MultiChoice has denied it signed a revision to an agreement with formerly Gupta-owned 24-hour news channel ANN7, in terms of which it would pay the channel R150m/year.

But the news that it has been paying the channel at all provoked a backlash from consumers on social media on Thursday.

Responding to e-mailed questions from TechCentral, MultiChoice said the draft contract (PDF) — contained in the so-called “Gupta leaks” e-mails — was never finalised.

The draft contract published (in the Gupta e-mails) was not signed and MultiChoice is not part of the e-mail exchange referred to in your query

The draft contract came to light on Thursday after a portion of the leaked e-mails were published online.

The e-mail that contained the draft amendment to the channel supply agreement between MultiChoice and ANN7, sent from former Gupta lieutenant Nazeem Howa to one of the Gupta brothers, Rajesh “Tony” Gupta, showed plans were afoot to change the original deal, which was signed in December 2012. It’s not known why the amended deal was not signed.

The draft “third channel amendment agreement” stated: “With effect from the effective date (1 April 2014), the fees payable by MCA (MultiChoice Africa) … shall be increased from R50m/annum to R150m for the remainder of the term. For the avoidance of any doubt, the increased fees for the remainder of the term shall be calculated pro rata from the effective date to the end of term”. The unsigned amendment suggests that MultiChoice had been paying R50m/year up to that point for the supply of the channel, which until recently was owned by the controversial Gupta family.

The unsigned amendment agreement also proposed changing the duration of the contract to 10 years – so, expiring in 2024.

‘Legally binding contract’

“The draft contract published (in the Gupta e-mails) was not signed and MultiChoice is not part of the e-mail exchange referred to in your query,” the pay-TV broadcaster said in its e-mail to TechCentral on Thursday.

“We confirm that we have a legally binding contract, the details of which are subject to confidentiality clauses,” it added. It declined to say how much it has paid ANN7 to date.

According to a well-placed source with knowledge of the situation, the deal between MultiChoice and ANN7 will expire in 2018. It’s not clear, however, whether MultiChoice intends extending the contract. That, presumably, will be the subject of negotiations between the companies.

The Naspers-owned broadcaster has faced a consumer backlash for carrying the channel on its platform at all. This criticism intensified on Thursday on the news that it has been paying ANN7 for the supply of the channel.

The deal with ANN7 risks causing reputational and commercial damage to MultiChoice, with some users on social media on Thursday saying that they are considering cancelling their DStv subscriptions in the wake of the revelations that it has been paying ANN7 for the channel.

In August, controversial Gupta-aligned businessman Mzwanele Manyi said he was buying ANN7 and The New Age newspaper for R450m in a deal financed by the Guptas.

A Manyi-owned company called Lodidox bought Infinity Media, which owns ANN7, for R300m, and two-thirds of TNA Media, which owns The New Age, for R150m, Gupta-owned Oakbay Investments said in a statement at the time.

The sale came as Oakbay struggled to find a banker willing to do business with it. Bank of Baroda this year became the latest institution unwilling to provide banking services to the Gupta family’s businesses. — © 2017 NewsCentral Media