MultiChoice and SABC in cahoots over control mechanism
Controversy over the set-top box, which has delayed the government’s rollout of digital terrestrial television for 16 years, rages on at the Zondo commission.
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8 October 2019
The controversial R553 million deal between MultiChoice and the South African Broadcasting Corporation (SABC), signed on 3 July 2013 by SABC acting chief operating officer Hlaudi Motsoeneng, is under scrutiny at the Zondo commission of inquiry into state capture.
The commission has heard how the deal is alleged to have been concluded behind the back of the SABC’s then chief executive officer Lulama Mokhobo and how proper process was not followed, making the deal allegedly “unlawful”.
The commission also heard how MultiChoice inserted a controversial clause into the contract that would allow it to dictate the public broadcaster’s policy on a control mechanism to be inserted in set-top boxes that were to be used in the government’s digital terrestrial television (DTT) rollout.
Government has planned for over a decade to migrate all television broadcasting from an analogue broadcasting system to a digital one. But 15 years after it first began planning for the DTT rollout, the project remains in limbo.
For those who cannot afford a new digital television set, their analogue television can be converted to digital via an antenna and set-top box. The most impoverished five million households in the country will qualify for free set-top boxes; it was the fight over the control mechanism in these boxes that a former department of communications technical adviser says caused the project to remain incomplete in 2019. This control mechanism would allow households to connect to the internet and provide access to direct messaging, government documents and study materials.
Disagreement over the DTT’s control mechanism
Engineer Roy Kruger, who was the technical adviser to both former communications ministers Dina Pule and her successor Yunus Carrim, testified before the commission that the disagreement over the control mechanism was the single factor that derailed government’s DTT rollout.
Kruger is currently employed in Mozambique rolling out the country’s own DTT migration. He said it would be complete by December 2019 and that it would have taken 18 months in total. By comparison, South Africa’s DTT migration began in 2004 and is still not complete.
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Kruger accused MultiChoice of spreading disinformation regarding the set-top box control mechanism. He argued that MultiChoice did not want pay-TV rivals to be able to use the DTT set-top boxes, which they would not be able to do without the control mechanism.
He testified that the department of communications was shocked when the SABC did an about- turn and said it was not in favour of the control mechanism. Kruger said this change happened very suddenly.
The first SABC MultiChoice contract
The deal between the SABC and MultiChoice has a long history. When negotiations first began, Pule was minister of communication, Mokhobo was the chief executive of the SABC and Ben Ngubane was the SABC chair.
The first contract signed between the SABC and MultiChoice dates to early 2012 and does not contain the contentious control mechanism clause. When the second contract was signed in July 2013, however, Ngubane had been replaced by Ellen Tshabalala as SABC chairperson and Pule was in the last few days of her role as communications minister. Carrim replaced her on 10 July 2013, a week after Motsoeneng signed the contract.
The second contract stipulated that the SABC provided a 24-hour news channel on the DStv bouquet and an entertainment channel, which was later to become SABC Encore.
It also contained the clause that bound MultiChoice and the SABC together in terms of policy on the DTT set-top box control mechanism.
Ngubane testified before the commission that the need for an SABC 24-hour news channel came from the desire to compete against eTV’s eNCA, hosted on the DStv platform.
MultiChoice was the last option
Ngubane testified that Motsoeneng was sent to India and London to see if he could find a partner for the SABC. After this yielded no results, Ngubane said he was called to a meeting with then communications minister Pule where the SABC was told, “It is important that we talk to MultiChoice because that is the only remaining alternative”.
SABC board minutes from 2012 and 2013 back up Ngubane’s claim that the instruction to negotiate with MultiChoice came from Pule. SABC board members from the time have confirmed that the pressure to pursue the MultiChoice deal came from Pule and that this was expressed to the board through Ngubane and members of senior SABC management.
SABC board minutes from 7 February 2012 reveal that board members were displeased that negotiations were taking place between MultiChoice and the SABC while no documentation had been placed before the board.
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In this board meeting, Mokhobo advised the board that “the minister had been in conversation with various parties and MultiChoice was one of those parties”. Ngubane had stated during the same meeting that the matter was now a “policy directive” and that the SABC was required to function within that policy. Motsoeneng stated in the board meeting that pressure had been placed on SABC management to get a business plan approved.
SABC board minutes from 24 February 2012 show that it was at this meeting that Mokhobo announced that a contract between the SABC and MultiChoice had been executed, despite the fact that the board had not had sight of the contract.
This was the first agreement signed by the two parties.
SABC 24-hour news channel mothballed
Ngubane testified that negotiations with MultiChoice progressed to the point where a contract was signed. But a problem emerged “when it came to how MultiChoice will pay for the SABC on their DStv bouquet,” testified Ngubane. “That broke the discussion.”
SABC board minutes from January 2013 show that the SABC had decided there was not enough funding for a 24-hour news channel, and the project was mothballed. It was at this point that Motsoeneng testified that he picked up the deal.
Motsoeneng said that it was Mokhobo and Ngubane who had initially approached MultiChoice with the idea of having a 24-hour news channel on the DStv platform, but there had been funding issues and so the SABC had applied to National Treasury for the money. This request was declined in October 2012.
Motsoeneng testified that after Mokhobo and Ngubane had “failed” in their negotiations with MultiChoice, Ngubane gave him permission to resume negotiations.
“I decided to approach MultiChoice after we had failed and [said] to them, ‘Look, we still need a 24-hour news channel,’” he said.
Motsoeneng detailed how he would ultimately negotiate a two-channel deal with MultiChoice, referring to the two channels before the commission as “my legacy”.
The second SABC MultiChoice contract
In March 2013, Ngubane was replaced by new SABC chair Tshabalala. Mokhobo testified before the commission that Tshabalala was desperate to get rid of her because she was opposed to the second contract in the deal with MultiChoice that had been negotiated by Motsoeneng.
She said the SABC board minutes from the time will show how she had “locked horns over the MultiChoice contract” with Tshabalala.
“I had challenged a lot of her decisions very vigorously, and she was very angry with me,” testified Mokhobo. “It was very, very ugly.” Mokhobo also alleged that Motsoeneng had undermined her on many occasions.
Mokhobo testified that it was Tshabalala who instructed Motsoeneng and the SABC acting chief financial officer Christian Olivier to go ahead and sign the contract with MultiChoice. She had to take emergency leave for just short of a week to care for her granddaughter who was gravely ill during that week. “While I was gone, they then decided to meet with MultiChoice and quickly conclude the contract,” she said.
Mokhobo outlined for the commission the process the SABC-MultiChoice deal should have followed, arguing that the deal should have been first scrutinised by the SABC’s group executive members, then by the finance and procurement subcommittee and then taken to the board for a rubber stamp. But the process of concluding the SABC-MultiChoice deal “did not happen that way” and that deal was “entered into unlawfully”.
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“I just did not agree with it … at all,” she said. “The process was fundamentally flawed.”
When Mokhobo finished testifying, Deputy Chief Justice Raymond Zondo asked her to prepare a further affidavit about the MultiChoice-SABC deal.
Motsoeneng argued before the commission that the MultiChoice deal was very much in the interests of the SABC and he was boastful about the revenue this brought to the broadcaster, at one point referring to the success of his negotiating skills as a “brown bag with R700 million”.
When asked if the money had indeed arrived in a “brown bag” he replied that the use of the phrase was just a “teaser”.
Motsoeneng was also questioned about the multimillion rand “success fee” he is reported to have been paid by the SABC for negotiating the deal.
The fight over the control mechanism
Mokhobo testified that there were clauses in the contract that were “completely inappropriate” such as MultiChoice wanting to dictate the SABC’s position on the DTT set-top box control mechanism and that she clashed with Tshabalala again over the SABC’s position on it.
“In terms of the digital migration policy of 2012, which was in force at that time, it was important for those set-top boxes to have a control mechanism,” said Mokhobo. “The benefits were just enormous but all of that was thrown out when the MultiChoice contract was entered into.” She said the SABC-MultiChoice contract “effectively prescribed” to the SABC that its position had to be against the control mechanism.
During this time, Mokhobo was accused of being a shareholder in eTV, and it was alleged that her two children were working at eTV. Mokhobo described these allegations as a “bottomless pit of lies”. She said “The reason was quite simply that I was refusing to do things that were not according to policy, and therefore they had to find a way to sully my name.”
Ngubane described the issue of set-top box control mechanisms as “a ball that has been kicked around a lot at SABC”. He testified that there was a “strong view” in the SABC that the encryption that the control mechanism used would mean that SABC viewers could have their television signal switched off, which would be in contravention of the SABC Act.
“It was not decisive, but the majority view tended to be to a large extent that let’s not create any obstacle for people who don’t have subscription DStv or whatever other subscription channel can be switched off and not have access,” said Ngubane.
This position on the control mechanism offered up by Ngubane to the commission was similar to the one Kruger would later testify constituted disinformation being spread by people in MultiChoice and the SABC.
Control or corruption?
Mokhobo also rejected this argument in her testimony, arguing that no TV would have been switched off while she was the SABC CEO.
Kruger testified that politics was driving the fight over the control mechanism, to which Zondo asked whether it was “politics” or “corruption”.
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“If it was corruption, it needs to be dealt with very urgently,” said Zondo.
Later, Kruger testified that the then communications minister Faith Muthambi, who succeeded Carrim, went against both government and ANC policy in insisting that boxes have no control mechanism. Zondo said if this was true, the leaders of both the government and ANC “have a lot to explain”.
In response for comment the SABC said: “The SABC has noted the testimony in relation to the public broadcaster, which has been presented thus far at the State Capture Commission being chaired by Deputy Chief Justice Raymond Zondo. As the Commission is still underway, the SABC does not have a comment at this stage in relation to the testimonies of the individuals you have mentioned in your enquiry.”
Multichoice did not respond to requests for comment.
