Naspers's MultiChoice to Probe Deal With Gupta TV Channel
(Bloomberg) -- Naspers Ltd. pay-TV unit MultiChoice started an investigation into whether there was any evidence of wrongdoing regarding its contract with ANN7, a 24-hour South African news channel formerly owned by the politically connected Gupta family.
Africa's biggest company by market value was responding to allegations in local media that MultiChoice had a corrupt relationship with ANN7, which Gupta-controlled Oakbay Investments sold along with other South African media interests earlier this year. Two years ago, MultiChoice increased its annual payment to ANN7 to 141 million rand ($10 million) from 50 million rand, News24 website reported Nov. 24, citing leaked emails.
“These allegations have negatively impacted the reputation of MultiChoice,” Don Eriksson, chairman of the unit's risk and audit committees, said in an emailed statement Friday.
The probe threatens to embroil Cape Town-based Naspers in the scandal surrounding the Guptas, who are accused of using their friendship with South African President Jacob Zuma to win lucrative state contracts and influence ministerial appointments. Auditor KPMG LLP, German software provider SAP SE, consultancy McKinsey & Co. and U.K. public relations firm Bell Pottinger LLP have all investigated work done for the family, which in all cases was found to have breached corporate governance standards to various degrees. The Guptas and Zuma deny any wrongdoing.
“The MultiChoice board needs to look into the contracts,” Naspers Chief Financial Officer Basil Sgourdos said in a phone interview earlier this week. “We do not think it is trivial and we would like the board to look into it and make sure that due process was followed.”
MultiChoice, which owns DSTV, Africa's biggest pay-TV provider, will assess whether there have been any governance failures regarding the relationship with ANN7. It will also examine whether the amount paid to the channel was in line with that made to other locally-produced TV stations, “with due consideration being given to the estimated costs of running a 24-hour news channel.”
Naspers shares fell 3.2 percent to 3,568.15 rand as of 1:42 p.m. in Johannesburg, valuing the company at 1.57 trillion rand.
To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net.
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, John Bowker, John Viljoen
©2017 Bloomberg L.P.
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