MultiChoice and eMedia Holdings are fighting it out over DStv’s plan to cut four E-tv channels.
On Monday, the Competition Tribunal heard eMedia’s application for interim relief against MultiChoice’s decision to drop the eMovies, eMovies Extra, eExtra and eToonz channels from its DStv packages.
The broadcaster planned to suspend these channels from its service at the end of March 2022. It delayed the removals by two months after E-tv decided to take the issue to the Competition Commission.
eMedia Holdings legal counsel Tembeka Ngcukaitobi argued that MultiChoice’s decision amounted to a dominant player refusing to supply a scarce service, in contravention of the Competition Act Section 8.
The company believes it will lose as much as 19% of its advertising revenue should the channels be suspended.
In his opening arguments on the matter, Ngcukaitobi stated that MultiChoice did not justify its decision during negotiations or in response to a letter of demand from eMedia.
MultiChoice had only stated the decision was based purely on commercial considerations.
It was only in its first answering affidavit to the case brought before the Competition Tribunal that MultiChoice elaborated.
Initially, its rebuttal included that it had satellite capacity constraints.
MultiChoice said it had to cut eMedia’s four channels so it could accommodate three yet-to-be-launched SABC channels that it must carry under South African broadcasting laws.
But eMedia disputed this, claiming that its calculations showed MultiChoice had more than enough bandwidth on one of the satellites it has capacity on.
eMedia alleged MultiChoice held satellite bandwidth broadcast capacity from 23 transponders on Intelsat IS-20 and 28 more on the Intelsat IS-36 satellite.
MultiChoice’s initial affidavits didn’t reveal which satellite it uses for the four E-tv channels. It also disputed eMedia’s calculations and said it had only 21 transponders on IS-20.
Curiously, it included data on the IS-20 satellite’s capacity to try and support its case, implying that this was the satellite on which E-tv’s channels were broadcast.
When E-tv’s experts performed calculations based on this input, it worked out that E-tv’s 720p “HD Ready” channels would take up between 3.5Mbps and 5Mbps of capacity.
That means they would occupy a combined maximum of 20Mbps of bandwidth out of an estimated 1,150Mbps on IS-20 — or a 1.7% share.
MultiChoice had claimed that IS-20 could host four more channels for uplink from South Africa.
Ngcukaitobi also stressed that DStv doesn’t have to carry SABC’s additional channels immediately, but only sometime in the future following negotiations with the SABC.
Confusion over satellite in question
However, MultiChoice subsequently claimed that the channels took up more than 11% of capacity, with each drawing up to 6.5Mbps for 26Mbps in total.
While DStv did not directly clarify which of the satellites it hosts E-tv’s channels, its new data suggested they were actually broadcast on IS-36.
Ngcukaitobi repeatedly emphasised that MultiChoice’s first affidavits seemed to completely ignore the broadcaster’s capacity on the IS-36 satellite, continually suggesting that IS-20 was the satellite being used.
In another affidavit, MultiChoice backtracked on the capacity constraint argument and said it was never told to specify details around bandwidth capacity on the actual satellite used for E-tv’s broadcasts.
Ngcukaitobi described MultiChoice’s apparent flip-flop as “astonishing” and an attempt to turn the litigation into a game of “catch me if you can”.
“The only reason why the capacity defence is abandoned is because it has been shown to be unsustainable in their evidence,” Ngcukaitobi stated.
E-tv needs DStv
eMedia contends under the prevailing market dynamics, its channels were dependent on DStv to remain competitive.
Ngcukaitobi argued presence on the DStv platforms allows E-tv to maintain customer contact, generate advertising revenue, and ensure a high-quality broadcasting service.
The company has also argued that carrying the four E-tv channels was economically feasible for MultiChoice, as eMedia provided them for free, and two were in DStv’s top 10 most popular channels.
MultiChoice’s other reasons for denying a carriage renewal agreement included that the channels did not meet its strategic objectives for local content, black empowerment, value propositions, and its aim to decrease the frequency of repeats.
Ngcukaitobi said MultiChoice’s claims that the decision was based on E-tv not meeting DStv’s strategic objectives were “contrived”.
He argued two of the four channels were sharply focused on local content, while eMedia was a majority black-owned business.
He also maintained MultiChoice had not provided evidence it would replace the channels with other offerings that met its criteria.
Ngcukaitobi surmised that MultiChoice’s action was done from a desire to inflict harm on a potential rival by undercutting its revenue.
The hearing continued this morning from 10:00.