MultiChoice has admitted that it “made mistakes” in its relationship with former Gupta-owned television news channel ANN7, but an internal probe has found that the firm did not engage in corrupt practices.
MultiChoice has also decided to sever ties with ANN7 by not renewing its broadcasting contract when it expires in August this year. Essentially, ANN7 will be booted off the DStv platform, which is owned by MultiChoice.
“In light of the on-going controversies, it will not be appropriate to renew ANN7’s current contract… Instead we are starting the process of finding a new black-owned local news channel that is free from any political interference,” said Calvo Mawela, the CEO of MultiChoice on Wednesday.
MultiChoice was briefing the media on the outcomes of its internal investigation into its relationship with the news channel and the fairness of its commercial agreement.
The probe was supported by Webber Wentzel and an independent audit firm, who reviewed five years of related payments information and emails, interviewed individuals involved. MultiChoice will not make its investigative report public as it’s “commercially sensitive.”
MultiChoice and its parent company Naspers have faced criticism amid allegations that both companies entered into commercial agreements with ANN7 and the SABC to influence government’s digital migration policy. Allegations of bribery and corruption surfaced, suggesting that MultiChoice and ANN7 attempted to influence and change government policy on the encryption of digital terrestrial signals and set-top boxes.
The allegations include that MultiChoice paid ANN7 R141 million per annum and a once-off amount of R25 million to air the channel on its digital platform, while the SABC was paid R100 million per annum to host its 24-hour news channel.
Mawela said the firm failed to do a due diligence on ANN7 given the “controversies around the television station and state capture in the country”. He also said MultiChoice was poor in the management of its contract negotiations and lobbying efforts with the television channel.
“We could have communicated better and we should have acted better on concerns over ANN7.”
Implication of Imtiaz Patel
The allegations stemmed from a copy of minutes of a meeting held between MultiChoice and the SABC in 2013 that emerged in the media. The minutes apparently show MultiChoice CEO Imtiaz Patel stating that the deal, which would see MultiChoice pay the SABC more than R100 million per year to include the SABC News Channel on the MultiChoice bouquet, would hinge on government pursuing a non-encrypted set-top box policy. In the minutes, Patel described the issue as a “deal breaker”.
Mawela said the amount paid to ANN7 was not “unusual nor abnormal” and was similar to that paid to other news channels on the DStv platform.
This included the R25 million upfront payment to ANN7. “There were prepayments made to the SABC and other channels as part of the channel negotiations and [the amount] is in the similar ballpark. It is common practice to pay for content including local news channels.” Although he didn’t confirm the total amount paid to ANN7, he said it is “above R100 million”. Mawela said MultiChoice couldn’t disclose the amount due to confidentiality agreements with ANN7.
According to media reports and #Guptaleaks, Patel was once a director of a company owned by Tony Gupta and President Jacob Zuma’s son Duduzane. Patel’s relationship with the Gupta family and his independence came into question. MultiChoice found that this was not a problem in the company’s negotiations with ANN7, which was recently sold by the Gupta family to former government spokesperson Mzwanele Manyi.
“Mr Patel’s relationship with the Guptas played no role in the terms negotiated for the ANN7 channel and that he acted in the interest of the company at all times,” said Mawela.
He said Patel has been cleared of any wrongdoing on contract negotiations with ANN7 and SABC.
“We confirm that following committee work [internal investigation] that Mr Patel acted in the interest of the company. The channel agreement was agreed by a collective management process and not that of an individual. This materially reducing the risk of corruption activity.”
The SABC payments and its channel agreement was not part of MultiChoice’s probe as Parliament has referred the matter to the Special Investigation Unit. MultiChoice is cooperating with this investigation, said Mawela.
MultiChoice was also criticised for the quantum of the payments to eMedia, the operator of 24-hour news channel eNCA. In its interim results to end September 2017, eMedia said its profits fell by nearly R100 million partly due to DStv renegotiating its license fee agreement and that of five other channels.
eNCA’s license fee was cut to R140.8 million from R267 million. SA’s switch-over to digital has been stalled for over nine years, as the government has missed several self-imposed deadlines due to disagreements between the government and private sector about the rollout of set-top boxes.
MultiChoice, which monopolises the SA pay-tv market through its DStv business, has argued that digital encryption of set-top boxes would benefit its competitors. Although the firm’s investigation has cleared it of all wrongdoing, it might face a full-scale investigation from broadcasting and telecommunications regulator the Independent Communications Authority of South Africa (Icasa).
Icasa plans to investigate a complaint by the Democratic Alliance (DA) against MultiChoice in November 2017 requesting that the regulator conduct an inquiry into the payments. The complaint by DA MP Phumzile Van Damme was referred to Icasa’s Compliance and Consumer Affairs division, which will consider the matter before it forges ahead with a full-scale investigation.