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KIPCO delays OSN sale

August 25, 2020

Kuwait Projects Co, (KIPCO) the ultra-patient investor in Dubai-based pay-TV operator OSN (the former Orbit Showtime Network), will stay with the broadcaster a little longer. It has been looking to sell the business, or bring new partners on board, since 2018.

KIPCO says the Covid pandemic has created a downturn in in the local markets and it would wait until those markets recovered. Since December 2019 its holdings in the Panther Media Group Ltd (with Mawared) have been itemised as “Assets held for sale”

KIPCO’s half-yearly statement says: “A dispute arose between PMGL partners over ownership of certain shares issued in connection with capital calls made by the board of PMGL in which the Group has contributed. This dispute was finally resolved in March 2020 by an arbitration panel. As a result of this and contributions to further capital calls, the Group’s effective ownership in PMGL increased from 60.5 per cent to 87.6 per cent. In view of these developments, the management of Parent Company concluded that it was able to exercise control over the PMGL and therefore, it became a subsidiary of the Group in March 2020.”

“Given the reality of Covid-19, where things have greatly disrupted all businesses, we believe that it [the sale] is likely to be a 2021 item, but very much in forefront of our thinking.”

KIPCO hired investment bank Goldman Sachs in November 2018 to advise it on selling its 60.5 per cent stake on OSN. However, in March this year it increased its stake in the business to 87.6 per cent following capital calls and an arbitration hearing according to a filing made to the Kuwait stock exchange at the time.

KIPCO says that its OTT streaming service has also grown during the pandemic. KIPCO says its streaming subscriber numbers had grown from 80,000 some four months ago to 250,000 now, according to KIPCO group’s CFO, Pinak Maitra.

“The encouraging part is that without the partners, we are doing fantastic and with the partners we will hopefully be able to report even better performance,” Maitra said. “It is a great place to have after very difficult three years and to come out on the right side of it.”

The broadcaster has trimmed staff (down from about 1300 to 700) over the past year, and it has dramatically trimmed its sports coverage.

Back in June this year KIPCO reported that its operational turnaround had been achieved. “The streamlining of OSN’s business is being carried out successfully, with content cost rationalised and savings of $120 million against the contractual value in 2019. The pay-TV company also recorded a 28 per cent reduction in general and administrative expenses and staff costs in 2019 compared to the year before. The management team was strengthened in the necessary areas of expertise.”

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