In this latest installment of Corporate Stories, we are going to tell the story of a young man, who dared to take on a mighty monopoly with his start-up.
The story navigates through the murky waters of corporate competition. It is about displacing a corporate monopoly and the perils of riding that success.
It navigates the intersection between crony capitalism, patient capital and executive exuberance. It serves as a lesson for any self-determined visionary out there who is building a start-up to take on the next vulnerable monopoly.
Defeating the monopoly
“Power is about to change hands,” a newspaper headline read in late 2006.
A week before then, on November 6, 2006 to be precise, a competitive bid was being held somewhere in the United Kingdom. For the first time, a “proudly Nigerian owned” company was about to displace a foreign owned monopoly that had cornered Africa’s largest market for about 13 years.
At stake was a bid for “Territory 70”, a commercial term for the Nigerian market; it was made separate from the rest of Africa by the owners of one of the most valuable content in the world after they recognized the value which demographics portends for pricing its product. Seven Nigerian companies submitted bids, but that night only one was favoured to win nearly 70 percent of the total package on offer. That win, would of course, be to the detriment of the behemoth that was a ruthless monopoly from South Africa.
As the bid came to a grand close, a local startup was set to do the unthinkable.
Nigeria’s HiTV was announced as the winner of Nigeria’s “Live A” for Territory 70, giving them exclusive rights to broadcast Premiership football matches in the whole of Africa, while the “Live B” offer was given to Free to Air Broadcasters in Nigeria and included a single non-exclusive premiership match.
It was a massive victory and the beginning of a new dawn for Nigeria. “Never again, will we allow a foreign monopoly take advantage of our market.”
At the heart of the victory was a young handsome lawyer called Toyin Subair.
His startup, Entertainment Highway Limited “HiTV” had just pulled off the unthinkable and was in a few months about to shift the pay TV dynamics in Nigeria. In his corner, was the Minister of Information and Culture, Frank Nweke Junior, who had promised that as minister, the foreign dominance of premiership rights in Nigeria would be shattered. His vision of seeing a Nigerian company own broadcast rights to premiership in the country was far more important than anything else. This promise was about to be fulfilled and there was no turning back.
The deal was reportedly worth over $28 million and with the government firmly behind the startup, no one was going to stop the successful launch of Nigeria’s first truly pay TV channel, which was taking the market by storm, with the crown jewel that was the Premiership rights. According to an FT article that chronicled the significance of this achievement, HiTV had spent about “$28m in 2006 to secure the right to broadcast English Premiership football for three years even before they had sold a single dish.”
It was stuff made of legends and had all the ingredients of success.
Behind this remarkable deal was Guaranty Trust Bank Plc, then led by the Late Tayo Adenirokun. The bank financed the transaction and reportedly took 15% equity in the company.
The political class also gave their support in full. Mr. Frank Nweke was so determined to ensure that a Nigerian company win this bid, he even accompanied them to the United Kingdom to ensure that broadcast rights to Nigeria was unbundled from the rest of Africa. It did not end there; to demonstrate this confidence, on the early hours of February 2nd, 2007, he arrived at the offices of HiTV to buy the first “receive equipment” from the company as it began operations the same day. Mr. Nweke remarked that the reason he had come so early to buy their equipment was “to show solidarity with Hi-TV,” because its CEO, the young lawyer, Mr. Toyin Subair, “embodied the Nigerian spirit.”
Toyin Subair or TSub, as some referred to him in his humble days in Surulere in Lagos, has always had a very infectious personality. A dashing looking guy and a smooth talker, Toyin, they remarked had a magic about him that drew the admiration of anyone he related with. It was like a gift, the type only the great Man from above, could bestow on someone sent to earth on a mission.
From his secondary school days in Federal Government College, Kaduna to his university days in Lagos State University (LASU), Toyin was loved and respected. Guys wanted him around and the ladies were enchanted and attracted to his charm and looks.
He graduated with a Law degree from LASU and soon joined the chambers of a notable law firm at Professor AB Kasunmu’s Chambers. There, he also charmed his colleagues and employers and soon became a favourite of the lead partner as he got close to the family.
As a young lawyer, Toyin took his job seriously and by leveraging on his tenacity, interpersonal skills and charisma, he quickly rose through the ranks in the law firm. His relationship with clients ensured more jobs accrued to the chambers and soon, he earned the confidence of his boss who perhaps hoped, he could one day lead the law firm in future.
He was known to close associates as a bit of an extremist; when he set his mind on something, he executed it with all his heart. Never one to do things in half measures, he embraced work and life to its maximum capacity.
He soon left Kasunmu to setup his own Law firm in 1997. It was named Abraham & co, Solicitors & Advocates. The name Abraham was Toyin’s adopted Christian name after he became born-again in the early nineties. As an extremist, he took his new found religion seriously and was very well known within pastoral circles. His conversion was a regular testimony and an inspiration to anyone who found it hard to break the shackles of inherited religious inclinations.
Business also appeared to be going well for the young lawyer. As is typical with the law profession, smart lawyers who resign from bigger firms often leave with close and often lucrative clients whom they had served in various capacities for years. For someone of Toyin’s charisma and interpersonal skills, it wasn’t difficult to upset the powers that be at AB Kasunmu. Abraham & Co started to grow and with time acquired notable clientele such as Microsoft, HP, Nigerian Television Authority, Multichoice and MNET in its portfolio.
Toyin was also very close to one Adewunmi Adedeji Ogunsanya, a close family friend in the nineties and through Adewunmi he often got briefs as a one of the legal advisers to Multichoice Nigeria Limited, operators of DStv in Nigeria and a future competitor. As a young lawyer and smart businessman, Toyin allegedly studied the business model for pay TV in Africa. He understood the dynamics of the business and how to broker deals with content providers. Unbeknownst to Dewunmi, the young Toyin would one day use his charm and tenacity to usurp him as the number one pay TV provider in Africa’s largest market.
Battle to stay on top
On February 1, 2007, HiTV was successfully launched as a pay TV station in Nigerian. In attendance was the erudite Minister of Communications and Information, Mr. Frank Nweke Jr. Also in attendance were reputable Nigerian industrialists such as, Mr. Felix Ohiwerie and Senator Olayinka Omilani, the National Vice Chairman, South West of People’s Democratic Party (PDP). Senator Omilani was the father-in-law to the young Toyin and proudly supported his son-in-law in his latest venture.
In addition to the premiership, HiTV also had rights to the Spanish La Liga and the Italian Serie A. They launched with about 17 channels including HiSports, HiSoccer, HiMix, HiNolly, Nigezie and Hi-Ovation. They also claimed to have signed a contract with the American NBA and would also air international channels such as CNN, BBC and Fox Sports.
The strategy here was clear. By using the premiership as the main driver of its business, they could quickly rack up subscribers and gradually get them exposed to other content that they had. In the cable business, sports and more sports, followed by news channels, reality TVs and movies were the keys to locking down subscribers.
But there was also one small hurdle. Nigerians were already used to watching premiership wherever they were; location did not matter, so long as you owned a decoder and a dish. This was a tall order for HiTV which could warrant significant capital outlay that they did not have. It will also meant setting up shops in every part of the country, where it wants to broadcast.
If not handled strategically, they could rile subscribers even before they started, so they decided that the way to go was to adopt satellite option. The difference was that while cable TV as line of sight service requires installation transmission facility in every city, on one location on a good satellite, they claimed, will enable HiTV to be received all over the country.
As Toyin himself opined back then, “We are now on Eutelsat W4, on a spot beam that covers the whole country. Nigerians will thus be able to view all our channels nationwide.”
The hybrid of cable and satellite would perhaps be the solution to one of the biggest challenges the young company will soon face.
As HiTV commenced the broadcast of Premiership football in August 2007, it soon came to appreciate the difference between rising to the top and staying there. At N3,000 per subscription, the company sold at a huge discount to its competitor DStv, which sold its subscription for N9000. HiTV’s decoder was also low in quality and lacked some of the features Nigerians were already accustomed to with DStv.
Considering that it still had limited channels, it could not rely only on the Premiership to court subscribers. They also knew football was mostly during the weekends and quickly faded once the games were over. Its strategy was to offer subscribers one-year deals of N36k in exchange for free decoders and access to their content for a year. While, DStv offered one-year subscription but you only had to pay for 11 months. The 12th month was free, but you had to pay for decoders.
By starting out with a price war, HiTV showed its hands early and told an already experienced competitor how it wanted to play the game.
In hindsight, this was perhaps a wrong move. Not to be cowed by the first major threat to their market dominance, DStv would fight back. They entered beast mode and deployed all the contents in its arsenal to ensure it kept the loyalty of its subscribers. It first yanked off CNN and Al Jazeera from HiTV and invested heavily in more content. Its Big Brother Franchise, which had in 2006 captivated Nigerians was extremely popular and still of immense value to viewers.
The reality program, keeping up with the Kardashians, which had just premiered, was a fan favourite. They also had the compliment of music channels, MTV and Channel O, and shifted strategy to developing more home grown content.
If there was party who had something to lose here, it was content hungry Nigerians who now had a choice to make and DStv made sure it wasn’t going to be a zero sum game.
Considering the flurry of content still available at rival DStv, families had to make an expensive compromise; to appease their wives and kids, soccer loving dads had no choice but to own both HiTV and DStv decoders. The division was clear as women and children would not trade any of their content for football.
It would be the first major defence thrown at HiTV – a sign, that DStv was not about to be pushed aside so soon.
Nevertheless, within a year, HiTV quickly racked up about 240,000 subscribers to DStv’s 200,000. Most of them were football loving subscribers who could not let go of their darling premiership. By 2009 subscription cost went up to N4,000. Despite this impressive number, it still fell short of paying back the premiership rights let alone servicing the existing loans. The company would have to achieve at least, 500,000 subscribers if it was to be profitable and boast of a comfortable cash rich balance sheet.
It was a tall order; just as balancing the books was a major challenge earlier on for HiTV, so were other teething issues. The company had major service delivery issues. Complaints flooded their customer service centers from all parts of the country. For example, after paying for subscriptions, it took the company days to activate viewing; customers became accustomed to going for days without service after making payments – there were more scrambled channels than content; customer service could not face up to the deluge of complaints they were getting and soon incurred the wrath of subscribers.
The quality of viewing soon dropped and service disruptions became a norm.
A thread titled “HiTV or Hi Rubbish” was soon on Nairaland, Nigeria’s most popular online forum. The opening thread encapsulated the major complaints being experienced by Nigerians.
“Dear Nairalanders, after HiTV succeeded in making us subscribe for 12-month subscription all because i cannot afford to miss watching my exciting premiership games, they have started with their Hi Rubbish.
“Do you notice they have been scrambling and descrambling before they FINALLY SCRAMBLED on Wednesday? I called their customer care and the girl that responded was merely laughing when i complained about this rip-off? What do you think i should do?”
The thread was vicious. Amid all these complaints, rumours started to swirl about the lifestyle and conduct of the charming and exuberant Toyin Subair.
Lifestyle of the Rich and Famous
In one story of his reported flashy lifestyle, Toyin was alleged to have thrown a birthday bash in London where he spent N5 million on champagne. According to media reports, the company’s account was debited for the bill. The media was on the prowl and reports started surfacing about his penchant for the high life. One report suggests he had about 10 flashy cars and was often seen driving by himself. Some claimed that he often travelled on first class when attending meetings abroad and flew nothing else but private jets for local travels. Others close to him revealed his high tastes for expensive designer wears, including wrist watches and shoes.
Toyin would deny some of these claims years later, insisting that everything he did was within the company’s corporate governance code. He however did not explain how he funded the flashy cars or if it was part of the company’s fleet. But as he came to learn later in life, perception is often reality, especially in the internet age where your image and profile can be distorted when shaped by bloggers and powerful influencers.
It is thus impossible to disentangle the story of the failure of HiTV from the flashy lifestyle of the mercurial TSub, who from his heydays in Surulere, was known for his charisma and style. A man’s reputation is often perfectly correlated with the success of his enterprise. When your business is doing well, accolades tend to follow. And when things go downhill, people look for scapegoats and more often than not, the man at the top is an easy target.
At the shimmering height of HiTV, Toyin Subair was the toast of the media and entrepreneurship community. Toyin in 2009 won the Young Manager of the year 2008 at the ThisDay awards and the City People Awards-in the category of the Entrepreneur of the year 2008. In 2011, he also won the award of “New Champions For An Enduring Culture” at one of ThisDay’s biggest award shows to date. The award graced the presence of Bill Clinton and Arnold Schwarzenegger. He shared the award with the likes of Chimamanda Adiche, Chiwetel Ejiofor and 2Face.
Toyin was also invited as a guest speaker in several entrepreneurial events, lecturing aspiring up-and-coming founders on how to follow their dreams. He would eventually come to realize that success has many fathers but failure is an orphan.
In February 2009, HiTV announced that it was having its anniversary dinner as a way of saying “thank you” to their dealers and “media friends”. When asked why it was necessary to have a dinner after just 2 years of operation, Mr. Subair responded uncannily:
“A whole lot, that we are all alive and well and that the business is growing stronger is so much to be thankful for and we are indeed GRATEFUL TO GOD.
“We are also expanding rapidly, opening friendship centres in partnership with our distributors so we can be closer to our customers and offer them a much higher level of service. We have already opened one in Kano and several more will be opened within the next few months.
“We also now have a more robust subscriber management system that has greatly improved our processes and removed a lot of the challenges we faced in the past. Our new office in Ikeja will be open to the public shortly and the location comes with ample space to serve our customers better.
“We are also on the verge of hitting our 200,000 subscriber mark after only two years of commercial existence and this goes to show the confidence Nigerians have in our service as they continue to acquire it. This is definitely worth celebrating.
“We are moving from being a startup to a full operational company. Whilst we were expected to outperform a foreign owned, financed and run 15 years plus business on day 1, we have worked very hard to do this in the last 18 months and are very proud of ourselves.”
This was the sort of response you would expect from a man bursting with confidence and looking into the future. It is how startup founders sound when they have the imaginary halo effect on them. In retrospect, it will also be unfair to read negative connotations into this response. HiTV was the toast of the media and had just displaced a cable TV giant – DStv.
The Business model that wasn’t!
With subscriber growth approaching 200k, his business model seemed to be super tight. To scale quickly his pay TV startup, his model was to focus first on sports (football in particular) and then gradually introduce other entertainment channels.
He confirmed this in one of his interviews:
“HITV was never set up to sell football only; it was circumstances that led us to use football at inception as our mainstay content. We have used football to gain the high-level of acceptance we hoped to get. Now is the time to go back to our original business model, which offers Nigerians unparalleled entertainment.”
The staying power of cable TV in Nigeria was not just about sports; it was offering a blend of content for women, children and organisations. Family entertainment had to be the goal for any composite content offering. Unfortunately, he had just lost rights to CNN, Discovery Channel and did not have MTV Base, the leading music channel in Africa at the time.
But HiTV did not just rely on sports. To the company, sports was football and they spent millions of dollars securing rights to some of the best football content in the world. The company was the major broadcast right owner for EPL, La Liga, Serie A and UEFA Champions League. It was only on HiTV that viewers could watch Premier League, Carling Cup, Serie A and the Champions League from next season.