TopTV a pawn in IDC's political game, says shareholder
These allegations from Mergan Moodley – the founder of On Digital Media (ODM), which owns TopTV – come on the same day the pay-TV station announced it would be discontinuing two channels from its bouquet for "operational reasons" in preparation for a new channel structure.
"The IDC [Industrial Development Corporation] has orchestrated moves to devalue the company [ODM] in order to facilitate a sweetened deal with a potential investor that would buy it out," Moodley said on Wednesday.
ODM's cash flow issues have been well documented and TopTV was declared technically insolvent last June by auditing firm KPMG.
The company applied for business rescue in October 2012 to give it time to find investors and has been in discussions with Chinese pay-TV group StarTimes for the past few months.
Initially 400 000 TopTV decoders were sold in 2010 but the number of active subscribers is believed to have diminished to a point where it is speculated the company may fold within months.
The Development Bank of Southern Africa (DBSA) as its biggest creditor – since its investment of R200-million – is not willing to further bankroll in the company, which is currently said to be surviving on subscription fees.
"I am very concerned that the IDC has run this company into the ground with the sole purpose of offering ODM to these prospective Chinese investors for nothing," added Moodley, who is currently a minority shareholder in ODM after founding the company in 2001.
A touted deal could see StarTimes – which already operates pay-TV facilities in nine other African countries – buying out TopTV's shareholders and resolving part of the company's mounting debt.
But, broadcast regulations cap foreign ownership on licensed broadcasting entities at 20%.
StarTimes proposed the creation of a new entity to provide transmission services to TopTV and other pay-TV operators in South Africa and Africa.
The IDC are a government owned development finance institution that aims to promote economic growth and industrial development in South Africa and is supervised by the economic development department.
The financially distressed pay station has been embroiled in court battles to broadcast three pornographic channels, namely Playboy TV, Desire TV and Private Space. The Independent Communications Authority of South Africa (Icasa) in 2012 blocked a previous attempt by TopTV to launch the channels, arguing, among other things, that the rights of women to equality and human dignity trumped the broadcaster's right to freedom of expression.
Moodley also alleged the IDC orchestrated the replacement of former chief executive Vino Govender with current head and former chairperson Eddie Mbalo.
"He [Mbalo] was never chief-executive material and the IDC purposefully did not receive money during Vino's [Govender] time to ensure he would fail," Moodley added.
Moodley said he wrote to the IDC on several occasions to inform them of his concerns regarding the poor financial management of ODM, claiming he was "flatly ignored each and every time".
"This is a sad reflection of how political meddling and stakeholder interference is destroying the broadcast industry. TopTV had a gap in the market but because of this fight for control of the company it is set to fail dismally," he added.
'Without substance whatsoever'
In response the IDC has discounted Moodley's comments.
"The IDC is firmly of the view that these allegations are without substance whatsoever," Mandla Mpangase, IDC public relations manager, said.
"The IDC, as a substantial funder of TopTV, has at all times acted as a responsible shareholder with the information that was available to us."
The corporation is "waiting for a report [on the StarTimes offer] from the business rescue practitioner, which will be published soon," according to a report in the Business Day on Wednesday.
When Top TV and Mbalo were asked for comment they replied through appointed business rescue officer Peter van den Steen.
Plan to remedy financial woes
"I have been, since my appointment, and remain, committed to engaging all stakeholders in an even handed and transparent manner that will serve the interests of all stakeholders in ODM," Van den Steen said.
Van den Steen is expected to publish the business rescue plan, which included StarTimes's proposal to shareholders during the course of this week.
It will have to then be voted on by both creditors and shareholders within 10 days of its publication.
He said that any plan proposed to remedy ODM's current financial woes will be "subject to its adoption by relevant stakeholder groups and implementation by me".
"To this end I will publish a rescue plan for stakeholders to consider and vote upon at a meeting in due course. No amount of meddling or political interference will distract me from my obligations to act in the best interests of all stakeholders," Van den Steen added.
But even after his allegations were refuted, Moodley claimed the IDC was only concerned with devaluing ODM to expedite a sale to StarTimes.
"Don't be surprised if someone within IDC receives a kickback for organising this sale. It won't be in the best interests of the company," he added.