A Flow store in New Kingston.

The Broadcast Commission of Jamaica (BCJ) went to court last Friday in an attempt to plug a legal loophole allowing Flow and other aggressive cable providers the ability to acquire rivals without regulatory approval.

The loophole relates to partial acquisitions and whether the BCJ would need to approve such transactions.
Flow no longer needs to fully acquire rivals because it has an all-island licence. It can simply buy the assets it wants without acquiring costly licences and liabilities. This method according to Flow president Michelle English, obviates the vendor from notifying the BCJ, because the entire business is not being sold.

"Our interpretation of the act was that if you are buying the business and therefore all the liabilities and the licence and so on, then the BCJ must approve the transaction prior to being completed. If you are just buying the assets of the company not the licence and liabilities and so on, just some of the assets, in that case then there would not be a requirement of the BCJ to review and approve the transaction," said English.

In the interim, Flow said it would notify the BCJ of any plans to acquire rivals. But English said Flow has no immediate plans to acquire new ventures.

Billionaire investor, Michael Lee Chin who has substantial ownership in Flow, has acquired some seven competitors - most recently, Entertainment Systems. The BCJ was apparently notified about the sale after the fact. It raised fears of monopoly formation and prompted the BCJ to file an injunction, contending then that Flow was in breach of Section 28 of the Television and Sound Broadcasting Regulation.

The injunction only delayed the acquisition but now the BCJ want the courts to specify that it should be notified to approve partial acquisitions. In order to do that, the court must provide an interruption of section 28 of the Television and Sound Broadcasting Regulations. That section pertains to the transfer of ownership and control of cable businesses.
According to Section 28:

(1) Every licensee shall notify the Commission in writing within fourteen days of -
(a) the transfer of ownership by him of his business or part thereof
stating -
(i) the date on which ownership or part thereof is transferred and
(ii) the name and address of the new or part owner;
(b) any change in the name or address of business;
(c) subject to paragraph (2), any change of persons who are in control of the business stating
(i) the names, nationality and addresses of such persons;
(ii) the date on which such persons either ceased to be in control or assumed control thereof.

(2) Where there is to be a transfer of ownership or change of person in control of the business, the licensee shall, before the transfer or change is effected, first obtain the approval of the Commission for such transfer or change, as the case may be.

Flow has been buying up other cable operators since June 2006 when the company made its first acquisition - SAUCE Communications.

Since, Flow acquired Allied Cablevision Company, D&L Satellite and Communications Network Limited based in Kingston, Northern Cable and Communication Network serving Ocho Rios, St Ann's Bay and its immediate environs; and the assets of Matrix Entertainment and Communications, serving Hanover; JACS serving Portmore and Spanish Town; and Coral Seas serving Negril, Green Bay and Hanover.

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