Pay-TV operator MultiChoice waged a campaign to overturn a crucial government decision that critics claim crossed the line between acceptable lobbying and capturing state policy.
At issue is the government’s plan to move all television broadcasting to a digital system that, depending on the policy choices, could threaten MultiChoice’s dominance of the pay-television market. This possibility exists because the government plans to subsidise the distribution of millions of set-top boxes (STBs) needed to convert the new digital signal into a form that can still be received by old-fashioned TV sets.
Depending on whether the government policy allows the signal to be encrypted and for the STBs to act as decoders – with a technology known as “conditional access” (See “Battle over limits on access”) – the proliferation of STBs would allow new pay channels and services alongside the existing free channels on the SABC and e.tv.
But without conditional access, new service providers would have no way of using the STBs to offer paid-for services, and MultiChoice’s virtual monopoly would be secured.
When the then communications minister, Yunus Carrim, tabled a final policy decision in the Cabinet in December 2013 allowing conditional access, it represented a major threat to MultiChoice’s profits and opened the door to rivals such as e.tv to offer pay services of their own.
An amaBhungane investigation has shown how MultiChoice fought back, including by:
- Signing a controversial deal with the SABC in June 2013 that bought the support of the politically powerful public broadcaster. The SABC chairperson, Obert Maguvhe, recently declared he liked to think of the SABC as being married to MultiChoice;
- As part of the 2013 contract, the SABC agreed to bar conditional access on its free-to-air channels for five years. The deal is now the subject of a fierce legal battle in the Competition Tribunal. (See “Legal face-offs create static for state and broadcasters”);
- Apparently securing political access and intelligence, including appearing to know that Carrim was going to be removed long before the minister himself knew it;
- Backing an empowerment lobby group that appears to have acted as a MultiChoice puppet in launching a public attack on Carrim and his backing for conditional access; and
- Succeeding in having Carrim’s policy, which was accepted by the Cabinet in 2013, dramatically reversed by Faith Muthambi, the new minister appointed by President Jacob Zuma after last year’s elections. In doing so, Muthambi seemingly also flouted ANC policy, and her about-face is being challenged in court by e-tv. (See “Legal face-offs create static for state and broadcasters”.)
Exhibit A against MultiChoice is an extraordinary attack on Carrim by Koos Bekker, the chairperson of Naspers, MultiChoice’s parent company. It highlights MultiChoice’s deep unhappiness with the 2013 Cabinet decision to include conditional access.
In a memorandum sent to senior management, dated March 2014, which amaBhungane has seen, Bekker describes Carrim as “temperamentally unsuited to high political office” and states that he is “in the power of e.tv”.
He adds that Carrim will not be re-appointed as communications minister after the elections (in May last year).
The source of Bekker’s information is unclear, but well-placed insiders in the broadcasting sector sympathetic to Carrim allege that, months before the memo was circulated, MultiChoice was stating as fact that he would be replaced.
Approached for comment, Naspers spokesperson Meloy Horn said Bekker “is currently abroad. It is not our policy to comment on press speculation.”
Carrim responded to Bekker’s allegations, which amaBhungane brought to his attention, by saying it was “not appropriate” for a former minister to comment on a previous portfolio. But he was not going to allow his integrity to be attacked, he said. “No, no. I was not in the power of e.tv.
“That, however defined, would be a crime. The national fiscus wasn’t my personal money box that I could just use to benefit a particular company I chose.”
Carrim said the December 2013 policy that was decided on on his watch aimed to encourage new African pay-TV players rather than serving e.tv’s narrow interests.
“It was a Cabinet decision, not a personal whim,” he said.
AmaBhungane has also learned that at about the same time MultiChoice’s management was involved in producing an opinion piece, published in April last year, that attacked Carrim.
The article was published under the byline of Keith Thabo, then-president of the National Association of Manufacturers in Electronic Components (Namec).
It is an important lobby group for mainly black small, medium and micro-enterprises in the electronic manufacturing sector.
AmaBhungane has seen email correspondence from April 21 last year between Calvo Mawela, the head of stakeholder and regulatory affairs for MultiChoice South Africa, and Thabo, referring to Mawela’s role in penning an opinion piece published on the technology website TechCentral on the same day.
In the email Mawela writes: “Herewith the final article as requested.”
He then provides Thabo with the email address of the TechCentral editor, Duncan McLeod, saying: “I think try get it to him as soon as possible.”
The article, titled “Minister you are misleading the public”, accuses Carrim of rewriting history and distorting facts.
MultiChoice described the allegation that it was involved in authoring opinion pieces for Namec “insulting”.
“Through its office bearers, Namec asked for Mr Mawela’s input as a broadcasting engineer, and he shared his thoughts based on his expert knowledge of the broadcasting sector,” said MultiChoice’s spokesperson, Jackie Rakitla.
The Mail & Guardian reported in August last year that Namec had split into two factions.
The article reported on allegations made against Thabo and Vijay Panday, another Namec leader. They were accused by one of the factions of being “empowerment raiders” for hijacking an empowerment deal for their own benefit.
At the heart of the dispute was the relationship Namec had entered into with MultiChoice and the Chinese manufacturer Skyworth Digital, to potentially supply 15-million decoder boxes over three years.
Responding this week, Thabo said: “We formulate academic opinions and write articles on our own, as we have a research and development team that has done research on DTT [digital terrestrial television] and visited Europe, Asia and South America.”
Quid pro quo?
Some Namec members said the only reason MultiChoice was interested in doing a deal was Namec could help in the fight against conditional access.
This appears to be backed up by correspondence between Panday and Thabo, dated June 16 last year.
The email from Panday, titled “MCA”, an abbreviation for MultiChoice Africa, reads: “You have to tell BRU [presumably a MultiChoice staffer whose identity is unknown] we want some protection. Between you and me, they [are] under pressure from the top to relook at UEC [Altech UEC, a rival set-top box manufacturer].
Before that happens, we put a lot of time, effort, lost face with govt and DTI [department of trade and industry], fighting the [conditional access] battle. A year from now, when all is over, they can allocate the forecast to anyone.”
The email appears to show that Panday saw the fight against conditional access as a quid pro quo for the set-top box orders Namec was getting from MultiChoice.
But Rakitla said the pay-TV operator had no knowledge of the email.
“We concluded a purely commercial agreement … It had absolutely nothing to do with who took what position on digital migration.”
In a further email from Panday, dated May 25 last year, the day Zuma announced his new Cabinet following the elections, he wrote: “A big thank you to all from Keith and I for all the support with the recent fight with DOC Carrim. He is officially out. We will have an easier run. She is a nice person and supports Namec.”
The she in the email appears to be a reference to Muthambi, the new communications minister.
Rakitla said MultiChoice could not comment on Panday’s email, as it was unaware of it.
“However, it’s important to note that when Minister Muthambi was appointed, we had no knowledge of her position on [set-top box] control,” Rakitla said.
Panday did not respond to questions from amaBhungane.
Namec’s secretary general, Adil Nchabaleng, a leader of the faction opposed to Thabo and Panday, said, in his view, “a predatory approach was used by MultiChoice to get them [Thabo and Panday] on side for conditional access”.
Thabo said Nchabeleng was relieved of the secretary general’s position in 2010.
“This is a desperate man who has been used by the white electronic industry to frustrate the aspirations of the black players in transforming the industry and creation of black industrialists,” he said.
“A big thank you to all from Keith and I for all the support with the recent fight with DOC Carrim. He is officially out”.
Source: Mail & Guardian