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Caxton wages battle with MultiChoice

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 20 Apr 2015
Caxton says MultiChoice's deal with the public broadcaster influenced its position on encryption.
Caxton says MultiChoice's deal with the public broadcaster influenced its position on encryption.

Caxton has complained to the Competition Tribunal about MultiChoice's distribution agreement with the South African Broadcasting Corporation (SABC).

The publishing house has argued the deal with the SABC is a "merger" and puts MultiChoices in a position to influence SABC policy, particularly on encrypting its broadcasts during the digital migration process.

MultiChoice and the SABC signed the controversial deal, which sees the SABC provide MultiChoice with a 24-hour news channel and a 24-hour payment channel for five years for R553 million, in mid-2013. However, the agreement was slammed after reports emerged that the SABC had agreed not to carry any of its free-to-air channels over a terrestrial medium that is encrypted.

In response to Caxton's allegations, MultiChoice - the dominant pay TV player - says Caxton's statements are "far-fetched".

"We totally reject the allegations and the misrepresentations they're based on," says MultiChoice executive chairman Nolo Letele. "There's simply no basis to suggest that there is anything wrong with our relationship with the SABC.

"The truth is: this is a standard commercial agreement for the supply of two television channels: a news channel (already on DStv) and an entertainment channel (which will be added shortly). We have the same kind of agreement with dozens of other channel suppliers, locally and internationally.

"It's also standard practice to commission and license new channels. So there's no way this can be described as a 'merger' that needs approval by the competition authorities."

Letele adds: "It's also not true to say we've influenced the SABC's position on encryption. The SABC has taken different positions on encryption at different times during the digital migration process for reasons unrelated to the agreement with MultiChoice. However, before the agreement with MultiChoice was concluded, the SABC was opposed to encryption."

The recently-published Broadcasting Digital Migration policy mandates there will be a control system to stop subsidised boxes working on non-SA networks, but no encryption. This "robust" control system will benefit those who own TVs because it will ensure they continue to receive free-to-air broadcasts.

About 65% of the 13 million homes with TV rely exclusively on free-to-air broadcasting services, notes the gazette. A turn-on date for digital TV has yet to be announced, although it is evident SA will not meet the International Telecommunication Union's 17 June deadline for migration.

The control system is purely a means of protecting government's investment in subsidised boxes. However, individual broadcasters may, at their own cost, make decisions regarding encryption of content, notes the gazette.

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