MultiChoice is remaining firm on its stance that a R500 million deal between itself and the SABC regarding the public broadcaster’s archive was not a merger, but a “standard channel distribution agreement similar to the ones we have with numerous other channel suppliers”.
The ruling came as a surprise as previously the Competitions Appeal Court and the Competition Tribunal had ruled the deal was not a merger. But an appeal to the Constitutional Court by Caxton and the SOS Broadcasting Coalition saw the parties argue that the agreement was a notifiable merger and that MultiChoice and the SABC had contravened the Competition Act by not notifying the commission.
The Competition Commission ordered that the deal be further investigated and despite roadblocks put in place by the SABC and MultiChoice (such as a lack of proper documentation and refusal to allow certain executives to give evidence), ultimately the ConCourt ruled the officials, under oath, should give evidence on the negotiation, conclusion and implementation of the agreement.
It was new evidence unearthed during this process that has given rise to the Competition Commission’s finding that the SABC and MultiChoice in July 2013 “implemented a merger transaction, without notifying the Commission, in contravention of the Competition Act”. The controversial R533 million five-year deal, signed by former SABC chief operations officer, Hlaudi Motsoeneng, gave MultiChoice the right to broadcast SABC’s 24-hour news channel and an entertainment channel, SABC Encore. Motsoeneng awarded himself an R11 million ‘bonus’ for signing the agreement.
But broadcasting stakeholders were convinced the deal was in reality in exchange for the SABC agreeing not to support encryption for the set top boxes required for all televisions once South Africa (finally) implements digital terrestrial broadcasting. Such a deal would preserve MultiChoice domination of the pay-TV sector.
In its findings, the Competition Commission said the SABC’s stance on encryption had vacillated from time to time, but the issues were made clear in its agreement with MultiChoice: The channels would “be broadcast or transmitted by or on behalf of the SABC, unencrypted and without any conditional access system and shall always be available and receivable by M-Net DTT Set-Top Boxes distributed in South Africa throughout the term, without requiring anything other than the installation of an M-Net DTT Set-Top Box”.
It was this that led the Competition Commission to find that the undertaking “influenced the SABC’s policy on encryption…”
The SABC, responding to the Competition Commission’s finding, said in a statement that it had noted with “concern” the ruling. It said it had subsequently “entered into a new commercial channel supply agreement with MultiChoice which in the SABC’s understanding, does not constitute a merger”.
MultiChoice group executive of corporate affairs, Joe Heshu, told The Media Online “both the [Competition] Tribunal and the Competition Appeals Court have previously ruled that the channel distribution agreement did not constitute a merger.
“We will make further representations in the process to be conducted by the Competition Tribunal”.
Former campaigner for the SOS Public Broadcasting Coalition, Sekoetlane Phamodi, who was involved in fighting the deal right at the beginning, said in a Twitter thread, the ruling, “Vindicates our protestation against corporate capture and destruction of our SABC by Naspers”.
It’s late on the DTT front.
MultiChoice bought SABC illegally (for 5 cents) to change encryption policy to consolidate & guarantee its control over premium content & TV matket ahead of listing (this was always the game plan).
DTT BENEFITS NO LONGER VIABLE.
— Sekoetlane Phamodi (@MrPhamodi) November 12, 2018