Allegations of secrecy have been levelled against Radio Highveld’s favoured bidder. Barbara Ludman reports
THE multimillion-rand fight for ownership of Radio Highveld Stereo has moved from merely monetary issues to questions of ideology. With Highveld licence hearings scheduled for the first week in September, the second-highest bidder, Worldwide Consortium, has accused the frontrunner of keeping secret two key documents that could prove a lack of commitment to black empowerment.
In a response filed this week with the Independent Broadcasting Authority (IBA), Newshelf 63, the highest bidder, has hit back at the charges.
Newshelf — a consortium that includes Primedia Broadcasting (which owns Radio 702), Mineworkers Investment Company (MIC), Sactwu Investment Group and the Women’s Investment Portfolio (WIP) — easily outbid the competition earlier this year for Highveld Stereo and Cape Town’s Kfm, two of the six South African Broadcasting Corporation radio stations up for sale.
The SABC recommended all six stations go to the highest bidder, although the IBA will make the final decision. Newshelf bid R320-million for Highveld, more than twice Worldwide’s R130-million bid, and R110-million for Kfm; Worldwide’s bid was R45- million.
The IBA has invited objections to submissions for licences before its hearings begin. Worldwide, among others, has responded to the invitation. It is Worldwide’s objection that Primedia has flagged as “confidential” both the management and shareholders’ agreements attached to its bid that has drawn the most heat.
Says Worldwide: “The exclusion of the shareholding and management agreements has obscured a number of critical questions. The answers … will have a fundamental bearing on the future of meaningful black ownership of the electronic media …”
Primedia, says Worldwide, owns 40% of the ordinary share capital in Newshelf and is providing 90% of the financing for the rest. It would seem, then, that “Primedia will be in financial, operational, management and programming control over Highveld …”
Worldwide has asked the IBA to find out whether — “given the asset base of MIC, Sactwu and WIP” — Primedia’s black partners will be able to repay Primedia; and whether, if they cannot, Primedia will take the stations over entirely “and therefore nullify black equity participation”.
Worldwide has also asked that the IBA look at whether the management agreement Primedia has signed with the black members of the consortium might lower the profitability of the radio stations the group will own.
In its response, Newshelf has noted that of all the applicants for licences for Highveld and Kfm, only Worldwide has made its management and shareholders’ agreement public. “While it is clearly desirable that they [IBA] have full sight of these documents, Newshelf 63 does not believe that these documents, insofar as they contain confidential information and information irrelevant to its application, need be disclosed to the public, and, more particularly, to its competitors.”
In any case, the response adds, the request for confidentiality is a request only, and the IBA has the final word on whether this information should be released to the public.
As for whether the “confidential documents” would prove a lack of commitment to black empowerment, the Newshelf submission states that the black empowerment consortium — MIC, Sactwu and WIP — will nominate the majority of appointees to the board which has delegated the day-to-day management to Primedia — and to which Primedia will be accountable.
The response also mentions its intention to “recruit, train and develop personnel from historically disadvantaged groups and to transfer managerial and technical skills to such persons”. This is, says the response, a “commitment to skills transfer constituting a promise of performance to the IBA by Newshelf 63, with which failure to comply could result in loss of the broadcast licence”.
If both of Newshelf’s bids succeed, Primedia will dominate both AM and FM broadcasting in Johannesburg and FM brodcasting in Cape Town.
A lack of diversity is one of the objections Worldwide has tabled with the IBA — “a diversity of broadcasting services, controlled by a diversity of communities in a competitive environment, is inherent in the primary object of the [IBA] Act — the public interest”.
A Newshelf consortium member calls the charges “comparing apples and oranges —ERadio 702 is talk radio, and Highveld is a music station”.