Econet Media CEO Joseph Hundah has said the company going into administration and has already appointed Ernst & Young accountants to take them through this process.
Speaking to Business Day, Mr Hundah is said to have claimed that Kwese’s free-to-air business was too small to sustain its operations, but one has to wonder just how accurate this is and whether it is in actuality the root cause.
When Kwese was still operational, they failed to meet licence obligations and channels started randomly disappearing from Kwese’s content roster. Later on there were reports of failure to settle licence fees for content already aired (i.e World Cup and the NBA).
A different report from TechCentral, also claims that Econet Media’s debts had reached US$130 million before the company went into administration.
A letter written to creditors reads;
Around November 2018, management entered into settlement arrangements with most of the company’s creditors,” the letter said. “All creditors with balances of up to $100 000 were paid in full. In the most part, creditors of the company with balances of more than $100 000 were paid 15% of their balances with agreement that (1) a second instalment will be made by the company around May 2019 (25%), (2) a second instalment will be made by the company around August 2019 (25%) and (3) a final instalment will be made by the company around December 2019 (35%). The company was unable to meet the May 2019 instalment.
Econet Media is said to have set a deadline of 30 June to pay a US$35 million installment to their creditors but also missed that deadline.
If that is the case it’s no surprise that partners such as Roku have pulled the plug and stopped working with Econet media altogether, to the dismay of Kwese Play subscribers.
The letter also blamed the “current macroeconomic conditions” in Zimbabwe -“which is the company’s primary source of funding“- for the turmoil they are in. If we are being frank the decline of Kwese started well before things took a turn for the worst and Kwese was also operating in other regions outside Africa. More profoundly, if they splurged on rights for the NBA and all other shows on their platform primarily for Zimbabwean subscribers then they had no idea what they were getting themselves into from the start.
Overall, it seems Kwese tried to acquire more content than it could afford in a bid to lure subscribers who would then pay for this content and when the subscribers did not lineup in their numbers, Kwese found themselves in a hole of their own digging.