Caxton to appeal MultiChoice, SABC content ruling

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The matter relates to a R533m deal that gave pay-TV provider MultiChoice the right to air two of the public broadcaster's channels, a 24-hour news channel and an entertainment channel showcasing the SABC's old programmes. The agreement was signed three years ago.

A consortium led by Caxton last year challenged the deal, stating that MultiChoice and the SABC must be compelled to classify their content deal as a merger.

In its notice of appeal, Caxton contends that the agreement gives rise to a change of control, and that the Competition Commission should be directed to investigate the deal.

Caxton said the tribunal, among other things, had erred in failing to adopt the correct approach in determining whether the relevant provisions of the agreement give rise to a merger.

The tribunal erred in "holding that a partial asset acquisition only constitutes a merger when the asset that changes hands represents a measurable and relatively permanent transfer of market share or productive capacity from one firm to another", Caxton said.

It said the tribunal ought to have held that the agreement provided for the transfer of a material portion of the SABC's archival content to MultiChoice by virtue of exclusivity and restraint provisions. "More particularly, that these provisions serve to prevent the SABC from licensing the content to any other third party and also prevent the SABC itself from including any of its archival entertainment content in a channel," Caxton said.

As part of the deal, the SABC decided not to allow any of its channels to be encrypted during the five-year term.

Initially, the SABC wanted encryption on set-top boxes that will be used to convert analogue signals to digital. But it has since changed its position.

It had reduced the SABC's ability to sell, wholesale, the entertainment channel to any other broadcaster, said Caxton, and enabled MultiChoice to attract additional subscribers and advertising revenue.

It said the commission should have been directed to probe whether the agreement was required to be notified.

Source: Business Day