Gupta TV’s big bid deemed ‘il­le­gal’

CityPress - - News - SU­SAN COM­RIE in­ves­ti­ga­tions@city­

The Gup­tas’ am­bi­tious plan to turn ANN7 into the coun­try’s pri­mary source of TV news was dealt a sig­nif­i­cant blow af­ter an in­de­pen­dent le­gal opin­ion warned that it would be il­le­gal to award them the li­cence.

The In­de­pen­dent Com­mu­ni­ca­tions Au­thor­ity of SA (Icasa) put out a ten­der for the cov­eted free-to-air dig­i­tal broad­cast li­cence in 2014.

In­fin­ity Me­dia Net­works, which owns ANN7, is one of four bid­ders – the com­pany is 40.25% owned by var­i­ous mem­bers of the Gupta fam­ily and 9.45% owned by Pres­i­dent Ja­cob Zuma’s son Duduzane.

Doc­u­ments filed as part of its bid show that In­fin­ity wants to go head-to-head with both the SABC and to be­come the first free-to-air, 24-hour news chan­nel, which will broad­cast news from all nine provinces in English, isiXhosa and isiZulu.

The li­cence would al­low them to move off the DStv plat­form, where they have a reach of less than 2 mil­lion peo­ple, to free TV, where their reach could be as high as 12 mil­lion view­ers.

But a leaked le­gal opin­ion com­mis­sioned by Icasa from the law firm Mkha­bela Hunt­ley Adek­eye Inc has warned the reg­u­la­tor that award­ing the ten­der to In­fin­ity would be “in con­tra­ven­tion of the prin­ci­ple of le­gal­ity”, and ad­vised it to re­ject In­fin­ity’s bid.

De­spite re­ceiv­ing the le­gal opin­ion al­most a month ago, Icasa spokesper­son Paseka Maleka said on Fri­day that the reg­u­la­tor “is still con­sid­er­ing all ap­pli­ca­tions and sub­mis­sions re­ceived”. “No de­ci­sion has been made yet as all ap­pli­ca­tions are be­ing de­lib­er­ated on through in­ter­nal pro­cesses,” he said.

Ac­cord­ing to the le­gal opin­ion, the key prob­lem with In­fin­ity’s bid is that the com­pany con­tra­venes the for­eign own­er­ship clause in the Elec­tronic Com­mu­ni­ca­tions Act be­cause it is 37.1% for­eign-owned and sub­stan­tially con­trolled by one of its ma­jor share­hold­ers – Es­sel Me­dia in In­dia.

In writ­ten re­sponses, In­fin­ity’s lawyers ar­gued it should still be granted the li­cence on the un­der­stand­ing that it would change its share­hold­ing af­ter it was awarded the li­cence.

“Our client, quite can­didly and hon­estly, dis­closed the fact that it does not, as things cur­rently stand, com­ply,” In­fin­ity’s lawyers stated.

“Our client in­di­cated that should it be given a li­cence, the share­hold­ing will change.” De­spite In­fin­ity pre­dict­ing that it would be mak­ing yearly prof­its of R534 mil­lion within 10 years, it ar­gued that it was un­rea­son­able of Icasa to ex­pect it to “go through the trou­ble and ex­pense” of chang­ing its share­hold­ing at this stage.

“There is, sim­ply, no rea­son to change the share­hold­ing at this stage be­cause our client is not in a po­si­tion to as­cer­tain whether or not its ap­pli­ca­tion will be suc­cess­ful,” a sub­mis­sion from Au­gust 2015 states.

“It can­not be ex­pected of our client, at this stage, to go through the trou­ble and ex­pense of chang­ing its share­holder’s agree­ment and for­eign share­hold­ing to com­ply with this sec­tion of the act, when it is not even cer­tain that the li­cence will be granted.”

How­ever, this ar­gu­ment does not ap­pear to have con­vinced Icasa’s le­gal ad­vis­ers.

In their opin­ion, dated Jan­uary 26 2016, they warned the reg­u­la­tor that “the au­thor­ity does not have the dis­cre­tion” to agree to In­fin­ity’s pro­posal, and “would be in con­tra­ven­tion of the prin­ci­ple of le­gal­ity and sus­cep­ti­ble to a le­gal chal­lenge” if it did so.

“Ap­pli­cants,” they state, must “be el­i­gi­ble to be granted the li­cence as at the time of the sub­mis­sion”, and con­don­ing In­fin­ity’s non­com­pli­ance would be “ul­tra vires [be­yond the le­gal power or au­thor­ity], or unau­tho­rised, as a re­sult”.

De­spite the pres­ence of Duduzane Zuma’s Maben­gela In­vest­ments as one of the share­hold­ers, the opin­ion also noted that In­fin­ity “did not pro­vide any ver­i­fi­ca­tion cer­tifi­cates or other sim­i­lar ev­i­dence re­gard­ing its com­pli­ance with the broad-based BEE obli­ga­tions im­posed by the [act]”.

Asked to com­ment on the le­gal opin­ion, The New Age CEO Nazeem Howa said: “The opin­ion at­trib­uted to Icasa con­sti­tutes new in­for­ma­tion to In­fin­ity Me­dia. As such, it would be in­ap­pro­pri­ate for us to com­ment un­til we re­ceive this for­mally from Icasa.”

Our client, quite can­didly and hon­estly, dis­closed the fact that it does not, as things cur­rently stand, com­ply

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