Naspers won't renew contract with Gupta-linked ANN7

2018-01-31 16:51 - Yolandi Groenewald
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Johannesburg - Naspers’ [JSE:NPN] MultiChoice has decided to rid itself of Gupta-linked ANN7, after an internal investigation found that the media company made critical mistakes. However, the investigation found no explicit wrongdoing or corruption.

This follows News24's #GuptaLeaks report in November, in which it was detailed how MultiChoice agreed to pay the Guptas' Infinity Media Networks a "once off" payment of R25m in 2015. The payment was not deemed as corruption in the internal investigation, headed by MultiChoice board member Don Eriksson.

In December it emerged that MultiChoice had also agreed to increase its annual payment for Infinity's ANN7 news channel from R50m to just over R140m, documents showed.

Criticism has been heaped on the company for funding a channel with dwindling viewership which essentially became a propaganda machine for the Gupta and Zuma families.

Allegations also emerged that MultiChoice made a payment to the South African Broadcasting Corporation (SABC) in exchange for political influence over government policy on digital migration.

Before MultiChoice signed the agreement, then communications minister Faith Muthambi had forwarded detailed suggestions about government decisions affecting the broadcasting sector to the Guptas and Duduzane Zuma, the president’s son, News24 reported.

The documents were penned by Clarissa Mack, MultiChoice's then head of regulatory and policy affairs.

But on Thursday the internal investigation said no corruption had been found in its probe, “done by a capable and respected team”.

MultiChoice CEO Calvo Mawela said the company would own up to the fact that critical mistakes had been made.

Despite assurances that no corruption or wrongdoing had been found, Mawela said the full report would not be released. He said only the findings and recommendations would be shared, because the full report contained sensitive commercial information.

Mawela also declined to say exactly how much money ANN7 had been paid, merely hinting that it was above R100m.

ANN7 dumped

ANN7’s contract will lapse in August, and it will not be renewed. Instead a black owned new news channel will be introduced. Mawela said tenders would be going out shortly to select a channel that would represent the majority of South Africans.

The new channel must be black, free from political interference, and offer critical news coverage, Mawela said.

A firm owned by Mzwanele Manyi has since bought ANN7 and The New Age and Mawela said MultiChoice has had discussions with Manyi about their decision to dump the channel.

Mawela said it had been a humbling episode for MultiChoice and that it would learn from this experience. Nobody had been fired as a result of the investigation, he said.

“We fully understand the outrage of the public, we must have dealt with the concerns more swiftly,” he said. “Today we hold our hands up to our mistakes.”

He said former MultiChoice SA CEO Imtiaz Patel's relationship with the Guptas played no role in their relationship with MultiChoice. Patel heads up video entertainment in Naspers.

Also MultiChoice would fully cooperate with a parliamentary inquiry into whether influence had been peddled.

Icasa will also be investigating MultiChoice over allegations of the payments made to both the South African Broadcasting Corporation (SABC) and ANN7.

Mistakes

Mawela said the investigation found that mistakes were made, which they hoped to avoid in future. The failure to conduct thorough due diligence around ANN7 and its ownership was mistake number one. Secondly not raising concerns around ANN7 and their associates as they came to light, was another.

Yet the investigators found that the commercial contract with ANN7 was within the accepted parameters of MultiChoice, Mawela ssid.

Negotiations with ANN7 began at a time when MultiChoice wanted to add black coverage to its bouquet to reflect more diversity in South Africa, Mawela said.

He said the investigation also found no correlation between ANN7 and lobbying for government influence on policies that could benefit MultiChoice. “But some processes could be improved.”

Naspers CEO Bob van Dijk said the news coverage was “not what you wanted to see about your company”.

But he said he understood the levels of concern, and how the public felt about the allegations.

“Those allegations were extremely serious,” he said. “We have taken them seriously.”

Payments made to ANN7, including an upfront R25m in 2015, were “neither abnormal nor unusual” when negotiating with TV channels about broadcasting on a network, MultiChoice said.

All relevant contracts were reviewed by the company and attorneys Webber Wentzel.

* Fin24 is part of 24.com, a division of Media24, which is a subsidiary of Naspers.

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