COMPETITION TRIBUNAL OF SOUTH AFRICA
Case NO: 105/LM/Oct08
In the matter between
Kagiso Media Ltd Primary Acquiring firm
And
Urban Brews Studios (Pty) Ltd Primary Target Firm
Panel : D Lewis (Tribunal member); N Manoim (Tribunal member) and
Y Carrim (Tribunal member)
Heard on : 29 October 2008
Decided on : 29 October 2008
Reasons Issued : 24 November 2008
Reasons for decision
Approval
[1] On 29 October 2008 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Kagiso Media Ltd and Urban Brews
Studios (Pty) Ltd unconditionally. The reasons for the approval appear below.
Parties
[2] The primary acquiring firm is Kagiso Media Ltd (“KML”). KML has in excess of
20 subsidiaries. It is controlled by Kagiso Trust Investments (Pty) Ltd (“KTI”), which
is in turn controlled by Kagiso Charitable Trust (“Kagiso Trust”). KTI has in excess of
46 subsidiaries, including Kagiso Trust Enterprises (“KTE”). 1 KTE indirectly controls
Kagiso Educational Television (Pty) Ltd (“Kagiso TV”).
1 Refer to form CC 4(1) for a complete list of KML and KTI’s subsidiaries.
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[3] The primary target firm is Urban Brew Studios (Pty) Ltd (“UBS”). UBS is jointly
controlled by Danie Ferreira and Zwelakhe Sisulu each with 50% share. UBS
controls Urban Rhythm Factory (Pty) Ltd, Mtommbo Audio Solutions (Pty) Ltd, One
Gospel (Pty) Ltd, Soweto TV (Pty) Ltd and Ink Fly (Pty) Ltd.
Transaction
[4] The transaction entails KML acquiring 50.1% shares in UBS. On completion
of the transaction, UBS will be controlled by KML.
Rationale
[5] From KML’s viewpoint the transaction provides an opportunity to constantly
evolve with customer demand and meet the current needs of investors.
[6] UBS submits that the transaction will enable it to obtain structures, finances
and management depth to allow it to take advantage of new opportunities,
particularly in other parts of Africa.
Parties Activities
The Acquiring Group
[7] KML is involved in the provision of services such as the production and
broadcasting of audio content for radio, sale of advertising space on radio, the
publication and provision of specialised academic and professional information
service, outdoor billboard advertising and hosting and operating trade and consumer
exhibitions. KTI is an investment holding company with interests in the industrial,
financial services and resources sectors. KTE is also an investment holding
company specialising in the management of small businesses.
[8] Kagiso TV is involved in the production of private videos used by business,
government and interested members of the public for educational purposes. Kagiso
TV also produces audiovisual content for TV broadcasting. 2 Kagiso Trust is involved
in social development consultancy including consulting services in relation to the
2 The parties submitted that Kagiso TV does not have its own studios and other infrastructure required
to produce and complete an audio visual content but rather sources these from other companies.
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involvement of young adults in business, government as well as urban renewal
projects.
The Primary Target Firm
[9] UBS is active in the market for the production of audio visual content. This
content is produced for operators of television broadcast platforms such as the
SABC. UBS’s subsidiaries are involved in inter alia, the production of voice overs,
composition of music and sound tracks for television shows and the development of
gospel music package.
Competition analyses
[10] The activities of the merging parties overlap in respect of the following:
production of jingles (written music using a radio station name, slogan and frequency
usually played before or after a song) and audio products, audio broadcasting
services and the production of audiovisual content.
[11] The Commission submits that KML produces jingles for its radio station and
UBS for their in-house use. Since in-house activities do not constitute part of the
contestable market, the Commission concludes that this overlap does not have any
effect on competition.
[12] For the production of audio products, the merging parties’ combined post-
merger market share is estimated to be 2%. For the provision of audio broadcasting
services, KML has infrastructure for broadcasting of its radio stations whereas UBS
currently does not have but has begun building its infrastructure in South Sudan. The
Commission therefore came to the conclusion that the parties’ activities overlap in
this regard but not geographically since UBS’s broadcasting infrastructure is based
in Sudan.
[13] Both merging parties produce audiovisual content for broadcasting on free to
air TV. The post merger market share for locally produced audiovisual content is
estimated at 4.59%. For all content produced and broadcasted on free to air, the
merging parties’ combined post-merger market share is estimated to be 2.05%. The
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merging parties face competition from other firms such as Endemol, Morula Pictures,
Magic- Works, Red Pepper and Franz Marx Films.
[14] The transaction is unlikely to substantially prevent or lessen competition in the
affected markets as the merging parties’ combined post-merger market shares
remain low.
Public interest
[15] The transaction does not give rise to any public interest issues and is
accordingly approved without conditions.
___________________ 24 November 2008
D Lewis Date
Tribunal Member
Concurring: N Manoim and Y Carrim
Tribunal Researcher : I Selaledi
For the merging parties : Barkers Attorneys
For the Commission : Themba Mahlangu (Mergers and Acquisitions)
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