TELECOMMUNICATION companies (Telcos) Digicel and Cable & Wireless have until next Tuesday, April 16, to respond to a suit brought against them by broadcaster VertiCast Media Group in which it is seeking an order from the court to force the telcos to show its CSport channels on their cable network in Jamaica, details from the affidavit filed in the Supreme Court last week show.

The telcos have refused to show VertiCast Media Group’s CSport channels throughout the region since it outbid their joint venture Caribbean Prime Sports Limited — the operator of regional sports broadcaster RUSH — two years ago for the English Premier League over the 2022/23 season to the 2024/25 season. Cable & Wireless cited the cost that the product was offered as hindrance to a deal, saying it would have presented challenges for consumers. Digicel, on the other hand, simply said it would be unable to broadcast the league.

The broadcaster is also seeking damages in lieu of what it deems is lost business from the actions of both Digicel and Cable & Wireless which trades in the consumer market as Flow, though the amount of money being sought was not outlined in the affidavit.

Helping to marshall the claims against Digicel and Flow is attorney, lecturer and former senior legal counsel at the Fair Trading Commission (FTC) Dr Delroy Beckford along with Jacqueline Cummings. With Beckford’s extensive knowledge of competition law, VertiCast is hoping that the advice it has received and taken to court claiming Digicel and Flow have been engaging in anti-competitive behaviour towards it will hold up.

All parties return to court on April 19 along with the FTC which has been summoned to make submissions in the case.

But, as they get ready to give evidence in their claim, it is clear that VertiCast is banking on a favourable outcome if it is to realise long-term success. That’s because the company’s business model was projected on getting access to both telcos’ cable network for its channels to reach more consumers, according to VertiCast’s investor presentation from April 2022, a copy of which has been obtained by the Jamaica Observer.

In it, VertiCast, seemingly confident that it would have been able to negotiate deals with Digicel and Flow, based its revenue model off accessing approximately 650,000 cable subscribers around the region. And though both have refused to show VertiCast’s
CSport channels on their cable networks, the media group said it has signed broadcast deals with more than 20 cable operators regionally, most of whom are smaller players, “at market rates”.

Digicel and Flow, it said, were offered similar deals. For its part, VertiCast has been forced to turn to its digital app to facilitate distribution of the Premier League and other sporting products it has shown in its two-year existence.

It is not clear how many subscribers VertiCast has or had around the region. It doesn’t provide those figures, though attrition since it showed its last Premier League match in February would have caused a decline in subscribers. But the number of cable operators it said it has deals with now is far fewer than it said in 2022 when, in an article published on Trinidad and Tobago-based online newspaper
wired868.com, VertiCast president and CEO Oliver McIntosh said he had deals with “close to 40 cable operators” in multiple Caribbean nations.

In its investor presentation it said it had targeted 80-plus cable operators. The closest one comes to understanding how many subscribers VertiCast has was outlined in the Trinidad and Tobago
Guardian newspaper with which VertiCast has a relationship. In an article published a year ago, McIntosh was quoted as saying the company has 60,000 registered users in Trinidad and Tobago, which is its second largest market after Jamaica. It has a deal with a small cable operator called Amplia in Trinidad and Tobago. In Jamaica, subscribers were only able to access VertiCast’s products through its app.

But VertiCast was never hoping to rely on its app for revenue generation. Its investor presentation from April 2022 showed it expected its digital app to account for one per cent to 2.5 per cent of its subscribers with revenues from it projected to reach more than US$567,426 this year, up from US$425, 569 last year. At best, that was just over 1.5 per cent of VertiCast’s projected revenues which it had expected to reach US$34 million this year. Most of that revenue, about 60 per cent of the total, was projected on cable subscription generating around US$20 million per year from 2023 onwards. The rest was expected to come from a combination of rights sales, advertising & sponsorship and production.

With Digicel and Flow refusing to do business with VertiCast, an industry insider said it could safely assume that those projections are not being met, putting the company under pressure from shareholders, creditors and subscribers. Another industry insider with whom the
Business Observer spoke about the matter said much of the projections made in the investor presentation could be called into question.

For example, it was pointed out that though VertiCast told investors that its content “will be” distributed on Digicel and Flow cable networks, there was no mention of agreements needed, which along with its targeted US$2.50 cost per subscriber was labelled as being “bogus”. Holes were also poked in the claim in the investor presentation that VertiCast has a host of other exclusive sporting content such as NBA and Formula 1 since US-based sports broadcaster ESPN has the rights and is still holding that right in the Caribbean market for them at this time.

“They had a massive overshoot on cable subscription revenues,” yet another industry insider told the Business Observer. “No entity gets US$2.50 average per subscriber for 650,000 subscribers with only two or even three channels.”

The impact from this is likely to be felt at its free-to-air broadcaster, Jamaica-based
CVM TV. VertiCast acquired the entity from the Michael Lee-Chin-led AIC Barbados. The cost was not disclosed, but again a note in VertiCast’s investor presentation gave a hint with a proposal to acquire assets for US$16 million.

VertiCast, in the investor presentation at the time, said it intends to centralise content and operations which it has done at the CVM TV location, and from there will spread across all markets and on all channels to leverage spend and increase revenues. It said it was also looking to leverage the content to help drive revenues at CVM TV which was projected to reach US$6 million in 2022 before rising to US$7.6 million in 2023 and US$10.1 million in 2024 before levelling off at US$11.5 million the next year, according to the investor presentation. It is not clear how much of this has been achieved and the extent to which the non-deals with Digicel and Flow have affected the projections.

Meanwhile, as VertiCast prepares to return to court next Friday to get a ruling on its claims, subscribers of the Premier League in the region remain uncertain if they will be able to legally watch matches again before the season ends on May 19.

The Premier League, in response to Business Observer queries about the situation in which the league is not being shown in the region, said, “We don’t have a comment on this.”

However, we understand that the Premier League is aware of the issue and is working to resolve it soon.

So far, McIntosh has not responded to questions sent to him by the Business Observer including about the issues it is facing with the satellite and production companies. Neither Digicel nor Flow has responded to VertiCast’s suit though Flow last week promised to issue a release on the matter. VertiCast is also yet to directly address demands for rebates from its own subscribers. A notice on its app said the company was suffering “a critical failure of the feeds” and was “working around the clock to fix the issue”.