Broadcasting Commission Intervenes in Sale of Cable Company


The sale of assets of Entertainment Systems Limited, one of the Corporate Area’s larger cable outfits, to Columbus Communications Jamaica Limited (FLOW), is now on hold as the Broadcasting Commission obtained an injunction against both entities on February 20.
The injunction restrains FLOW from acquiring the cable television and the communication assets of any other company, unless approval of the Broadcasting Commission is granted. It also restrains FLOW from making any changes to the system that it has purchased from Entertainment Systems Limited, until further orders of the Court or the judgment.
In addition, the injunction restrains Entertainment from taking any further steps in finalizing or completing the sale of its assets to FLOW. This announcement was made at a press conference hosted by the Broadcasting Commission at the Mona Visitors’ Lodge on the campus of the University of the West Indies, Mona on February 20.
The action comes against the background of the flouting of Regulation 28 under the Television and Sound Broadcasting regulations, which outlines that there should be no change in ownership or control of cable businesses without the prior approval of the Commission.
According to Executive Director of the Commission, Cordel Green, the Commission has been in “relentless engagement” with FLOW and the cable companies, pointing out that if they continue to proceed as they intended, without the approval of the Commission, they would be in breach of the regulations. These consultations occurred as early as August 27, 2007, which is within the same month FLOW was granted its national licence to operate in Jamaica.
“All of this crystallized in about October of last year when the Broadcasting Commission came upon additional acquisitions of that nature [by FLOW] without notice. We were basically reading it in the newspapers like everybody else, that the arrangements for cable companies were being changed overnight,” he lamented.
Expounding further, the Executive Director said that the Commission sought immediately to engage further with not only the licencees, in relation to the interpretation of Regulation 28, but also the Fair Trading Commission, the Consumer Affairs Commission, on these matters, and then the Attorney General’s chambers in early December last year.
“Our intervention with the Attorney General’s chambers essentially sought to solidify with a legal opinion, our own interpretation of Regulation 28 and that opinion we got from the Attorney General’s chambers on the 12th of January said that we were right,” he said.
“The Broadcasting Commission communicated this information to FLOW. So in addition to the engagement since August on Regulation 28 and our consistent advice that to proceed as they intended would be in breach of the regulation and also reiterating the position in January strengthened by the opinion of the Attorney General’s chambers, we have seen this latest acquisition, which now has resulted in an appeal to the Court for a further pronouncement on the matter,” Mr. Green added.
Representative from the Office of the Attorney General, attorney-at-law, Nicole Brown said that in granting the Order, the Court took into consideration several grounds, which were established not only in its application, but also in the affidavit that was before the court.
“There were two affidavits before the court .a substantive affidavit and an affidavit of urgency, which allowed the court to hear it [case] today, without notice being given,” she noted.
In terms of the considerations that the court concerned itself with before reaching the decision, she said that these included the fact that the Commission had formed the view that it is entitled to review and to approve all agreements between STV licencees for the sale of their cable television distribution and communication assets before there is a transfer of such assets, which is outlined in Regulation 28, and that Entertainment Systems Limited had entered into such an agreement with FLOW, without first seeking the approval of the Commission, is in violation of Regulation 28.
“The court was also told that the Commission was fearful that such an agreement may amount to conduct that may have the purpose or the effect of preventing or substantially restricting or distorting competition in the STV market or interfering with operations of networks or the provision of services of FLOW competitors in violation of section 20 of FLOW’s STV licence, thereby causing injury to subscribers, consumers and the general public,” she informed.
In addition, the court was advised that as a result of numerous complaints from cable subscribers and the general public, the Commission was also fearful that consumers in general may continue to suffer injury if the status quo was not preserved until the final determination of the substantive claim in this matter.As part of the proceedings, the court will be asked to determine, because there is a difference of interpretation of regulation 28, the correct interpretation.
In the meantime, the Executive Director acknowledged that prior to August 27, the proper channels were followed by FLOW and the cable entities and there were applications made to the Broadcasting Commission for the acquisition of D& L Cable, Sauce, JACS and those were examined by the Commission and as well as the arguments put forward by the applicants were examined and terms and conditions applied, to ensure the protection of the public interest.
“Since August 27 up to Entertainment Systems Limited case, changes have occurred without the Commission getting approval or being requested to consider applications,” he reiterated. Some five cable entities, including Entertainment Systems Limited have been acquired during that period.
“A regulator would wish to look at the impact of that particular application. A regulator would be interested in the public interest. A regulator would be interested in transitional arrangements. A regulator would be interested in a cable operator’s obligations to its subscribers, ensuring that there is no instability in the market,” he said.
The Order took effect at 2:15 p.m. on February 20 and will be in place for a period of 14 days, at the end of which there will be a further hearing on whether the injunction will be extended.

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