ENTERTAINMENT GIANT
Canal+ makes a bid to buy MultiChoice for more than R30bn
Canal+, which already owns 31.67% of MultiChoice, announced this morning it wants to buy all of the company’s shares. It will be a tough deal to get over the line because South Africa’s broadcasting rules currently prohibit foreign entities from owning more than 20% of a local broadcaster’s voting rights, although its economic interest can be higher.
France’s entertainment giant Canal+, which bought a significant stake in MultiChoice in previous years, has approached the board of the local pay-television group with an offer to buy it out.
On Thursday 1 February, Canal+ confirmed that it is prepared to table an offer of R105 per MultiChoice share, which represents a 40% premium to the company’s closing price of R75 on 31 January 2024.
MultiChoice shares on the JSE shot up 25% in early trade on Thursday, inferring that the company’s shareholders are warming up to Canal+’s offer.
In recent years, Canal+ has been buying shares in MultiChoice, ending up with a shareholding of 31.67% by the end of March 2023, according to MultiChoice’s latest annual report. Canal+’s current ownership of MultiChoice is close to the 35% mark, which South Africa’s competition rules would require it to make a mandatory offer to minority shareholders to buy out the company. That Canal+’s ownership of MultiChoice is nowhere near 35% makes its planned buyout offer voluntary.
Daily Maverick calculates that Canal+ would shell out R31.7-billion for the remaining shares in MultiChoice that it does not already own. At Canal+’s offer of R105 per MultiChoice share, the French entertainment giant values MultiChoice at R46.5-billion.
In a JSE SENS announcement, MultiChoice confirmed receiving a letter from Canal+, indicating its plans to buy out the company. It also confirmed the R105 per share offer that Canal+ is willing to pay. MultiChoice said its board will update shareholders if there are any further developments.”
Once the MultiChoice board is open to buyout talks, Canal+ said it would conduct a due diligence process into the affairs of the pay television company and submit a firm buyout to the board. “At this stage, there can be no certainty about the progression of the potential offer, nor the terms of any transaction that may occur,” Canal+ said in a statement.
Fraught regulatory approval processes
Arguably, Canal+ will have to go through tough regulatory hurdles to get the deal over the line. Although South African broadcasting rules are open to a foreign entity (Canal+) investing in a local broadcasting company, the rules put a cap on ownership. Currently, foreign ownership of broadcasters is restricted to 20% of voting rights in a company, although its economic interest can be higher. This policy seeks to “ensure that South Africa’s broadcasting system continues to be owned and operated by South Africans,” a government policy paper reads. The government has proposed raising the limit from 20% to 49%, but nothing has come to fruition.
However, if the MultiChoice board is interested in Canal+’s advances, it might put forward a case to regulatory bodies for the deal to receive the green light.
Canal+ said the aim of buying MultiChoice would be to combine both businesses to create an entertainment giant. “It is the ambition of Canal+ to create an African media business with enhanced scale, which can thrive in a competitive international market, better serve its consumers with a world-leading offering of sports, local and global content, and ensure that Africa can tell her story to a global audience on her own terms.”
Canal+ said the media industry in which MultiChoice is operating “is becoming increasingly globalised and competitive, with regional media companies having to compete with the firepower of global media titans, with enormous resources to invest in content, marketing and technology. Scale is the only way to survive and thrive in this environment”.
Even Amazon Prime Video pulled out of South Africa due to a tough and competitive market.
Read more in Daily Maverick: Amazon Prime Video’s restructuring will reverberate in SA through job losses and axed TV projects
Canal+’s advances towards MultiChoice come at a time when the latter is working with global broadcast groups to improve its content offering through its television businesses, DStv and Showmax. MultiChoice is working closely with global broadcasting group, Comcast, which owns NBCUniversal and the UK’s Sky, to relaunch Showmax and offer international content on its streaming service.
In addition to buying MultiChoice, Canal+ has other plans in South Africa. Canal+ said it is preparing for its own listing, adding that combining its operations with those of MultiChoice would benefit investors. “This will allow investors to benefit from the combination of Canal+ and MultiChoice, our ultimate goal being to also obtain a listing in South Africa.” DM
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As a customer, I don’t feel very pleased with the prospect. Although DSTV is generally overpriced, Super Sport is a great product and invests in local sports increasingly all the way to the grassroots level. DSTV has also over the last few years pumped money into the local creative economy funding great local shows like Shaka Ilembe. I’m skeptical Canal+ would continue on this path. I’ve always thought that Naspers should have made the necessary changes to Multichoice (e.g. responding to tech changes) before the separate listing, this would have made it less lucrative but put the business on a great footing for growth.
Could there be an International Advisory Board in the offing? You know, a “non-statutory entity” acting as a supra-strategic finger in the pot – ala MTN providing their “valuable insight and experience” to assist the new board… while complying with regulatory scrutiny 👀 Dust off your CVs and your answers for executive advisory board member interviews and steam those fancy pants owners, just in case