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MultiChoice refutes allegations surrounding Gupta-backed ANN7

MultiChoice refutes allegations surrounding Gupta-backed ANN7

South African pay-TV firm MultiChoice, which owns DStv and M-Net, has dismissed allegations stemming from leaked emails that it paid millions in bribes to the then Gupta-family owned news channel ANN7 in order to influence former Minister of Communications Faith Muthambi to advocate for unencrypted set-top boxes for digital terrestrial television migration in South Africa.

The country's opposition parties, the Democratic Alliance and Economic Freedom Fighters (EFF), have since called for the company to disclose the full nature of its relationship with the TV channel, the former Minister and the Gupta family in what they suspect to have been underhanded dealings by MultiChoice in a bid to maintain its dominance within the country's Pay-TV market.

A MultiChoice spokesperson told ITWeb Africa that while the company has noted media speculation over their contract with ANN7, its actions are above board.

"While we understand that some people may not be aware of it, it is standard practice to pay for mainstream news channels - particularly for local 24-hour news channels. The fee structure for the ANN7 contract is in line with the costs of developing and running such a channel, and ANN7 is definitely not the highest-paid local news channel on the DStv platform. The R25m fee referred to in the articles is also not unusual."

The spokesperson added that is also standard practice for companies to interact with the industry regulator and government on policy matters on the question of what some deem to have been improper influence on former communications Minister Muthambi, who was moved to lead another ministry in March this year.

"There is nothing wrong with that. In this case, the interaction relates to a 2014 President Proclamation. Prior to 2014 broadcasting, telecommunications and postal services fell under one Ministry. The President chose to split broadcasting and telecommunications, creating a Minister for broadcasting and a Minister for telecommunications and postal services. Unfortunately, the Presidential Proclamation creating these two new Ministries did not make sense to a number of stakeholders in the broadcasting sector. Control over broadcasting was split between the two Ministries. Several of these stakeholders made submissions to the Minister suggesting it be corrected. MultiChoice was one of these."

Opposition parties react

The DA said it would give Multichoice 8 hours to explain itself and that failure to do so will result in arequest to the Independent Communications Authority of South Africa (ICASA) to force it to oblige.

The second largest opposition party has stated it would report MultiChoice to the Competition Commission.

Both parties have urged the Parliament to intervene by conducting an inquiry into the matter.

However, MultiChoice insists on the integrity of its conduct.

"MultiChoice has no knowledge whatsoever of the Minister sending our proposals to any other person, and can in no way be held responsible for that. There is absolutely no relationship between our interaction with the Minister, the channel supply agreement for ANN7, and any fees or increase in fees paid for that channel," added the company's spokesperson.

Steven Ambrose, industry analyst and CEO of StrategyWorx says the level of influence a private company with the market share like that of MultiChoice has on government officials is not surprising.

"In a perfect society companies should have little or no influence of good and proper government policy. South Africa is a small country with a history of close cooperation between government and commerce. In this case a major monopoly would have an influence on policy. We can only hope that that is moderated by proper policy. There is no question that MultiChoice had an influence, the question is how much and how did this impact governments decisions.

Many of the decisions made by the communications minister were inexplicable and often went against good practice."

Magda Wierdyka, CEO of investment firm Sygnia and outspoken critic of the reported influence the Gupta family has on the South African government, believes Naspers (Multichoice's parent company) should also be answerable.

"All shareholders in Naspers must put pressure on the company to deal with this decisively. Yes, that is you, Allan Gray, Coronation, Investec, Prudential et al. Sygnia, as a passive fund manager, will engage on Monday (yesterday). We want answers."

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