Kenya Broadcasting Corporation managing director, Mr David Waweru. Photo/FREDRICK ONYANGO
A dispute over the circumstances under which the Kenya Broadcasting Corporation (KBC), the public broadcaster, exclusively sub-contracted World Cup television rights to Radio Africa Ltd, has exposed the hostile tactics and backroom dealings prevalent in the country’s broadcasting industry.
With 32 teams from around the world meeting in South Africa to battle over the biggest sporting event, broadcasters were eagerly expecting the World Cup to provide them a welcome increase in viewership, listenership and advertising
The snag, however, was that the cost of acquiring World Cup rights had soared phenomenally.
Indeed, in many countries, it was almost taken for granted that the World Cup was going to be viewed only on public broadcasting or Pay-TV.
In Kenya, according to documents seen by The EastAfrican, KBC paid a fee of $700,000 for the rights towards the end of last year.
With the public broadcaster having taken the lead, expectations within the broadcasting industry were that KBC would come up with a formula for sharing both the cost of acquiring the rights and the advertising revenues without locking out any interested broadcaster.
As it turned out, what was expected did not happen.
Instead, the scramble for World Cup rights evolved into an intriguing game of vicious manoeuvring and under-hand dealings, all of which resulted in last week’s removal from office of KBC’s chief executive, David Waweru, and the corporation’s legal secretary, Hezekia Oira.
KBC quietly negotiated an exclusive deal with Radio Africa — owned by prominent media entreprenuer Patrick Quarrco.
According to the correspondence, the deal was initiated by a letter by Mr Waweru dated November 6, 2009, to Mr Quarrco refering to his “expression to partner with KBC in broadcasting the World Cup” and informing him that the corporation had accepted his proposal.
Five days later, Radio Africa formally accepted, paving the way for the signing of the agreement.
That agreement, consumated through a four-page and casually drafted document, titled “Memorandum of Understanding between Kenya Broadcasting Corporation and Radio Africa Ltd’ was signed on December, 23, 2009.
How KBC — a public entity subject to public procurement rules — came to grant an exclusive deal to Radio Africa without subjecting the World Cup rights to competitive bidding, is one of the most intriguing asides to the saga.
The details of that agreement included the following: First, Radio Africa was to pay KBC 50 per cent of the total costs of the rights.
Secondly, it was agreed that the revenues accruing from the “exploitation of the football tournaments” (sic) less VAT and agency commissions, shall be set between the parties on a 60:40 basis, with KBC taking the larger share while royalty would be shared on a 50:50 basis.
Thirdly, that Radio Africa would pay the 50 per cent for the rights in the following manner: 10 per cent on signing the agreement, 15 per cent on signing of the agreement and 25 per cent by March 2010.
Fourth, it was also agreed that the parties would open “joint bank accounts” for the purposes of collecting and banking the revenues.
The accounts were to be closed after the money was shared equally.
Fifth, under a section titled: “Third party rights,” the agreement stipulated that no third parties would be allowed to enjoy the rights.
Clearly, the manner in which the deal was sealed beg more questions than answers.
Where was the value added in a deal allowing a private party to underwrite rights held by a public broadcaster?
Why couldn’t KBC do it alone and hog all the revenues, in view of the fact that the World Cup rights had been paid for by the government?
Is it not the case that KBC would have negotiated better terms if the deal had been subjected to competitive bidding?
There was an uproar among broadcasters when it came to light that KBC had signed this exclusive deal with Radio Africa.
A team, representing the media industry’s foremost lobby, the Media Owners Association, was forced to hurriedly make representations to the permanent secretary in the Ministry of Information and Communications, Dr Bitange Ndemo.
However, all this was water under the bridge because KBC had already committed to Radio Africa.
It is noteworthy that at this stage, KBC’s parent ministry did not raise a finger about the manner in which the deal was procured.
Still, throughout this period, and in the build-up to the World Cup, KBC and Radio Africa went about signing advertising deals without any ripple in the broadcast industry.
That was until the Committee of Experts on Constitutional Reform came up with an order for a massive Ksh100 million advertising deal.
The committee wanted World Cup advertising space for civic education.
Apparently, the Citizen Group decided that they would not sit back as Mr Quarrcos’s group hogged the whole of the lucrative deal
According to a Citizen Group insider, Citizen felt that, with several vernacular stations in its stable, what it offered KBC and the Committee of Experts was a superior product.
Hardly 48-hours before the World Cup, the Citizen Group managed to get Mr Waweru to sign a radio commentary deal with them, allowing them to claim a share of the Ksh100 million deal from the Committee of Experts.
The Citizen Group paid Ksh500,000 (about $6,410) for rights to air radio commentaries.
With almost all advertising deals mopped up by KBC and Radio Africa, rumours started circulating that Mr Waweru had surreptitiously gone behind Mr Quarcco’s back and signed a deal with the Citizen Group.
Mr Quarcco immediately demanded a meeting to seek an explanation.
On Monday, June 7, a meeting was convened at the KBC boardroom to discuss the matter.
According to a letter Mr Quarcco sent to Mr Waweru the following day, Mr Waweru admitted admitted to him at the meeting that a deal had indeed been signed by the Citizen group.
In that letter, Mr Quarcco makes the sensational claim that Mr Waweru admitted to him that KBC had been put under pressure by senior government officials to give the Citizen Group and its affiliates rights to the World Cup.
“You indicated to me that you had come under political pressure to breach the agreement,” he said,
The Citizen Group insists that it had a right to stake a a claim to the lucrative deal from the Committee Experts.
“You can’t blame us for wanting to share the prize’, said a Citizen Group insider.
In a new twist Dr Ndemo has asked the Office of the Inspectorate of State Corporations under the Prime Minister’s Office to investigate whether Mr Waweru’s decision to sign a deal with the Citizen Group had put the Ksh75 million (about $1m) which the government had invested in the World Cup rights in jeopardy.
Source: East African
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