By Standard on Saturday Reporter

A decision by the Kenya Broadcasting Corporation (KBC) to lock The Standard Group and Nation Media Group out of the World Cup broadcast rights raises serious accountability questions, which the investigating team from the Inspectorate of State Corporations sums up as unethical and mischievous.

The audit team in a report, now with the Information and Communication PS Bitange Ndemo, questions why KBC senior managers opted for smaller players in the industry leaving out The Standard and Nation, which had made attractive proposals that would have earned the national broadcaster huge profits.

Lucrative Deal

The report says major players were deliberatively left out of the lucrative business deal on the pretext that sub-licensing the rights to broadcast the 2010 World Cup matches would have contravened the contract the national broadcaster had entered with the world football governing body Fifa and African Union Broadcasters.

"A joint effort by the aforementioned two media houses (Standard and Nation) to make renewed request to KBC was made vide a letter dated February 22 addressed to the managing director, KBC. This request was also turned down on March 2 on the grounds that Fifa and AUB needed to be consulted due to the contractual arrangement between KBC and AUB," says the report.

This was despite the fact that KBC had executed a contract with Radio Africa Ltd on December 22, last year, without reference to its contract with Fifa.

When KBC acquired the exclusive rights to broadcast the 19 editions of the World Cup, it invited bids for collaboration from other media houses. The decision was informed by business sense in which KBC would share the costs with highest bidders. Given their territorial reach and expertise, the two media houses made proposals in which they would share the proceeds from advertisement and sponsorships on 60: 40 ratio, with the national broadcaster pocketing the lion’s share.

After the proposals failed to elicit interest from KBC and its managing director opted for RAL, the report concludes: "This act should be considered somewhat mischievous and a reflection of unethical business practices on the part of the management of KBC."

In Bad Faith

It adds: "This was in bad faith on the part of KBC in denying other media houses a chance to compete for acquisition of the 2010 Fifa World Cup rights while granting the same to selected media firms on a non-competitive basis."

In its verdict, had KBC opened up the playing field the World Cup rights partnership would have been a highly profitable venture for the national broadcaster.

According to the various business models KBC had come up with, had it gone alone in broadcasting the matches in Kenya, it would have netted Sh64 million in profits.

Were it to partner with The Standard Group or Nation Media Group, it stood to earn Sh98.4 million from revenue of Sh160 million.

If it had outsourced an agency, Sh200 million would have been realised as revenue, out of which KBC would have banked Sh144 million. Partnerships with smaller media houses was expected to earn the station Sh80 million from Sh160 million in revenue projection. Given these four scenarios, KBC resolved to invite bids from all media houses "to assist KBC in decisions making process."

However, there was no follow up as the Managing Director David Waweru opted to single-source "smaller" players.

In all these decisions, the report says, Waweru bypassed the Permanent Secretary and the board of directors who should have been kept abreast of all the decisions.

The Standard Group and Nation Media Group lost out under the pretext they were competitors with same territorial reach, hence they would deprive it of business.