SECRET DSTV-SABC DEAL NOT NEFARIOUS : MULTICHOICE

The application brought before the Competition Tribunal against MultiChoice regarding its deal with the SABC is full of inaccuracies, MultiChoice has argued.

MultiChoice has not forced the SABC into changing its stance on the encryption of South Africa’s digital TV signals, nor has it taken control of the public broadcaster’s content portfolio.

That’s the word from Nolo Letele, executive chairman of MultiChoice South Africa, and Karen Willenberg, director of regulatory and legal affairs at M-Net.

Letele and Willenberg recently spoke to MyBroadband shortly after MultiChoice filed a responding affidavit to a Competition Tribunal application brought by Caxton Publishers, Media Monitoring Africa, and SOS: Support Public Broadcasting Coalition.

The organisations argued that the deal between MultiChoice and the SABC constituted a merger of which the Competition Tribunal had not been notified.

They stated that Media Monitoring Africa raised the following concerns with the deal when it was announced in 2013:

Handing over the SABC archive: The SABC has handed over power and control of its archives to MultiChoice.
Encryption turnaround: The SABC ceded its power to determine its policy on set-top box control to a commercial broadcasting entity that is also its competitor.
Best programming veto: The deal sets out terms for a future channel to be developed by the SABC, where MultiChoice may require that the best future local programming from the SABC is aired exclusively on DStv, thereby denying citizens who do not subscribe to MultiChoice access to those programmes.

Content control allegations all false: MultiChoice

MultiChoice said there is no way its deal with the SABC could be seen as a merger.

“This is a MultiChoice-SABC channel supply agreement. It’s a standard commercial agreement and no different from the dozens of channel supply agreements we have with local and international suppliers,” said Letele.

The agreement covers a 24-hour news channel, which has already been launched, and an upcoming entertainment channel – which was reportedly set to launch before the end of 2014.

Letele said the amount of archive material that will be broadcast on the channel amounts to less than 1% of SABC’s total archive content.

On the point of exclusivity on new content, he argued this was a normal provision for a content licensing agreement.

“It’s a very simple relationship. The agreement allows for the channel to be shown on the DStv platform exclusively during the window in which the content is being shown.”

After the exclusivity window, the SABC can do what it wants with the content, including selling it to other broadcasters.

“You never find broadcasters in the same area concurrently showing the same content. Then what’s the point of licensing anything?”

SABC dictates own policy on encryption

Regarding the SABC’s “about-turn” on digital terrestrial television (DTT) signal, Willenberg said Caxton falsely asserted that MultiChoice was dictating SABC policy on the matter.

She said MultiChoice has provided evidence in its affidavit to show that the SABC hasn’t always been in favour of encryption.

“In fact, during the planning stages of South Africa’s digital migration, everyone was opposed to encryption,” Willenberg said.

South Africa’s migration from analogue to DTT has been slow-moving since the last general elections in May 2014, mostly due to an ongoing debate over whether the government should include support for encryption in its decoder-like DTT set-top box.

Every household that receives its TV signal through an antenna will need a set-top box, and the government will be subsidising 5 million of them for the poorest households in the country.

The fight is over these subsidised boxes. The government previously said it would use encryption in its boxes, which E-tv and others were in favour of.

Minister of Communications Faith Muthambi, along with the government, then said it will adopt a set-top box control mechanism that does not require encryption. MultiChoice and others are in favour of this.

A 2013 Sunday Times report, however, stated that the secret channel supply deal between the SABC and MultiChoice included wording that specifically prevented the public broadcaster from airing its channels on a terrestrial platform with conditional access systems.

This suggested MultiChoice was trying to force a government entity to adopt its policy on the issue, and that there was an inappropriate relationship between the government and MultiChoice.

Asked about this, Willenberg said she first wanted to respond to the fact that a big deal is being made about the secrecy of the deal.

“All commercial channel supply agreements have confidentiality clauses.” However, she was able to confirm that the deal with the SABC covered encryption.

Willenberg said the contract was negotiated and not forced on the SABC, and the encryption provisions were included to ensure M-Net subscribers will have access to free-to-air channels after the digital migration is completed.

She said months before the deal was concluded, then-Minister of Communications Dina Pule announced in her 2013 budget vote speech that she intends to amend the national broadcasting policy to remove encryption.

MultiChoice was therefore of the view that their agreement with the SABC was in-line with policy.

Asked why it was necessary include what seems to be a government policy issue in a channel supply agreement, Willenberg they wanted it recorded.

“It was a necessary precaution given everything that had happened,” said Willenberg, referring to the history of both the government and organisations changing their positions on DTT encryption, and the fact that Pule was removed from office soon after her budget vote speech.
Is the SABC-MultiChoice deal really “normal”?

Arguments about the need to include provisions dealing with encryption aside, the fact that these stipulations are even in a channel supply agreement raises questions about the touted normalcy of the deal between the SABC and MultiChoice.

Letele conceded he couldn’t immediately think of an example where they might have such clauses in agreements with other channel suppliers.

He argued that it is completely misguided to compare its deal with the SABC to other channel supply agreements, though, as the SABC is based in the same territory as MultiChoice where there are so-called “must-carry regulations” that obligate platforms like DStv to offer SABC’s free-to-air channels.

Asked about how the SABC’s contract with MultiChoice effectively prevents it from changing its stance, Willenberg said that the public broadcaster is free to say whatever it wants to about encryption.

“I think the scope of the provision has been misunderstood,” said Willenberg.

She said the SABC’s obligation to not encrypt its free-to-air channels on terrestrial platforms only extends for the term of the contract.

In addition, if the SABC wants to speak out in favour of encryption, they are free to do so.

Letele said the encryption provisions were also not condition precedent. “In other words, we could not refuse to sign the agreement, for instance, if they went the other route.”

Source: My Broadband – Jan Vermeulen