SA: SAMRO pulls out of UAE deal, loses $2.8m

The termination of the partnership was announced to members late last week after the SAMRO board concluded that the deal was unprofitable amid tough economic conditions, a SAMRO statement reads. Another key reason for ending the partnership was that AEMRO was not licensed to operate in the UAE.

“SAMRO has decided to terminate its investment in the UAE and although at another period in time this type of investment could have yielded great financial rewards, the board has decided to cut its losses in the interest of SAMRO members and focus on strengthening its Southern African and African operations for now,” the SAMRO statement reads.

“This investment was made after due consideration at the time but developments in the UAE, with our global partner collective management organisations [CMOs], coupled with an adverse economic environment in South Africa has heightened the risks. Hence, in the interest of SAMRO members, SAMRO has decided to terminate this venture.”

SAMRO said the project was initiated based on a potential return on investment of more than R1bn and that its role in the project was to “contribute its expertise and experience and would set up a platform and train a dynamic licensing team”.

“The local partner in the UAE would in turn contribute market knowledge, relationships and stakeholder management. SAMRO was to receive a negotiated administration fee on all collections, contributing directly to the South African company’s revenue,” SAMRO said.

SAMRO said it sought to assist AEMRO to become a member of the International Confederation of Societies of Authors and Composers (CISAC) but the application was rejected in 2016 because AEMRO had no legal grounds to operate in the UAE.

City Press reported last week that three SAMRO members had alleged that the investment lacked transparency and called for the disbandment of the SAMRO board. Other members had enquired why the money was not invested in the development of the South African music industry before going global, the newspaper said.

“I have reviewed the process of making this investment and can guarantee on behalf of the board that there was nothing untoward in this venture, except that now was not the right time and we as a board regret the loss of SAMRO time and money,” newly appointed SAMRO board chairperson Jerry Mnisi said.

“This [the termination of the investment] was done in the interest of the organisation, members and publishers. Our newly appointed CEO Nothando Migogo was instructed by the board to terminate this project, wind down its operations and call the extraordinary general meeting held last week to inform the members of the termination.”