Canal+ is embarking on a significant restructuring initiative concerning its acquisition of MultiChoice, South Africa’s leading pay-TV broadcaster. This plan involves the creation of two distinct entities: LicenceCo, which will be responsible for holding the broadcasting license, and the remaining operations, which will continue under the MultiChoice Group. This strategic move is aimed at ensuring compliance with South African regulations regarding foreign ownership in the broadcasting sector.
LicenceCo is set to be majority-owned by historically disadvantaged persons (HDPs), a decision that reflects Canal+’s commitment to adhering to the principles of Broad-Based Black Economic Empowerment (BBBEE). Key stakeholders in LicenceCo will include Phuthuma Nathi, Identity Partners Itai Consortium, Afrifund Consortium, and a Workers’ Trust, all of which are focused on promoting inclusive ownership within the media landscape.
Specifically, the ownership structure of LicenceCo is designed to align with South African laws that restrict foreign entities from holding significant stakes in local broadcasting licenses. According to Teeveetee’s blog, the ownership breakdown is as follows:
- Phuthuma Nathi: This Broad-Based Black Economic Empowerment (BBBEE) scheme will hold a 27% economic interest in LicenceCo, reinforcing its commitment to empowering historically disadvantaged individuals.
- Identity Partners Itai Consortium and Afrifund Consortium: These two black-owned and managed companies will also hold substantial stakes in LicenceCo, further enhancing the representation of HDPs in the broadcasting sector.
- Workers’ Trust (Employee Stock Ownership Plan – ESOP): This initiative is designed to benefit employees directly, promoting a culture of inclusive ownership and participation.
In this restructuring, MultiChoice Group will retain a 49% economic interest in LicenceCo, along with 20% of the voting rights. The remaining video entertainment assets of MultiChoice will continue to operate under the MultiChoice Group umbrella, ensuring that the core business remains intact while adhering to regulatory requirements.
The restructuring is primarily motivated by the need to comply with the Electronic Communications Act, which imposes strict limitations on foreign control of broadcasting licenses. By establishing LicenceCo, Canal+ aims to meet these regulatory demands while simultaneously preserving its BBBEE credentials, which are vital for operating within the South African market.
For subscribers, the transition to this new structure is expected to be seamless. LicenceCo will enter into various commercial agreements with subsidiaries of MultiChoice Group to ensure that service delivery remains uninterrupted. This restructuring not only ensures compliance with local laws but also opens up opportunities for new investors to engage in the South African media landscape. The inclusion of BBBEE-focused investors aligns with the broader economic transformation agenda of the country, fostering a more inclusive and diversified media industry.
Canal+, which has been gradually increasing its stake in MultiChoice over the years, is continuing its efforts to solidify its position in Africa’s broadcasting market. The outcome of this restructuring could set a significant precedent for other multinational companies looking to navigate similar regulatory environments in the future.
As the regulatory approval process unfolds, industry stakeholders are closely monitoring how this restructuring will influence MultiChoice’s long-term strategy and the overall dynamics of the African media ecosystem. The implications of this move could resonate beyond South Africa, potentially shaping the landscape for future foreign investments in the continent’s media sector.
