Picture: SUPPLIED
Picture: SUPPLIED

MultiChoice had decided to axe the Gupta-linked ANN7 channel from its DStv platform, the pay-TV group said on Wednesday.

Owing to the “controversies” associated with ANN7, MultiChoice said it would not renew its contract with the channel when it expired in August 2018. The company was preparing a tender for a replacement black-owned news channel, MultiChoice CEO Calvo Mawela said.

The decision to drop the channel — which was launched in 2013 to much criticism given its ties to the Gupta family — was a blow to new owner Mzwanele Manyi and possibly also the Guptas’ embattled Oakbay Investments vehicle.

In 2017, Manyi bought the Guptas’ shares in ANN7 for R300m in a vendor-financed deal. In such deals, if the buyer did not put up collateral, the seller and financier — in this case Oakbay — would be at risk of losing the repayments owed, Robert Peche, group strategy associate at Bravura, said.

“Essentially, [ANN7] will lose its core revenue stream and it therefore seems unlikely that it will be able to service the vendor finance, almost regardless of what the terms were,” Peche said on Wednesday.

Manyi did not respond to requests for comment. But Mawela said the former cabinet spokesman “has accepted our position and is considering what we have shared with him”.

MultiChoice was announcing the outcome of an internal investigation into its dealings with ANN7, following allegations that payments made to ANN7 and the SABC were intended to sway government policy on digital migration in its favour.

Mawela said the investigation showed that former MultiChoice CEO Imtiaz Patel’s relationship with the Guptas “played no role” in the terms negotiated. “We made some mistakes in our dealings with ANN7, but there is no evidence of corruption or any illegal activity.”

MultiChoice had failed to carry out a “comprehensive” due diligence process when signing ANN7, while it had also not raised concerns as they came to light and the company had communicated the situation poorly, Mawela said.

But the terms of the contract — including a R25m upfront payment on renewal of the deal in 2015 — were “within acceptable parameters associated with the establishment and cost of producing a news channel”.

Mawela said payments to e.tv of about R500m a year were about three times higher than those made to ANN7.

Media Monitoring Africa director William Bird said there were concerns that the briefing amounted to “smoke and mirrors” and that “if there’s nothing to hide” MultiChoice should make public the report and its agreements with ANN7. Its response was worryingly similar to those of scandal-hit McKinsey and KPMG.

hedleyn@businesslive.co.za