Tuesday, October 22, 2013

BREAKING. Shareholders to take On Digital Media (ODM) to court to prevent StarTimes business rescue plan of TopTV to go further.

Shareholders - which includes its former ODM CEO Vino Govender , extremely unhappy with the StarTimes bail-out and the business rescue plan of the struggling On Digital Media (ODM), now plan to take the Woodmead based South African satellite pay-TV operator to court to prevent the business rescue plan from the Chinese digital television conglomerate StarTimes from proceeding any further.

Unhappy and exasperated shareholders are now seeking an urgent court interdict to prevent what they see as wholesale changes to the TopTV service which are permanent and dangerous and which could be lethal to ODM should South Africa's broadcasting regulator not eventually approve the StarTimes bail-out application.

First National Media Investment Holdings and Atchuthandandan Moodley who together have a combined interest of 21,1% (20,4% and 0,7% respectively) are adamant to stop the business rescue plan being implemented by StarTimes from going any further.

The urgent court interdict will be brought on 29 October. If granted, it will further delay ODM's already delayed relaunch of its severely damaged TopTV brand into StarSat which was supposed to happen last week and which has been postponed to November.

With a court application and the interdict coming to the South Gauteng High Court, it now appears that a November launch of StarSat is also out of the question as conflict rages behind the scenes at TopTV.

The ODM shareholders voted on 30 April 2013 for China's StarTimes - already operational in several African countries - to take over a 20% share in the beleaguered company. What it means in reality is that StarTimes acquires an effective 65% economic interest in ODM.

A fifth of the shareholders have however been extremely concerned that On Digital Media will be "irreparably damaged" if the StarTimes business rescue plan goes ahead but isn't successful. Meanwhile some flaws in the implementation behind the scenes have already become very visible to not just shareholders but also to ordinary commercial TopTV subscribers.

"Currently the business rescue plan is the best opportunity for ODM, which is in a vulnerable position, to be rescued," says the shareholders, unhappy with what they claims are "significant aspects of the business rescue plan which appears to be permanent".

Already massive drama has been playing out behind the scenes at the company, once again rocking the struggling ODM as StarTimes' presence started to be felt the past two months.

It's been playing out for TopTV subscribers on their TV screens with weird new unexplained content, as well as high frustration and a consumer backlash over a new billing system which was introduced and instantly malfunctioned.

The ODM shareholders say that StarTimes is under financial stress of its own and that if StarTimes' business rescue plan proceeds that it will increase the risk of the business possible failing.

The shareholders are extremely concerned over the fact that StarTimes has been given control over ODM's billing methods and programming and they are worried over how ODM's own content - which it used to control - were suddenly sidelined and "outsourced" to China.

Then there is also grave concern over the termination of ODM's termination of German uplink contracts which were switched to StarTimes in Beijing  as well, and ODM's cancellation of satellite space on the SES satellite platform service which was taken over by StarTimes.

"In this respect, all content being broadcast into South Africa is now under foreign control," says the shareholders.

"This act by the business rescue practitioner outsources the very core of ODM's top channels which are packaged and owned by ODM. The ability to reactivate these channels will be a very lengthy process and the loss of these channels on the ODM product bouquet will certainly result in a huge loss of the subscriber base," says the shareholders.

These big changes have been done with the Independent Communications Authority of South Africa (Icasa) which has not even approved ODM's change of shareholding application with the broadcasting regulator.

Icasa is still considering and has to make a decision on ODM's request, submitted last month, requesting approval of the massive foreign shareholder change with StarTimes. In the application ODM asked for the unconditional transfer of the ENCS licence from ODM to Newco, which is in fact StarTimes Media SA.

If it's not approved, and with StarTimes already in control of crucial business aspects of ODM, ODM will be essentially cut off and lose its link to its TopTV subscribers without content and satellite distribution capability.

"The ownership and control of ODM is misrepresented in the Icasa application in order to circumvent the criteria for holding and transferring an individual Broadcasting Service Licence and an ENCS licence," the shareholders say.

"In my extensive experience as previous CEO of ODM, and from my long experience in the industry, it is clear that once a subscriber is lost, it is very costly and difficult to win that subscriber back," says Vino Govender.

"Unhappy subscribers who have cancelled their contracts and moved to ODM's competitors often do not return despite massive marketing attempts."