…The True Story behind The Fall of HiTV as Told By Toyin
Subair
Why
HITV Failed, By Toyin Subair
Toyin Subair, former CEO of HiTV
My great mentor asked me one day, a few years ago, why
after the appointment of a Receiver/Manager by GTB over the assets of HiTV I
gave up fighting and just rolled into a semi coma.
He said this because; he knew how hard we fought to
save it. I responded with the story of King David crying to GOD over his sick
child but then quickly wiped his face off, ate and started drinking, when the
child was pronounced dead.
You really just must know when to move on so that you
can see and take the future opportunities that will come your way.
Thereafter, Solomon, the wisest and richest ruler of
Israel was born to David because he looked and lived forward.
People who care, ask me what happened to HiTV and
others in their supreme wisdom profess their own reasons. I have kept my peace
and quietly moved on in life, until I wrote an article recently about 1 million
Digital Jobs from the Creative sector. I realise, however, that if I am
throwing a challenge to other entrepreneurs to be bold and creative, I, who
used to be a poster boy for a generation and who failed after 5 years of a
great business endeavour, owed it to them to share my HiTV experience.
Choose your shareholders carefully and know the implication
of every clause in your Shareholders agreement, if you are going to sign one.
HiTV collapsed essentially because of a clause in our
original Shareholders Agreement, which allowed a group of founding shareholders
to block the company raising money or selling off a subsidiary. This right was
exercised to block our capital raise because it was believed to be a possible
ploy by another group to take control of the company. We the management were
caught in the middle and it took us another 8 months to pursue the alternative
that was acceptable to the shareholders but by that time the equity market had
gone bust, leaving us groveling all over for debt.
Every power you give up has future ramifications so
don’t sign away your life for what may be a quick fix or a “morsel of bread” as
it might come back to bite you. The same right you give to Mr A and is used
wisely, will in the hands of Mr B be used to destroy your dreams.
I failed to know and manage my investors properly,
which made it hard for me to mediate when they didn’t see eye-to-eye.
Perception is EVERYTHING in Nigeria
Your neighbour, banker, staff, bloggers, enemies are
watching you and it is not what you are that matters but what others see and
are saying about you.
Once you are funded by other people’s money, either
investors or bankers, it matters what they think. So your lifestyle must be
measured. Even if you have access to other sources of income, you must be
prudent in spending and seen to be prudent else it will be assumed that you are
“extravagant” and/or diverting other people’s money for your own personal use.
Solely because it is common place in Nigeria for
executives to mismanage corporate funds, people are quick to judge and assume
every situation is the same . I never touched company money or take a single
bribe or kick back. HiTV had full corporate governance rules in place and a
budget that was jealously guarded by a Board that sat 6 times in a year. Even
when I went out or travelled with a supplier, I always insisted on paying, but
only my shareholders and management team knew that. This forthrightness of mine
made me throw caution to the wind since I knew I was clean BUT unfortunately I
didn’t realise the negative impact it could have on my reputation. The first
thing your adversaries or haters target in order to bring you down, is your
reputation. Protect it.
Whatever you do, train people and invest in them
One thing we did right was to invest in the lives of
our people. I inspired all my staff, which grew to about 380 plus, in 6 locations
in Nigeria and a London office, including over a thousand dealers, by making
sure I led by example, sent them on trainings, exposed them to the
international market and bought them books to read about Media, and very
importantly made them know we were all in the same boat. If I was comfortable
they also had to be, and if they were going through pains, we had to do it
together.
I have always marveled at the Receiver/Manager and
people who thought HiTV could be locked up with chains? HiTV is today a force
in different companies making or waiting to make a difference.
However, make sure the people you train and inspire do
the same to their sub-ordinates. Usually Nigerians are scared to pass knowledge
for fear of being replaced and so you have to teach them to let others fly.
Reading the 1 Minute Manager meets Mr Monkey taught me not to micro-manage and
get people to earn their pay so that I can be free to do the bigger things. The
balance to delegation is to make sure there is a system to ensure that those
who are working are justly rewarded.
In the absence of a technical foreign partner, we
learnt our trade on the job and intensive trainings and we were just
implementing our robust researched systems and processes when the company was
closed down. How I would have loved to see its results.
Equity Vs Debt
We gambled on building a company with debt with the
hope of converting it to equity once we proved the model. As I said earlier, we
were impeded from doing this at the right time. At 25-27% interest on debt,
most businesses cannot survive and you will be a slave to the banks for life.
That is why they take collateral from you. They lend against your collateral
not your business case. Regardless of our strong cashflows, the funding
requirements continued to increase. Similar businesses in Europe like Sky,
Virgin, Polsat etc had worse debt profiles whilst building up their Brands and
subscription models but their markets have sophisticated equity and debt.
Unfortunately, we have no sophisticated equity market
and I mean Angel investors and/or Venture Capitalist in Nigeria and without
that, who can survive?
It pains me to admit that someone told the then
Minister of Information that Nigerians can’t fund our type of business and I
was really hoping to prove him wrong but Alas!
We paid 40 million dollars for the first year of the
second term of the EPL from mostly equity. But still had to come up with a
guarantee of about 70 million dollars for the latter 2 years and in Nigeria,
guarantee requires cash in bank. The alternative bank we were forced to use
despite all their assurances and being offered half of the amount by another
Bank failed to issue same on that fateful Tuesday and only offered it to us on
Thursday. Meanwhile the EPL sold it to our competition on Wednesday morning.
Watch your debt profile. HiTV was paying an average of
1.1billion Naira approximately in interests and guarantee charges annually, for
over 5 years! For a new company, we did a damn good job but really got blown
out once our house was divided. I never live by debt and so was really ignorant
about how interest works up till HiTV and of course since then you won’t catch
me near it. But what do you do when you have to? They say internationally that
“equity is more expensive than debt”, but that is NOT true in Nigeria. Debt is
way too expensive and destructive.
At the end of it all I was sued in my personal
capacity for the debts of the company by the bank, but we have since sorted out
our differences, agreed, signed and filed terms of settlement in all legal
actions. The Managing Director simply told me, when we finally met, that since
we all owned the company, I had to pay out of the liability and not just dump
it on them. It made total sense to me and I offered them what I had, they
accepted and that was it. Fair is fair.
You can’t avoid a lot of skin in the game because
investors will be looking for this.
You need Government and regulation on your side
I
ignored government to my peril. The competition spent a lot of time courting
all arms of government and I was a simpleton. We just expected the whole world
to cheer us
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