MultiChoice filed this transaction with regulators by 30 September 2024 and the Competition Commission usually takes about 40 business days but for larger mergers they can extend from 6 months to 12 months with this deal already past 7 months presuming regulators wanted more info about the deal.
Compared to previous larger mergers (e.g. Walmart and Massmart), the MultiChoice deal is the most complex due I mean most others would have this done within 6 months (excluding consultations with the Tribunal). This is due to the ECA which limits decision making to 20% and Canal+ addressed that with LicenceCo.
Others hurdles would have to be the effects this transaction has on competitors (like eMedia Investments) and the economy. MultiChoice has been a dominant force (via SuperSport) but as we've seen in recent years Netflix is starting to catch-up as they've licensed WWE for a number of countries.
If MultiChoice wants to continue outshining Netflix they have to assure this deal gets greenlight between now to early July if they want to meet the October deadline. The tribunal will need 3 months at least if approved to hold public hearings and set the ground work.
Major delays to October would have to be the Competition Commission's recommendation to block the deal or a minority shareholder (like Alan Gray) wanting more money. But if I'm being honest the deal has a moderate to high rate of getting to Scenario A than B.
Scenario A
MultiChoice is in financial distress and serves a responsibility in growing the local landscape. Regulators could greenlight this deal as a means to keep these operations around for the foreseeable future although Netflix is a dominant foe it can't replicate SABC News much less DStv Diski.
If Canal+ is able to swallow up MultiChoice as there's a moderate to high chance of the deal being greenlight by regulators mainly because of the company's financial position. Although, Netflix already curates content within the market it's not to the scale of SuperSport much less SABC News.
Expect this deal to come with numerous clauses the first I presume would be local quotas even for LicenceCo. Canal+ could be told that 40-60% of its earnings must be used to fund the local landscape and with a 20% cap they'll likely want a detailed report on their activities.
Another which I don't think would be the case is a divestiture of core brands maybe Canal+ could sell a stake in SuperSport which I doubt even DStv. Canal+ is more likely look to offload assets such as Namola and Aura as they generate very little revenue for MultiChoice.
Scenario B
Regulators have been known to block deals in the past with Vodacom and Maziv deal that had remained ongoing since 2022. On the MultiChoice's stance, the issue would stem from its dominance within the TV spectrum particularly sports, a deal like this would further isolate competitors.
Another may have to do with economic factors, regulators may fear that this ordeal will lead to jobs cuts or loss of local content. Although Canal+ doesn't have an existing foothold, MultiChoice has been loss making and the acquiring company always looks to reduce operational expenses.
Lastly the structure, MultiChoice plans to curve out it's broadcasting license into a separate entity to ensure its compliant with legislation. Regulators may not be convinced that MultiChoice will comply with that 20% cap as the loophole to this would be MultiChoice Africa.
No comments:
Post a Comment