DStv owner scores huge win

The Competition Commission has recommended that the Competition Tribunal approve the proposed takeover of Multichoice by French media giant, Canal+, with conditions.

The recommendation follows the commission’s investigation of the merger notification received on 30 September 2024.

Canal+, an international media firm, has offered to buy the remaining shares in Multichoice that it does not already own for R125 per share, valuing the group at R55 billion.

It already owns about 45% of Multichoice’s shares.

According to the commission, the proposed takeover is unlikely to lessen or prevent competition in any market.

However, given the imporance of Multichoice in the broader audiovisual ecosystem in South Africa, and to address public interest concerns, the commission recommended several conditions be attached to the takeover.

This includes addressing employment concerns, and increasing the shareholding of historically disadvantaged persons (HDPs) and workers in Orbicom and LicenceCo.

LicenceCo is a new proposed company to be held within the merged group, containing local licence rights and subscribers, which will broadcast content through DStv.

The commission also wants the groups to commit to futher supplier development and the merged entity’s continued operation from South Africa, giving plurality of television news and export promotion.

Notably, Multichoice and Canal+ have agreed to a moratorium on retrenchments for a period of three years following the merger implementation date.

They also committed that the majority of LicenceCo’s shareholders will be HDPs and workers.

Moreover, the parties have agreed to continue certain corporate social responsibility initiatives such as skills development in the audiovisual industry and sports development.

“In addition, Canal+ has undertaken that Multichoice Group will remain incorporated and headquartered in South Africa, endeavour to promote exports, and will pursue a secondary inward listing on the securities exchange operated by the JSE Limited,” the commission noted.

The merged entity has also made supplier development commitments that include expenditure on local audiovisual content, the promotion of South African audiovisual content in new markets, and procurement from HDPs and small, medium and micro enterprises (SMMEs).

Finally, the parties have agreed that LicenceCo will continue to procure local news content for DStv and will ensure the diversity of the news content it broadcasts.

The total value of all the public interest commitments advanced by the merger parties—based on past spend by MCG—is projected at a total amount of approximately R26 billion over the next three years.

Roadblocks still ahead

Clearing the Competition Commission is a big step in the process to completing the merger, with the Competition Tribunal the next challenge.

“In large mergers, the commission is required to assess and to ultimately make a recommendation to the Tribunal. The Commission is satisfied that the conditions attached to this merger sufficiently address the concerns raised during the investigation,” the commission said.

“The matter is now before the Tribunal for a final determination.”

However, for the transaction to proceed fully, the companies must also secure approvals from the Financial Surveillance Department, the JSE, the Takeover Regulation Panel, and the Independent Communications Authority of South Africa (Icasa).

Each step poses its own challenges and potential pitfalls, but Multichoice has assured that customers and subscribers will not be disrupted by the machinations happening in the background.

One of the key pitfalls the groups need to navigate is the conditions attached to the licensing.

Under the ECA, the commercial licences needed to operate are tightly controlled, and the regulations impose strict ownership rules that limit foreign control of these licences.

Specifically, no more than 20% of the directors of a commercial broadcasting licensee may be foreigners, and a foreign group may not control a commercial broadcasting licensee directly or indirectly.

The creation of the LicenceCo is the way they hope to get around this. The group will only be 49% owned by the merged group and will only retain 20% of the voting rights, in line with regulatory limits.

Multichoice previously laid out how the company’s structure would look post-merger:

Multichoice old structure

Multichoice new structure