ABS-CBN, TV5 partnership to face scrutiny — NTC – BusinessWorld Online

By Arjay L. Balinbin, Senior Reporter

THE National Telecommunications Commission (NTC) will investigate the partnership between ABS-CBN Corp. and TV5 Network, Inc. of the Pangilinan group’s MediaQuest Holdings, Inc., a commissioner said on Thursday.

“Kailangan po natin ito busisiin mabuti dahil madami pong lumabas na violations ang ABS-CBN noong nakaraang pagdinig ng renewal ng kanilang prangkisa noong nakaraang 18^th Congress na nagresulta sa ‘di pag-renew ng kanilang prangkisa,” NTC Commissioner Gamaliel A. Cordoba said in a statement when asked to comment on the deal signed by the two media companies on Wednesday.

(We need to study this carefully because the previous hearing on ABS-CBN’s franchise in the 18^th Congress revealed numerous violations committed by the company, which resulted in the network’s franchise not being renewed.)

ABS-CBN was forced to stop its broadcast operations in May 2020 after former President Rodrigo R. Duterte’s allies in Congress denied its franchise renewal application.

According to the NTC, it has issued a memorandum order prohibiting franchise grantees from entering into commercial agreements — in which the commission has jurisdiction — with parties “that have outstanding obligations to the national and local governments.”

“The franchise grantee shall ensure that all the parties it transacts or enters into agreements with obtain clearances from the Bureau of Internal Revenue, Bureau of Customs, NTC, and Securities and Exchange Commission,” Mr. Cordoba said.

The commercial agreements together with these clearances should be submitted by the franchise grantee to the NTC “prior to consummation.”

“Ang iba pong ahensiya ng gobyerno ay tutulong din po sa pagbusisi nitong mga violations na ito na lumabas noong 18^th Congress, kasama po dito ang DOJ, LRA, PCC at iba pa,” Mr. Cordoba added.

(Other government agencies, such as the Department of Justice, Land Registration Authority, and Philippine Competition Commission, will help in the investigation of the violations seen in the 18^th Congress.)

Under the partnership deal, the equity of the MediaQuest group — which is owned and controlled by the PLDT Beneficial Trust Fund — in TV5 will be reduced to 64.79% of the voting and outstanding capital stock, allowing it to retain control of the television network.

‘SYNERGIES’
Analysts see the partnership as mutually beneficial for ABS-CBN and TV5 Network.

“There would be synergies in the partnership… in terms of programs/content and wider reach to more Filipinos nationwide and globally, building up on earlier agreements such as some ABS-CBN shows aired by TV5,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a phone message to BusinessWorld.

The partnership would also lead to “higher advertising revenues/sales, earnings, and valuation for both groups,” he added.

The partnership should help level the playing field as they could leverage on each other’s expertise against the ever-changing technology-driven business, according to Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio.

“While everything isn’t set in stone as of yet, the news was positively viewed by the market — leading to a gap-up in ABS-CBN share prices today,” she said in a phone message.

For his part, Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said: “TV5 will finally get the popular content it has been searching for since MediaQuest took over in 2010.”

“ABS-CBN will finally get a home for its top-rating shows after losing its franchise two years ago.”

Mercantile Securities Corp. Analyst Jeff Radley C. See said that investors “should stay cautious” given the “political” factors that could affect the partnership.

“We can’t really do anything if they still continue to target ABS-CBN,” he said, alluding to the lawmakers and groups critical of the media company.

‘SABOTAGE’
Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said the ABS-CBN-TV5 deal has no impact on franchise and competition.

“Adversaries of ABS-CBN at all levels of government will try to sabotage this partnership. In fact, we are already seeing this in Congress, as some congressmen are pushing for inquiries into the deal,” he said in an e-mailed statement.

He pointed out that the deal is not a franchise issue. “This involves no transfer of controlling stakes requiring congressional approval.”

On the competition side, he said there might be no basis for the PCC to strike the deal, as it does not involve a transaction that will reduce or limit competition.

“In fact, when ABS-CBN lost its franchise in 2020, it ceased to be the dominant player in the broadcast segment, and TV5 has not yet attained dominant status in the same sector,” Mr. Ridon noted.

“However, given the size of the transaction and the entities involved, they may opt to undertake voluntary review with the PCC. This is not compulsory, as the transaction does not meet the current P50-billion threshold for compulsory review,” he added.

The PCC has warned both ABS-CBN and TV5 “to ensure compliance with our antitrust law and engage in consultation with the commission, where necessary.”

“The PCC’s mandate to review transactions, whether on the basis of compulsory notification or motu proprio, remains in place to avoid the rise of new monopolies or consolidation of market power that may be detrimental to consumers,” the commission said in a recent statement.

ABS-CBN shares closed 5.09% higher at P11.98 apiece on Thursday, while PLDT shares closed 1.74% higher at P1,811 apiece.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.