Canal+ and Multichoice seek regulatory approval for $3bn takeover

Deal will be the biggest media takeover in Africa

Two South African regulators are now considering the biggest ever media takeover on the African continent. This afternoon Multichoice announced to its shareholders “that Canal+ and MultiChoice have…made a joint merger control filing as required by the Competition Act” to seek approval for the $3bn (R51bn) transaction.

The two companies are “also engaging with the Independent Communications Authority of South Africa (ICASA) and other regulatory authorities”. Multichoice confirmed that “the transaction is classified as a ‘large merger’,  which requires approval by the Competition Tribunal. Accordingly, the Competition Commission will consider the filing and refer its recommendations to the Competition Tribunal”.

The deal would reportedly give the French group over 80% of the African pay tv market. In deciding on its recommendation to the Tribunal, the Commission would have to "determine whether the merger will result in any change in the competitive landscape that could substantially prevent or lessen competition in the relevant market" in South Africa.

Canal+ and Multichoice will no doubt seek to paint that market as wide as possible, to include Netflix, Amazon and other global players, and portray Multichoice not as a dominant player in SA (which had a three-decade long monopoly until the streamers came to town) but as a regional player under threat from global giants. Whatever the framing of the market, there is no doubt that the takeover will lead to an even greater concentration of sports and premium content rights in Africa.

Canal+ has previously announced that they would structure the deal  to ensure compliance with all SA laws, including the very explicit prohibition on foreign control of South African broadcasters.

Section 64 of the Electronic Communications Act provides that:

(1) A foreigner may not, whether directly or indirectly- 

(a) exercise control over a commercial broadcasting licensee;  

(b) have a financial interest or an interest either in voting shares or paid-up capital in a commercial broadcasting licensee, exceeding twenty (20) percent. 

(2) Not more than twenty (20) percent of the directors of a commercial broadcasting licensee may be foreigners. 

It will be up to ICASA to determine whether the deal structure—yet to be fully disclosed—is a case of ‘creative compliance’ or genuinely prevents Canal+ from assuming control over DStv or any ICASA-licensed entity.

The regulatory reviews by ICASA and the Competition Commission are likely to be concluded in 2025 at the earliest. The timeline could be further extended if any interested parties choose to formally object to the transaction.