by refusing Groupe Canal+'s takeover bid to acquire JSE-listed pay-TV broadcaster MultiChoice Group made some pretty interesting statements for investors on Monday. said:
The Board remains willing to engage with any party regarding any offer that is at a fair price and subject to appropriate terms, consistent with its obligation to act in the best interests of the Company.
Now, this statement may simply be an attempt to reassure shareholders that the board is acting in their interests. But is there more to the story than meets the eye? Could there be other suitors bidding besides Vivendi Group's Canal+?
One obvious possibility is that Comcast, the U.S. media and communications conglomerate that owns Britain's Sky Group and U.S. broadcaster NBC Universal, could put its own offer on the table.
MultiChoice immediately rejects Canal+'s offer price of R105 per share, telling the French company it undervalues Canal+'s business, just two business days after Canal+ made public its intentions for the South African broadcaster I'm sure I did.
This is speculation, and media questions from TechCentral to Comcast in the US have gone unanswered, but there is potential for Comcast to make a profit, especially if it is willing to pay a premium for Canal+'s indicative cash offer of R105 per share. A sale could make strategic sense for MultiChoice investors.
There are several reasons to think Canal+'s approach could prompt a counteroffer from U.S.-listed Comcast.
- Comcast acquires 30% stake in Showmax, MultiChoice Group CEO Calbo Mawela says he is open to selling further stakes in the African streamer to a US partner .
- Comcast's NBCUniversal is closely involved in helping MultiChoice build its new Showmax platform, which is expected to commercially launch to subscribers this weekend. MultiChoice and his NBCUniversal engineers worked together to build a new platform that brings the two companies closer together operationally.
- A slate of NBCUniversal content will be added to the new Showmax platform, with more likely to follow.
- Former Sky executive Andrea Zappia has been appointed chairman of Showmax. He also joined MultiChoice Group's board of directors in September last year. Comcast owns 76.8% of Sky.
- MultiChoice and Sky are working closely together on a range of technology projects, including the launch later this year of DStv Glass, a smart TV solution developed by Sky and sold under the Sky Glass brand in the UK.
MultiChoice has said in the past that it has worked with Canal+ to co-develop content for their respective markets, but while MultiChoice has traditionally focused on English-speaking Africa, Canal+ is strong in Francophone Africa – MultiChoice and Comcast's current relationship is clear (and its subsidiaries) are much closer operationally.
So while neither party has officially said anything, it's possible that something is in the works. That's also possible – is it possible? – MultiChoice management says he wants a deal involving Comcast.
Read: MultiChoice recommends hiking to Canal+
Of course, any deal involving Comcast would face the same hurdles as the acquisition by Canal+, but South Africa's restrictions on foreign ownership of local broadcasters would be the biggest obstacle to overcome.
The Electronic Communications Law prohibits foreigners (individuals and companies) from owning more than 20% of the shares of local broadcasting license holders.
This law states:
Foreign nationals may not exercise, directly or indirectly, any control over a commercial broadcasting licensee or hold an economic stake of more than 20% of either the voting stock or paid-up capital of a commercial broadcasting licensee. You may not have any personal interest or conflict of interest.
Legal experts have warned that this could be an insurmountable hurdle. However, Canal+ CEO Maxime Saada has indicated that he has found a way around this restriction, short of not including MultiChoice's valuable South African assets in the acquisition.
Is MultiChoice prepared to split itself into two separate parts to facilitate a deal with Canal+ or another suitor? As scale becomes increasingly important for long-term survival This seems unlikely due to lower economies of scale in industries where
Read: Canal+ faces uphill battle to close MultiChoice deal
But if Canal Plus does indeed find a way to circumvent foreign ownership rules, it will soon be the only company lining up outside MultiChoice's Randburg headquarters with checkbooks in hand, ready to make a deal. The company may not be alone. – © 2024 News Central Media
- Duncan McLeod is an editor at TechCentral
