time running the company. There have been a lot of changes. We all know the economy has changed greatly in the last few years, being able to adapt the company in order to stay alive has been part of the challenges; it has been an interesting time.
Talking about the changes in the economy, how has the economy impacted on your business, particularly during the recession?
Obviously the impact of the scarcity of foreign exchange was very big on our business because we have a lot of foreign costs; satellite cost, content cost that come in United State dollars. We also have to import equipment. These had quite an impact on our operations. We’ve tried to as much as possible to absorb and continue to provide an excellent service to our customers by adding new and fresh contents; we have also had to re-jig our services. We have been investing because we believe that on the long run the economy should fix.
It is no secret that in the business of media entertainment, content is key even as the cost of content continues to rise. This means that we tend to pay a lot. And it is no secret that the movement of the dollar against the naira, officially has increased, unofficially, it is even more than what it was two years ago, which means cost of our business had to double in a two year period. For any company to have cost of business double automatically it could do a lot of damage to it. The foreign exchange challenge affect the ability of your company to procure US dollars denominated content?
The fact that the exchange rate doubled doesn’t mean salary is increased and that was why we refused to do price increases until after a year. Inflation has been double digit, 16 to 17 per cent in the last few years. We try to re-jig the business and continue to provide excellent service with minimal 5% increase in the last year and continue to keep in touch with whatever is happening in the market.
A recent report by the Nigerian Economic Summit group Business Confidence Monitor indicated a show of optimism in the Nigerian economy despite the recession and the many challenges that businesses operating in the country are faced with, do share such optimism?
Like we have always said, we are Multichoice Nigeria; we have nowhere to go to, so we are very optimistic about the Nigerian economy.
The economy appears to be stabilising, inflation is not moving up anymore and the economy is beginning to record some positive growth; so definitely we’re very optimistic about the economy recovering and even recording growth.
The price of oil is a bit stable and we are back to exporting oil quite a bit too and the budget is also ready and government is implementing it. However, even with that optimism, we must face the reality on ground and the reality would mean we have to do business in an unusual way, we have to stabilise, grow, take baby steps and hope that these indices continue to grow over time, and there is no big shock to the system again.
As part of government effort to improve the ease of doing business in the country, a presidential committee to the effect was inaugurated some months back and many believe it has since gone to work, has your sector been impacted by the committee’s work in any way?
I think it’s quite early in the day for that but we’ve seen quite a number of announcements and changes. I will say it is as simple as even traveling through the airports, it’s a lot easier now, and a lot of multiple checks have been removed. I recall that the Vice President was there sometime back; we’re quite optimistic that if this continues we will see more improvement as regards ease of doing business in the country because I think it pays us as a country to make it very easy to do business here because, obviously, a lot of companies that want to come in and do business here will probably take that into consideration. Of course you will agree with me that the more foreign investments we get into the country the more the benefits for the country and its people.
You talked about your company’s optimism in the Nigerian economy and insinuated that the company is a Nigerian company that is here for the long haul; in concrete terms, what new investment is your company planning to demonstrate that confidence in the economy?
It is continuous investments from us. I think it is also important to make it known that a lot of times we invest not from the profit taking point of view; a lot of the investments that we do are also in form of interventions.
If you take Boxing for instance, when we re-started boxing it wasn’t getting sponsorship but we still went ahead and invested in the sport and things have since been getting better; the brand is built, we’ve been able to attract other sponsors into it; we’ve also attracted viewership.
When we started the Boxing fiesta two years ago in 2014, the indoor sports hall at the National Stadium, Surulere, Lagos, had not been used for any sporting event for a long time outside of the Basket Ball League that we hold there and I know what we went through trying to just clean the place and get it ready for boxing; by the last boxing event that we had there before we took it to Ibadan, Oyo State, the place was packed full with boxing fans.
We had people like Joe Lasisi and Jeremiah Okorodudu in attendance, sitting there beside each other, remembering their old bout when they had their rivalry.
They said the place had never been this filled but for boxing bout in a long time. That is part of some of our investments and we will continue to generate interest around the boxing and other sports.
Besides, we want to continue to create jobs in the country and I think that entertainment and the sports hold a very big opportunity for us and, for us it is how do we develop and how do we create jobs for people.
We always tell people that when you hear a movie or a series people tend to think of actors and actresses, but that’s probably the smallest set of people.
If you talk of a series or a movie where you have the set designers, the costumiers, people that make clothes, make-up artistes and the likes, there is an entire spectrum of jobs that are available from just one movie and we need to understand that and see how we can ensure that we create those jobs. I think the US has done that very well and have been able to create a very big employment out of entertainment and sports.
The annual boxing competition is yet to hold this year, how soon are we expecting this year’s competition?
It will hold very soon; in the next two months at most. It is probably going to be bigger. After each competition, we always go back to the drawing board so that we can plan something much bigger. I believe we are coming with a much bigger competition this year.
Going back to content, what is the rationale behind your company’s acquisition of the rights to WWW, the wrestling championship?
Like I said earlier, we are not fixed on one thing. For us we will continue to improve and add more fresh content and it reflects in the number of channels that we have. In the last two weeks we have been showing a lot of athletics, some live, and we look forward to seeing like minds locally come in and sponsor athletics so that we can build the sport. In our glory days in athletics we had three people out of the eight people in the finals of the Olympics 100 meters race. Wrestling is also very popular in Nigeria. As a kid, I remember that the American wrestlers used to tour Nigeria, the likes of Mighty Igor and the rest of them; and we are saying why not a Nigerian in the WWWE. The same way we have been shown international boxing matches. We look forward to showing live wrestling matches, we’ve shown live boxing matches, and that is what we always say, when we acquire international rights to contents and we bring it down here it is not for the profit taking, it is also an opportunity for us to learn and to see how we can also develop the games in the country; to think that those people used to tour Nigeria, maybe we can get that happening again, may be some of the young people will be inspired to take to wrestling. But we are very excited about the acquisition, we can’t wait to start, we will be showing WWW live as they are happening in the US in the night.
Are we seeing the Floyd Mayweather versus Conor McGregor fight?
Absolutely, please mark that date so that you would see when real boxing take place.
What has been the impact since your company introduced the Igbo movie Channel on Africa Magic? Is there a mechanism in place to measure impact of such intervention?
One of the ways to measure the impact is through the number of content that are being churned out, so that tells you that there are a lot of producers out there. Again, if you look at the awards, if you look at the movies that were nominated you will see a great improvement over the year; what that mean is that there are more, and people are trying to outdo themselves which means that there are improvements.
With everything that we do we always try to see whether we can measure. One of the things that we did with the resource centers was that we have to go and look for some of the students that went to the school 10 years ago when we introduced the resource centers, we were able to pick out some who are almost medical doctors now, we just asked them what impact did it have on them and you can see their enthusiastic nature because I think it is very different for you to learn from the textbook and when you can actually sit down and watch surgery being done.
One of the most powerful endorsements for me actually came from a medical doctor who called and said he wanted to have it in his alma mater, and I said no we don’t sell it and he said no he wants to pay for it.
I asked him why are you so interested in it so much that you want to pay for it, and he said he went to a missionary school, he is a medical doctor, he said I knew what it was like studying the way he did, he said he actually studied from a photocopied text. Do you know that until I cut somebody open I didn’t know what I will find? He said he was just watching and he realised that he had watched a whole surgery on the programme. For me that kind of feedback tells you that you are going the in the right direction.
Should your customers expect a price hike now that you have added some more contents?
In the past, we don’t add channels and increase tariffs. It has never been the company’s business model, it is an aggregate service, and that takes me back to investment in the local market. We believe in our movies, entertainment generally.
That is the model of the business for the future, we pioneered the African magic channels which is very popular not just in Nigeria but around the continent and the world. Why, because we believe in our stories. We need to rely on our own stories; we can’t continue to rely on people to tell our stories. We also believe there is a lot of creativity and big opportunity in doing so.
We needed someone to believe in the investment and the growth of our entertainment and that is why the contribution of the entertainment sector to the nation’s GDP has risen from nothing to about 13%. And we believe the opportunities in that sector are even a lot more than that. However, it will take collective investment. It is not just putting in money there is a lot of capacity building, equipment, studios. We have built lot of studios locally. First of all, you need to have a market in place, and then you will have willing buyers and sellers.
When we introduced the African Magic Igbo, there was that question but gradually you have had a lot of people investing in Igbo movie making. We have continued to improve on content. We are producing more local content than we have ever done. We recently acquired rights of the famous WWE Wrestling, if you look at it critically, we are adding content.
We have launched quite a few channels in the last 18 months, such that there have been additions to the channels. Our business is over a long period, not a business that you start today and take profit tomorrow. We always look very far ahead. We have been in the country for twenty-four years. There’re very few companies in Nigeria that have been here for that long. So, we would continue to improve in terms of content while trying to minimise cost.
The world is moving Digital Television Broadcasting but it appears Nigeria is slow in joining the train …
(cuts in) Digital is a very popular word for us, because DSTV itself is digital. We pioneered digital television very early in this country. It would interest you to know that Africa was the second continent, the second operator in the world to launch digital television, even before America and Europe.
I think we are contributing our quota. First, we introduced digital on satellite and then, digital on terrestrial with GOTV, offering which is what our sister company offers. Even before that, we had the mobile offering which the digital TV until it was phased out. We have been pioneering digital because we understand digital and to a large extent, there is digital TV in Nigeria. Of courses, the regulators and the government would make statement on the progression of how much courage that exists.
Another issue that has continued to trail your services has to do with the problem of signal degeneration during bad weather condition. Critics of your company continue to insist that this does not happen in other markets and expected that your company would have found a lasting solution to this and reduce broadcast downtime.
As with any satellite communication, is it C-Band which was the big dish to Ku-Band which is the small dish with precise and correct signal, the signal can be interrupted. It happens everywhere in the world.
There is something we have been pushing for a while. It’s like your car being taken for repairs at the mechanic workshop. If you are in Lagos for, instance, where the wind is very strong like the beach very close to us here, there is tendency for the dish to fall out of line.
However, it will continue to work but if you check the signal strength, it would be fluctuating; it could be 50% signal strength. So, it will continue to work. What actually interrupts signal is cloud, thick cloud; you remember that you get interruption just before it begins to rain. But what we have always canvass is that from time to time people should call in our certified installers to come in and carry out a check on their dishes, the same way that people take their cars for servicing periodically.
Your organisation is big in sports especially in the acquisition of major European football leagues, would you say football is the mainstay of the company?
We don’t really emphasise on football because it is just one of the many rights we acquired. There was a time we didn’t have access to these rights and business was moving on just fine. Our business is not built around one property which was why when we were talking about investments in movies and studios, I didn’t bother to mention football.
We tried to bring in the best as much as we can. May be we are not even looking at the positive perspective of bringing these rights to the country. There is a lot that we can learn from these rights. At a time, we had partnership with the Nigerian Football League and we brought the league to the viewing public and everyone agreed that it was good.
This was the same thing that we did with the Nigerian Basketball league, not only did we sponsor it, we also televised it. I think we don’t even usually see the effects of such rights, apart from watching on television. Did you know that shortly after putting the basketball league on television, Nigeria qualified twice in a roll, for the Olympic Games? Apart from that, did you know we also beat Angola for the first time? Until then, we had never beaten Angola. But it is essentially because the boys were able to play regularly as there was a lot of development. It is the same thing that we did with boxing. Now, we now have a regular boxing show every year.
The talk about Pay per view just won’t go away even after so much explanation from you and your company. However, the new twist to it borders on whether or not pay as you watch is feasible in Nigeria?
Would you rather pay your subscription then pay another extra for the Mayweather fight or would you rather have it as part of your subscription. The promoters of Mayweather are doing a great job in promoting the fight. The fight would be on pay per view in the US. And in addition to their television subscription, you will pay to watch that fight. The channel for the fight will be opened for the match and after the match, it would be shut down. The last time that Floyd Mayweather fought Manny Pacquiao, the pay per view subscription was about 100 dollars. If you change it to naira it is about N31, 000.000 (thousand naira). That was what subscribers who wanted to watch the match had to pay to see it.
That is why we try to educate people that the business model does not allow for pay as you go here in Nigeria, because that would mean that you want to remove your smart card and when you return you slot it in and continues to watch. The way you buy content is not for me to come to you with your movie and say I will take your movie and I will put it on between 8 and 10 pm then I will count how many people are watching and then, I will pay you based on this number of people. That is not how it works. If you are content supplier, you will not agree to sell your movie that way.
Again, the satellite is one way communication. On satellite, your decoder never talks. It is not telephone. We have no way of knowing if your decoder is on at home or not. With the phone I can tell if you have picked your call. But with decoder, it receives, it does not transmit.
Check how many movies there are on the channels and imagine what it actually takes to create one channel on the platform. So, the business model is very different. And it is like that everywhere in the world. It is easy to argue that how about the volume of subscribers we have? Ok, but how about in the early days when we had 30 subscribers and more than 100 channels? It is like a restaurant, you cannot say when I enter into a restaurant, if I eat half the rice, and a plate is N3000, I will then pay N1, 500. You can as well stretch it further by saying I take a bottle of Coca cola, if I take half, I will only pay for half.
What sort of partnership do you have with Nollywood
Nollywood is a name of an industry and we have lots of producers who are collectively known as Nollywood. We partner with a lot of producers inside Nollywood. Our sister company, African Magic, has its own production, acquires or commissions. These are the three different models by which we continuously engage with the industry. We also engage in a lot of capacity building and training. We have the biggest movie awards in Africa, the AMVCA, because in everything, if you provide reward for excellence, people tend to work harder. So you have to create a market so that there would be opportunity for that.
In what area is your company impacting the society by way of corporate social responsibility initiatives?
We’ve been giving back to the society in a few different ways? One of our Corporate Social Responsibility initiatives is our partnership with the Sickle Cell Foundation. Two months ago, we had an outreach in Lagos with the foundation, where tests were carried out on people at no cost. We have a great passion for the sickle cell issue because with test, you can easily detect who has it or not. Nigeria is one of the countries where it is quite endemic. So we throw our weight behind such initiatives.
We also have our school initiative. They are used as resource centers. We train teachers so that they can be able to use video to teach their students. The Discovery Channels which have a lot of content for learning are there in the decoder.