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MultiChoice squares up for legal battle with Icasa over its plans for pay-TV

29 May 2019 - 17:56 By BEKEZELA PHAKATHI
MultiChoice argues that plans by the Independent Communications Authority to open up the pay-TV market threaten its commercial viability.
MultiChoice argues that plans by the Independent Communications Authority to open up the pay-TV market threaten its commercial viability.
Image: Supplied

A legal battle is looming between pay-TV giant MultiChoice and the Independent Communications Authority of SA (Icasa) as the regulator pushes ahead with it plans to open up the market.

On April 12, Icasa published its draft findings following an inquiry into subscription TV broadcasting services. The findings highlight remedies to boost competition and lower subscription prices in the pay-TV market. These include:

  • reducing contract duration, specifically for sports rights;
  • splitting content rights and selling them to more than one broadcaster; and
  • halving the number of Hollywood studios MultiChoice may enter into exclusive contracts with.

Icasa gave interested parties 45 days from the date of publication of the draft findings to table written submissions. 

However, in court papers filed at the high court in Pretoria, MultiChoice argued that the regulator did not follow due process and some of its proposed measures threaten its commercial viability.

MultiChoice wants the court to compel Icasa to halt the inquiry process, pending the submission of all relevant documents or evidence the regulator relied on to make its draft findings and conclusions.

The company said Icasa’s failure to provide the documentation is unconstitutional or unlawful because it violates the Promotion of Administrative Justice Act and does not comply with the standard of rationality encompassed in the constitutional principle of legality. It said stakeholders are unable to evaluate whether the findings are based on accurate and reliable information, and are therefore not in a position to make informed representations.

The pay-TV operator wants interested parties to be given at least 60 days to make representations on the draft findings, after Icasa has provided all relevant documentation.

“The opportunity [to submit written submissions] will be meaningless if interested stakeholders are unable to ascertain how particular material findings were reached, on what evidence, and whether such evidence is accurate and reliable,” argued MultiChoice in its court papers.

According to MultiChoice, the proposed licence conditions would impose far-reaching restrictions on its business. In addition to their impact on its business model and commercial sustainability, the company said the conditions would negatively affect the nature, quality and variety of its services to consumers.

Exclusive-content costs

The continent’s biggest pay-TV operator listed on the JSE in February and is now valued at about R55bn, servicing nearly 14-million people across 50 countries in Africa.

MultiChoice, which owns DStv, dominates the market in part because it has exclusive contracts for premium and international content, such as the local Premier Soccer League (PSL), the English Premier League, the Spanish La Liga and the Uefa Champions League.

“These are the most popular competitions in SA … These sports rights are held by MultiChoice and this is considered to be its competitive advantage,” said Icasa in its draft findings following the inquiry into pay-TV.

The regulator said MultiChoice conceded that sports rights have become increasingly expensive, having spent R2.3bn on local sports content in 2018 alone. “The increasing cost of premium content is now beyond the reach of many broadcasters and new, smaller, local over-the-top (OTT) service providers,” it said. 

Icasa pointed out that in 2015, e.tv lost the rights to broadcast the Uefa Champions League, citing the prohibitive cost. In 2007, the SABC lost its exclusive rights to the PSL to SuperSport, in a deal worth R1.6bn. “Both broadcasters lost viewers as a result of failing to secure these premium sports rights,” said the regulator.

The current agreement between MultiChoice and the PSL runs for five years, through to the 2023/2024 season. The English Premier League agreement has been renewed until 2022.

“Effectively, no new entrant will have access to these and other rights currently held by MultiChoice,” said Icasa.

MultiChoice said a temporary suspension of the consultation process in respect of the draft findings document, pending the determination of the review application, will not be prejudicial to Icasa or any other interested parties. “Indeed, Icasa would benefit from ultimately receiving informed representations,” it said. 

Icasa spokesperson Paseka Maleka confirmed on Wednesday that the regulator has received MultiChoice’s court application and is analysing the documents. “The submission will therefore be made to council to take a decision,” he said. 

- BusinessLIVE