Picture: SUPPLIED
Picture: 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 argues that the regulator did not follow due process and some of its proposed measures threaten its commercial viability.

MultiChoice wants the courts 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. It said Icasa’s failure to provide the documentation is unconstitutional or unlawful because it does not comply with the standard of rationality encompassed in the constitutional principle of legality.

The pay-TV operator also 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,” MultiChoice says in its court papers.

The company says the proposed licence conditions would impose far-reaching restrictions on its business. MultiChoice said that in addition to their impact on its business model and commercial sustainability, the conditions would negatively affect the nature, quality and variety of the audiovisual services it provides 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,” Icasa said in its draft findings following the inquiry into subscription television broadcasting services.

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.” 

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.”

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,” Icasa said.

In its court papers, MultiChoice says a range of findings and conclusions in the draft findings document are based on documents, analyses, data, or other information that have not been made available to stakeholders. This, it said, is in violation of the Promotion of Administrative Justice Act. The company 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.

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 occasion any prejudice to Icasa or any other interested parties. “Indeed, Icasa would benefit from ultimately receiving informed representations.” 

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 on ... [the court application].” 

phakathib@businesslive.co.za