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MultiChoice Group, the owner of DStv and Showmax, he surprised investors on Monday when he revealed that the French Groupe Canal + has acquired 6.5% of its capital, causing its shares to jump higher.
But what could be behind the decision by Canal +, owned by French media giant Vivendi, to take a minority position in the pan-African pay-TV operator, whose other assets include SuperSport, GOtv and Irdeto?
MultiChoice’s announcement, which it was required to make under the Companies Act and JSE rules, certainly got the tongues moving. Why is Canal + accumulating a stake in MultiChoice? Could a hostile takeover be at stake? (Those are as rare as chicken teeth in South Africa, and difficult to make, so probably not.) And is a deal possible given South Africa’s (silly and old-fashioned) rules on foreign ownership of broadcasters?
It is quite possible that Canal + and parent Vivendi are simply betting that MultiChoice’s prospects are good and that an investment will yield a decent return in a sector they understand.
But it could also indicate the desire of the French media group to consolidate its position in Africa, where it is already a leader in many Francophone markets (MultiChoice is the market leader in Anglophone Africa). A combination of the two companies, or even closer cooperation, could, in theory, give them a stronger bargaining position with content providers. It could also, again in theory, help them better defend themselves against competitors like China’s StarTimes and a number of streaming providers, including Netflix, that have designs to take market share away from established satellite players.
Carefully worded
MultiChoice didn’t say much in their announcement Monday, although they did write the statement quite carefully, I thought. He said that he “engages regularly with his strategic partners”, suggesting, to me, that there have been discussions with Canal + of some description. He added that his policy is “not to comment on his individual shareholders, or on his interactions with them.” In other words, you are not going to tell investors what you have been talking about with Canal +.
“The company remains committed to acting in the best interest of all shareholders and creating long-term sustainable shareholder value,” he added. This could mean that whatever is being discussed with Canal + does not have the support of the administration, but perhaps I am reading too much in that part of the statement? (Maybe I’m reading too much about all this, but I suspect not.)
Vivendi spokespersons had not responded to an email from TechCentral Monday afternoon seeking comment on the Canal + investment. A spokesperson for MultiChoice said that Canal + first acquired a stake in the company in April 2020, but was only required to notify shareholders (and the Acquisition Regulation Panel) once it breached the stake of the company. 5%.
Assuming the combination of MultiChoice’s largest shareholders has not changed since the end of the year on March 31, Canal + is now its fourth largest shareholder behind Public Investment Corp (13.4%), Allan Gray (10.1 %) and Prudential Portfolio Managers (9%). Will you continue to build your bet? It’s completely possible.
But if you want to, you could run into the Electronic Communications Act at some point. The ECA states that “a foreigner may not, directly or indirectly, exercise control over a commercial broadcasting licensee or have a financial interest or an interest in shares with voting rights or in paid-up capital in a commercial broadcasting licensee of more than 20% “.
That probably applies to MultiChoice South Africa (the entity authorized by communications regulator Icasa), rather than MultiChoice Group, which is the JSE-listed entity in which Canal + has invested. In fact, the group’s annual report states that foreign institutions and shareholders already own 37% of its capital stock, well beyond the 20% foreign participation rule.
It is entirely plausible that if an agreement were to be reached, and I must emphasize again that this is speculation (we do not know what Canal + ‘s intentions are), that MultiChoice South Africa’s participation requirements could be covered separately from the rest of the group. pan-African operations.
However, for now, investors will be on the lookout for new announcements from MultiChoice that could provide clues as to the intentions of Canal + (and Vivendi). Monday’s stock price shake (it closed nearly 10% higher) could suggest investors are expecting more than passive participation. – © 2020 NewsCentral Media
- Duncan McLeod is editor of TechCentral
