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Re: MultiChoice Nigeria: A legacy of monopoly and non-transparency

Our attention has been drawn to an advertorial published on Thursday, 6 June, 2024. It is our intention to review the said advertorial, signed by…

Our attention has been drawn to an advertorial published on Thursday, 6 June, 2024. It is our intention to review the said advertorial, signed by one Suleman Saki, allegedly a “public affairs analyst based in Abuja”, against the true position of things in the broadcast industry in Nigeria so we can confirm if he is operating from an altruistic purpose or he is promoting a particular private narrative.

It is not in doubt that MultiChoice Nigeria is the biggest investor in the entertainment industry in Nigeria, given its diverse and rich range of content offering. The question Suleman Sarki struggles answer is whether MultiChoice’s massive investments in the Nigerian entertainment industry gives it the leverage to distort competition in the broadcast industry or abuse consumer rights. His advertorial is erected on two broad planks; it accused MultiChoice of “disregard for regulatory compliance”/lack of transparency and “monopolistic practices that threaten the integrity of the Nigerian media sector”.

The accusations are a call to Nigerians to hate MultiChoice. For the first, the advertorial stated that between 2014 and 2023, MultiChoice Nigeria failed to comply with a provision of the National Broadcasting (NBC) Act requiring broadcasters to remit 2.5 per cent of their gross annual income to the NBC. This, he claimed, has robbed the Federal Government of N30 billion in revenue. He equally alleged that MultiChoice, in disregard for the NBC Code, has repeatedly prevented “regulatory oversight” and concealed its financial position by denying the NBC access to its accounts.

For these infractions, Sarki wants MultiChoice Nigeria investigated by the Economic and Financial Crimes Commission (EFCC) for economic sabotage, penalised by the NBC for refusal to hand its financial, tax and accounting information over; compelled by the NBC to submit its financial information for regulatory assessment and break the presumed monopoly.

One does not need to be a sleuth to locate the source of the calumny against MultiChoice Nigeria. Interests, for whom Sarki is fronting, we can confidently state, are those who run pay television services, with government encouragement, on content pirated from MultiChoice, StarTimes and Qatari broadcasters, BeiN among others. They are the ones whose business plans contain just one tactic: stealing content produced or paid for by others.

  • It is pertinent to ask what computational method was used in arriving at the N30 billion MultiChoice is alleged to be owing the NBC. While it is public knowledge that MultiChoice instituted an action at the Federal High Court to challenge the NBC audit of its annual levy remittances and its exparte motion for an order to stop the audit was declined. However, the Court directed all parties to maintain status quo pending the determination of MultiChoice interlocutory application. The effect of this is that NBC is restrained from taking further steps in the matter until the interlocutory application is argued and ruling given.The sponsors of the cheap work of calumny masquerading as advocacy are claiming that MultiChoice is owing for nine years. Whereas, we are aware MultiChoice has never defaulted either in submitting its audited accounts or payment of the levy to the NBC.

As industry stakeholders and a major voice of opposition to the extant NBC Code at the time it was issued, we are aware that Section 2 2 (10) (d) of the Code requires broadcasters to submit the Certified True Copies (CTCs) of their annual audited accounts to the NBC for the purpose of computing their annual levy on income at the rate of 2.5 per cent. It is curious that the NBC, which has not stated that MultiChoice has defaulted in payment or submission of audited accounts, is demanding documents other than what the NBC Code provides for. The NBC Act (2004) has no provision empowering the commission to audit licensees’ accounts. Bizarrely, the NBC says it is investigating the pay television company for years 2014-2023. However, the 6th NBC Code, to which the regulator is alleging non-compliance only become operational, in 2020. What was in operation prior to 2020 was the 5th Edition of the NBC Code, issued in 2012 and replaced by the current one in 2020.

According to both editions of the Code, the NBC’s request for documents not listed in its code as requirements for the computation of annual income levy is an overreach of NBC power and an attempt by NBC to unlawfully assume the powers of the Federal Inland Revenue Service. What the NBC requires are annual audited accounts. No more. No less. The audited accounts have been submitted yearly to the NBC, as evidenced by the commission’s reticence on that. In any language, NBC’s demand for documents the law does not empower it to demand, spells abuse of power.

It is common knowledge that most broadcasters do not pay the annual levy and that NBC has threatened at various occasions (to no avail to revoke their licences). So, it is rather strange that NBC is chasing after the only operator that duly pays its annual levy, which far outstrips the totality of annual levies paid by the entire broadcast industry. It is therefore pertinent to ask Sarki and his sponsors what computational method was used in arriving at the N30 billion MultiChoice is alleged to be owing the NBC. It is equally important to point out that neither the 5th or 6th NBC Code provided its intended definition of “income”, leaving room for contestations over whether it is turnover or revenue minus cost of production, which puts a bold question mark on the fidelity of the N30 billion quoted by the advertorial.

The second plank of the position of the interests Sarki represents contains their real agenda: to continuously parasitize MultiChoice. This is obvious in the unfounded claims that MultiChoice stifles competition, is a monopoly and determines tariffs payable because of its dominant position-all cumbersome euphemisms for “we want to keep pirating content”. This is framed as concern for the consumer and the pay television ecosystem. Pricing is determined by various inputs, including domestic economic dynamics and everyone knows the shape of the economy over the last nine years.

At the heart of the second allegation are the exclusive rights to certain content and channels held by MultiChoice. Evidence declines to support the claim that MultiChoice is a monopoly or stifles competition. We recall that in 2022, the Competition and Consumer Protection Tribunal (CCPT) ruled that there was no evidence that MultiChoice had abused its dominant position. Also, importantly, we are aware that other pay television service providers operate, with some holding or having once held exclusive rights to content. StarTimes, we are aware, once had exclusive rights to the matches of the Italian football league, better known as Serie A. It currently has exclusive rights to the matches of the German football league (Bundesliga) and the Nigeria Professional Football League. For the first two, it outbid MultiChoice for the rights. The service provider is still in existence and does not pirate content to run its operations.

Before StarTimes, there was HiTv, which wrested the rights to matches of the English Premier League from MultiChoice and held them for three years until it was, as the founder, Toyin Subair, stated “collapsed essentially because of a clause in our original Shareholders Agreement, which allowed a group of founding shareholders to block the company raising money or selling off a subsidiary”. The collapse had nothing to do with MultiChoice.

After HiTv came Kwese, which operated for a little over two years until it was undone by its inability to meet multiple payments to third party partners because it could not quickly gain subscribers and the necessary cashflow. Its unfortunate collapse had nothing to do with MultiChoice. Neither did it pirate other operators’ content.

The campaign of calumny against MultiChoice did not just start. It manifests in a number of ways, with the issue of exclusivity a major one. Those casting covetous glances at MultiChoice’s success have been strident in falsely depicting content exclusivity as a crime and are emboldened to pirate content with encouragement from formal and informal quarters. Their hand was revealed in the now judicially-annulled amendment to the 6th edition of NBC Code, which sought to prohibit content exclusivity and compel sub-licensing to competitors on terms determined by the NBC and in flagrant indifference to the Copyright Act.

Some elements within the government of the time, cheered on by freebooters in the pay television ecosystem, promoted a variety of misguided beliefs about exclusivity. Notable among these were views that acquisition of broadcasting rights are anomalous; that some broadcasters are just handed exclusive rights; that the content market is closed off to Nigerian broadcasters; and that exclusivity stifles competition.

The truth about content exclusivity is that it is a widely accepted commercial practice required for a viable pay television ecosystem. Given that it is usually for a short time, three or four years in many cases, it cannot be considered anti-competitive, as other operators are at liberty to bid when the holder’s right to it expires. The grant of exclusive broadcasting licenses falls within the lawful exercise of copyright and it is widely accepted that, as far as the Copyright Law is concerned, a right owner has the right to refuse to license other users/firms, and to restrict exploitation of its intellectual property either to itself or to a licensee of its own choice. In the United Kingdom and the United States of America, there is no statutory prohibition of exclusive rights acquisition. There is equally no statutory requirement to sub-license sports or news content to competition or at rates determined by the regulator.

It is common knowledge that the sale of broadcasting rights is a competitive process, with rights owners seeking to extract maximum value from the property. As such, it is open to any broadcaster with the desire and means to acquire such rights. The proof of this, if any is needed, is StarTimes, which outbid MultiChoice for live broadcast of Germany’s Bundesliga. Other operators had, at one time or the other, acquired exclusive rights to matches of the French elite football division (Ligue Un) Copa del Rey and the Portuguese League, for instance. There are also numerous broadcast properties on the international content market for operators to bid for and acquire in addition to producing their own exclusive content.

Unfortunately, the desire of many operators is to wait for another operator to acquire the rights and/or finance production, invest in marketing and promotion, only for them to demand the property to be sold at prices that are close to derisory. It is akin to demanding subsidies. If the Federal Government is removing subsidies on various items and services, it is irrational to expect a private business to subsidize competition or anybody for that matter. It stands to reason that there will be no incentive to acquire or produce exciting broadcast properties if the only thing operators need to do is to leech on the one with more imagination backed by investment. To have such a system is to open the industry to hypocrites and parasites. Both have no place in the industry ecosystem.

Jacob Agunbiade
For: Association for the Defence of the Nigerian Economy (ADNE)

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