ANN7 deal to be probed
MultiChoice will conduct an internal investigation into its relationship with the former Gupta-owned 24-hour news channel ANN7 and the fairness of its commercial agreement, the company said in a statement yesterday.
This announcement follows widespread criticism that neither MultiChoice nor parent company Naspers responded adequately to allegations that the group entered into commercial agreements with ANN7 and the SABC to influence government’s digital migration policy.
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 24hour news channel.
MultiChoice issued a statement on Thursday in response to the SABC-related allegations and denied that the meeting at which the agreement was discussed, was irregular.
In the latest statement, Don Eriksson, chairperson of the MultiChoice audit and risk committees and independent nonexecutive director, says: “The MultiChoice board has read the various media reports alleging that MultiChoice [had] entered into an irregular relationship for the carriage of the ANN7 channel. The board is aware that the ANN7 channel has caused real public concern because of the allegations of corruption levelled at the former owners of the channel.”
He added that the board instructed the audit and risk committees to assess whether there were any “corporate governance failures” related to the ANN7 agreement, as well as whether the amounts paid to ANN7 were comparable to the payments to other locally produced channels.
The investigation of the quantum of the ANN7 payment is interesting, as it seems disproportionate to the current agreement MultiChoice has with eNCA, the most popular 24-hour news channel on DStv, with a market share of more than 50%.
eMedia, the owner of eNCA, stated in its interim results to the end of September that it saw profits drop by nearly R100 million during the period, mostly due to DStv renegotiating its licence fee agreement. This agreement was for eNCA and five other channels. The group stated that the licence fee was cut from R267 million to R140.8 million.
The eNCA contract is also an exclusive contract.
Meanwhile, the National Association for Manufacturers in Electronic Components would be reporting MultiChoice to the Competition Commission for “anticompetitive conduct” by influencing former minister Faith Muthambi to support nonencryption of set-top boxes.