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An arbitration action is taking place in London between a Dubai-based businessman, Ajay Sethi, and Kenya’s KBC public broadcaster over a failed joint-venture designed to launch a TV channel, Metro TV, into the country. The action is claiming penalties of $484 million.
The allegations are serious enough for locals to say that if KBC loses the action the penalties could bankrupt the broadcaster.
The action was started by Sethi and is based on a signed 2005 agreement with Sethi having invited KBC officials to Dubai to view the operations of Ajman TV (based in the near-by Emirate of Ajman) which he owned.
Sethi alleges that that KBC’s breach of their joint venture brought to an end his determination to venture into the East African market. KBC and Sethi’s company had jointly incorporated Channel Two G Corporation (Africa) Limited to run the joint venture as outlined in the formal agreement signed in May 2006 in which the Dubai company was to share revenue at the ration of 70:30. The joint venture was to end in August 2017.
KBC is alleged to have had to provide certain technical equipment for the j-v, while Sethi’s business bought a new transmitter, hired staff, and committed to advertising and a publicity budget.
The allegations say that KBC terminated the j-v via a letter in March 2009, saying: “The joint venture company could not attract a sufficient audience to obtain, or keep, advertising revenue and contracts. Company staff became demoralised by their lack of success in selling advertising air-time,” says the writ.
The joint venture had projected that by August 2017, it would have earned a profit of $481.9 million.
Mixed into the action, although not specifically named, is the role of DStv in that KBC owns 40 per cent of Multichoice Kenya Ltd (the balance is held by Multichoice Africa).
Countering the claim, KBC says that the channel’s programming was poor, and the transmitter under-powered.
The arbitration documents are filed with London’s Essex Court Chambers.