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StarTimes saves TopTV from going dark

2013-05-02 09:21
porn TopTV
Cape Town – TopTV will effectively be taken over by China's StarTimes after 99.3% of shareholders and creditors voted in favour of the bail-out of the beleaguered South African pay-TV operator.

TopTV would have gone dark and the service suspended on Tuesday night – one day before the struggling Woodmead-based pay-TV service's third birthday – if shareholders did not agree to the StarTimes business rescue plan offer.

On Digital Media (ODM) which runs the struggling TopTV also saw late bids on Sunday from Dynamic TV which was backed by millions from pay-TV platform MultiChoice which is TopTV’s rival, as well as the Wananchi group from Kenya also running a successful pay-TV service, Zuku.

With its business rescue plan adopted and StarTimes ready to flush cash into the loss-making TopTV, StarTimes and China is getting its first – and very important – foothold in South Africa, the continent's most sophisticated, developed and most lucrative satellite pay-TV market.

Millions owed to content providers

TopTV owes Fox International a massive R43.8m which amounts to 3% of TopTV's overall debt to creditors. Warner Bros is owed R25.4m or 1.7% of the total, Paramount is owed R13.1m and Manchester United Television is owed R9.5m which now reveals why the MUTV channel was suddenly yanked in November 2012.

TopTV also owes Turner Broadcasting System R6.4m which is why Turner's channel's suddenly disappeared in December 2012 when Silver, Showtime and Star were yanked. Top Junior and Top Movies +24 were also discontinued earlier in April. TopTV also owes The Walt Disney Company R7.2m.

In total ODM owes about R1.5m to creditors combined.

Shareholders of the beleaguered On Digital Media (ODM), currently in business rescue since the end of October 2012, voted overwhelmingly in favour of the StarTimes bail-out.

The StarTimes capital injection will not just keep TopTV on air and prevent liquidation immediately, it will also return TopTV to a solvent state for a minimum of the next three years.

TopTV was overspending at the pace of R25m per month by October 2012. ODM wants to start a separate TopTV porn bouquet of three sex channels with a R18 rating supplied by Playboy TV UK / Benelux Limited in England and got approval from South Africa's broadcasting regulator, the Independent Communications Authority of South Africa (Icasa), to do so.

StarTimes chosen over Dynamic TV, Wananchi

While a majority vote of at least 75% is needed to approve a business rescue bail-out plan, a whopping 99% of ODM's creditors and current shareholders which include the Industrial Development Corp (IDC), Development Bank of Southern Africa, the National Empowerment Fund and the European satellite operator SES, voted in favour of the StarTimes business rescue plan.

Dynamic TV which suddenly popped up as a contender to bail-out TopTV on Sunday - enabled through a loan of R100m and massive capital backing from MultiChoice - tried desperately to keep TopTV out of Chinese hands. Dynamic TV would have paid creditors 20c for every rand of debt as opposed to the 10c per rand from StarTimes.

MultiChoice was willing to invest R30m in TopTV per month to prevent what now effectively means a take-over by StarTimes of the TopTV service. StarTimes will install its own CEO at TopTV according to its business plan.

The third bidder who suddenly emerged on Monday night was the Wananchi group of Kenya which is running a successful and growing pay-TV service, Zuku, in Kenya, Ethiopia, Rwanda and Malawi.

Both Dynamic TV and the Wananchi group seem to have taken too long to put in their offers.

Shareholders already saw the StarTimes business rescue plan and had time to go through the details, and StarTimes was seen as the last and only remaining safety line to prevent TopTV from going under.

Desperate for a deal

Shareholders were desperate for a possible deal from a new capital investor and wasn't aware of Dynamic TV and the Wananchi group's offers until 48 hours and less than 24 hours before the crucial business rescue vote.

The StarTimes deal which also offered TopTV a way out to prevent liquidation, made it very clear to ODM that StarTimes was not going to entertainment amendments to the existing business plan and would immediately exit if shareholders voted no, or not for, StarTimes' offer on the last day of April.

Meanwhile StarTimes had already done due diligence, blasted TopTV's terrible business practice and mistakes, and issued clear goals of how it wants to transform TopTV bad pay-TV service which - given the precarious position TopTV is in - made shareholders feel safer opting for the StarTimes deal as opposed to the other bidders.

TopTV's business rescue plan from StarTime was preliminary adopted by an overwhelming majority of 93.9% of creditors that voted and the business rescue plan was thereafter adopted by a unanimous vote of preferential shareholders (100%) and a majority vote of ordinary shareholders (99.3%) in favour.

ODM's business rescue officer says the newly adopted business rescue plan is binding on TopTV, all the creditors as well as the shareholders.

ODM in a press statement says that Peter van der Steen, ODM's business rescue practitioner "is now required to take all necessary steps to satisfy all creditors and implement the adopted business rescue plan".

Read more on:    warner bros  |  startimes  |  multichoice  |  toptv  |  on digital media  |  tv
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