MultiChoice will keep ‘open mind’ on Canal+

MultiChoice Group chief financial officer Tim Jacobs has said in an interview with TechCentral that the pay-television broadcaster will “keep an open mind” to any approach by France’s Canal+.

Canal+, owned by French media conglomerate Vivendi, has bought 12% of JSE-listed MultiChoice Group’s shares this year, prompting speculation about the company’s intentions and fuelling a sharp rise in the South African firm’s share price to reach record levels above R140/share.

MultiChoice first disclosed on 5 October that Canal+ had acquired 6.5% of its equity. Then, on 29 October, it said the French company had nearly doubled that stake to 12%.

“Whether it’s Canal+ or someone else, we have a responsibility as directors of the company to do what is in the best interests of shareholders,” Jacobs told TechCentral in an interview following the publication of MultiChoice’s interim financial results on Thursday.

“Whatever opportunity comes our way, we will try to keep an open mind. We will certainly look at it and say, ‘Is this is in the best interest of shareholders or not?’ If it is, we’d need to embrace it and make the best deal we can for shareholders,” Jacobs said.

He said Canal+’s stated intention is that it views the MultiChoice stake as a financial investment. Canal+ has done well in Francophone Africa and is bullish about the prospects for the pay-television industry on the continent. He said the two companies have worked together for some time, sharing content between their markets. “We have an ongoing relationship with them in various territories.”

Foreign ownership

If Canal+ were to take the relationship further and make a play for MultiChoice, it would have to overcome South African restrictions on the foreign ownership of broadcasters.

The Electronic Communications Act states that a foreigner “may not, whether directly or indirectly, exercise control over a commercial broadcasting licensee or have a financial interest or an interest either in voting shares or paid-up capital in a commercial broadcasting licensee exceeding 20%”. Furthermore, no more than 20% of the directors of a commercial broadcasting licensee may be foreigners.

Although a draft white paper on audio-visual services, published last month, has proposed relaxing this restriction from 20% to 49%, it is likely to take at least two years before this is translated into legislation, Jacobs said.

Though the foreign ownership limitation is “potentially not insurmountable”, it is “certainly not an easy one to overcome”, he said. “It would require some deep and creative thought (to do a deal).”

In the meantime, MultiChoice is keeping a close eye on Canal+’s shareholding in the group. “They have done (the buying) in two big surges. They did the first build from February through to June or July. They were then out of the market for a while. Then they did another quick surge to double that to the 12%. That’s where they’re sitting now. We’re watching it closely.”  — © 2020 NewsCentral Media