In rejecting Groupe Canal+’s bid to buy MultiChoice Group, the JSE-listed pay-television broadcaster made a rather interesting remark to investors on Monday. It said:

In keeping with its duty to act in the best interests of the company, the board remains open to engage with any party in respect of any offer which is for a fair price and is subject to appropriate conditions.

Now, this remark may simply be about the board reassuring shareholders that it is acting in their interests. But could there more to it than meets the eye? Could another suitor – other than Vivendi Group’s Canal+ — be lining up to make a bid?

One distinct possibility is that Comcast – the US media and telecommunications conglomerate that owns the UK’s Sky Group and US broadcaster NBCUniversal – could put its own offer on the table.

MultiChoice was certainly quick to reject Canal+’s R105/share indicative offer price, telling the French company that it undervalues the business just two working days after Canal+ made its intentions towards the South African broadcaster public.

This is speculation – and a media query from TechCentral to Comcast in the US has gone unanswered – but a sale to Comcast could make strategic sense for MultiChoice investors, especially if it is willing to pay a premium to Canal+’s R105/share indicative cash offer.

There are several reasons to believe the Canal+ approach could prompt a counterproposal from US-listed Comcast:

Comcast has acquired a 30% stake in Showmax, and MultiChoice Group CEO Calvo Mawela has said it is open to selling more shares in the African streamer to its US partner.
Comcast’s NBCUniversal has been intimately involved in helping MultiChoice build the new Showmax platform, which will be launched commercially to subscribers this weekend. MultiChoice and NBCUniversal engineers have worked collaboratively to build the new platform, drawing the businesses much closer together operationally.
A slate of content from NBCUniversal has been added to the new Showmax platform, with the potential for more to follow.
Former top Sky executive Andrea Zappia has been named chairman of Showmax. He also joined the board of MultiChoice Group last September. Comcast owns 76.8% of Sky.
MultiChoice and Sky are collaborating closely on various technology projects, including the launch later this year of DStv Glass, a smart TV solution developed by Sky and marketed under the Sky Glass brand in the UK.

Though MultiChoice has said in the past that it has worked with Canal+ on co-developing content for their respective markets – MultiChoice has traditionally focused on Anglophone Africa, while Canal+ is strong in Francophone Africa – it’s clear that the current relationship between MultiChoice and Comcast (and its subsidiaries) is operationally much closer.

So, although neither party has said anything formal, it’s possible something could be in the works. It’s also possible – likely, even? – that MultiChoice management would prefer a deal involving Comcast.

Read: MultiChoice tells Canal+ to take a hike

Of course, a transaction involving Comcast would face the same hurdles that an acquisition by Canal+ would, with South Africa’s limitation on foreign ownership of local broadcasters the biggest obstacle that would have to be overcome.

The Electronic Communications Act bars foreigners – individuals and companies – from holding more than 20% of a local broadcasting licensee.

The act states this:

A foreigner may not, whether directly or indirectly, exercise control over a commercial broadcasting licensee or have a financial interest or an interest either in voting shares or paid-up capital in a commercial broadcasting licensee, exceeding 20%.

Legal experts have warned that this may be an insurmountable hurdle. Canal+ CEO Maxime Saada has, however, suggested his company has found a way around this restriction, though it’s difficult to see what that might be, short of not including MultiChoice’s prized South African assets in an acquisition.

Would MultiChoice be prepared to have itself cleaved into two separate parts to facilitate a deal with Canal+ or another suitor? It seems unlikely as it would reduce economies of scale in an industry where size is increasingly important for long-term survival.

Read: Canal+ faces uphill battle to land MultiChoice deal

But if Canal+ has indeed found a way around the foreign ownership rules, it might soon not be the only company lining up outside MultiChoice’s Randburg headquarters, chequebook in hand, ready to make a deal. – © 2024 NewsCentral Media