Big development in DStv owner sale

The Competition Commission has recommended that the sale of DStv parent MultiChoice to French broadcasting giant Group Canal+ be approved, with conditions.

The Commission said it considered the proposed transaction unlikely to substantially lessen or prevent competition in any market.

However, taking into account MultiChoice’s important role in the broader audiovisual ecosystem in South Africa, and to address public interest concerns, its recommendation is subject to various conditions.

Firstly, MultiChoice and Canal+ have agreed to a three-year moratorium on retrenchments following the merger implementation date.

Secondly, the merging parties have committed that most of LicenceCo’s shareholders are historically disadvantaged people (HDPs) and workers.

LicenceCo is being established as a separate entity to hold MultiChoice’s broadcasting licence, which is subject to certain local ownership requirements.

Thirdly, 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 the MultiChoice Group would remain incorporated and headquartered in South Africa.

Furthermore, it must promote exports and pursue a secondary inward listing on the securities exchange operated by the JSE.

In addition, the merged entity has also made supplier development commitments.

These include expenditure on local audiovisual content and the promotion of South African audiovisual content in new markets.

Another supplier development commitment is that it must procure some content from HDPs and small, medium and micro enterprises.

Lastly, MultiChoice and Canal+ have agreed that LicenceCo would continue procuring local news content for DStv and ensure diversity in its broadcasts.

The Competition Commission said the value of all the public interest commitments the merging parties agreed to was projected at R26 billion over the next three years.

The Commission said it was satisfied the conditions attached to the merger sufficiently addressed concerns raised during its investigation.

“The matter is now before the Tribunal for a final determination,” said deputy commissioner Hardin Ratshisusu.

Major restructuring needed to clear

Canal+’s acquisition of MultiChoice will cost Canal+ over R30 billion in cash.

The French firm steadily increased its share in MultiChoice from 2020 before breaking through a 35% ownership threshold in early 2024, which made it mandatory for the company to make a buyout offer.

One major stumbling block in the approval is that the Electronic Communications Act (ECA) stipulates an overseas company or person may not hold more than 20% voting rights in a broadcasting licensee.

In addition, the Independent Communications Authority of South Africa requires that licensees be 30% owned by HDPs to meet broad-based black economic empowerment rules.

To address this, MultiChoice and Canal+ notified shareholders about a plan to restructure the MultiChoice Group and hold the broadcasting licence in a separate independent entity called LicenceCo.

LicenceCo will be majority-owned by HDPs consisting of the following entities:

• Phuthuma Nathi, which will ultimately hold a 27% economic interest
• Two well-established black-owned and managed companies: Identity Partners Itai Consortium and Afrifund Consortium
• A Workers’ Trust (ESOP)

Under Canal+, MultiChoice Group will hold a 49% economic interest in LicenceCo and 20% share of voting rights.

MultiChoice South Africa will be 75% owned by Canal+, while Phuthuma Nathi will hold the remaining 25% of the company.

“LicenceCo will enter into various commercial agreements with MultiChoice Group subsidiaries in relation to the services currently provided to LicenceCo by other MultiChoice Group entities,” they said.

“These relate to, among other things, the provision of content, technology, subscriber management and support and other functions.”

The companies anticipate the transaction will be completed by October 2025, after initially targeting April 2025.

In addition to the Competition Tribunal’s approval, the parties still require Icasa’s green light to seal the deal.