If the competition tribunal agrees with Caxton’s Moolman and rules that there has been a ‘merger’, it will have deep implications.
Last week, Caxton founder Terry Moolman took an almighty dip at archrival Naspers at the competition tribunal, in a curious spat with deep implications for the cash-strapped SABC. The background is that in July 2013, the SABC’s Hlaudi Motsoeneng struck a deal with Naspers’s pay-TV arm, MultiChoice, to launch a 24-hour news channel and an entertainment channel on its pay-TV platform. In exchange, MultiChoice would pay the SABC R100-million for five years — R500-million.
A good deal, right? After all, the SABC clocked up an operating loss of R600-million last year, so surely this would ease the strain? It may seem that way.
Bucketload to finance news channel
But throw in the fact that it’ll cost the SABC a bucketload to finance the news channel (more than R200-million/year, in all likelihood), and that it’ll give MultiChoice unprecedented exclusivity rights over valuable SABC archives: there’s no prize for guessing who came out tops.
Besides getting two new channels financed by a rival, MultiChoice also got something else. After the deal was clinched, the SABC reversed its position on whether the country’s new set-top boxes need to carry “encryption” technology — supporting MultiChoice and effectively hurting e.tv.
Moolman, for one, is fuming.
At the tribunal, his lawyers argued that the SABC was giving away the family silver while entrenching MultiChoice’s dominance — signifying a “change of control”. The SABC, for all intents and purposes, had become Naspers’s barking dog.
“MultiChoice has acquired the ability to materially influence the television broadcast business of the SABC through its ability to dictate the manner in which the SABC broadcasts or distributes its free-to-air channels,” he said.
No takeover by stealth
MultiChoice, of course, fiercely denies any takeover by stealth of the public broadcaster.
You might be wondering why Moolman went this far, lavishing Caxton’s cash on well-heeled lawyers. Is it just a long-standing grudge with Naspers chairman Koos Bekker? Or more?
MultiChoice CEO Imtiaz Patel, for one, seems mystified.
“[Caxton] has not to my knowledge applied for or been granted a commercial television broadcasting licence,” he says.
Well, in his papers, Moolman says that actually, Caxton is considering expanding into television. And besides, he says, Naspers “cross-subsidises a number of its print media assets with revenue generated from its television assets”.
Essentially, his argument is that if MultiChoice were to become especially profitable unfairly, it would hurt Naspers’s print media rivals, like Caxton.
If the tribunal agrees with Moolman and rules that there has been a “merger” between Naspers and the SABC, it will have deep implications.
Competition implications of ‘merger’
For one thing, it’ll mean the public broadcaster (funded by taxpayers) is essentially controlled by a private sector company. And it’ll mean the deal will be halted, pending a deeper probe into the competition implications of a merger.
But Moolman’s real prize may be uncorking Naspers’s secretive ownership structure.
Basically, Naspers is controlled by a few secretive companies which control its unlisted A-shares, which each carry 1 000 times the vote of the N-shares, which are listed on the JSE. The real power at Naspers remains in the hands of these murky entities — Keeromstraat, Nasbel and Wheatfields 221.
But quite who sits behind Keeromstraat and Nasbel (and where) is as hazy as dawn in the KwaZulu Natal midlands.
Moolman has fought for years to find this out. Last year, he intervened at the tribunal in a deal which would have seen Naspers buy 5% of Paarl Media from Lambert Retief. Retief then scrapped the sale, describing Moolman as a “vexatious litigant” whose only goal was to extract Naspers’s “commercially sensitive information”.
So if it’s all a big conspiracy theory, why doesn’t Naspers just come clean on who really pulls the strings?
This article first appeared in the Financial Mail. It is republished here with the permission of the author.
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