ABS-CBN and TV5 joint venture
MANILA, Philippines — The investment deal between media companies ABS-CBN and TV5 is “not notifiable” and does not need approval from the Philippine Competition Commission (PCC), an official said Wednesday.
During a joint House committee hearing, PCC officer-in-charge Johannes Benjamin Bernabe said the transaction between the two media firms did not meet the P50-million threshold set by the Bayanihan 2 law.
Thus, the media entities have no obligation to notify the body of the investment deal since the transaction is not notifiable.
The Bayanihan 2 law raised the threshold for mergers and acquisitions to P50 billion until September 15.
“Based on this publicly available information, it appears to be that the transaction is not notifiable. It does not need the transaction value under the Bayanihan to Recover as One Act or the Bayanihan 2 law,” Bernabe told the House committees on legislative franchises and trade and industry.
Bernabe explained that the Bayanihan 2 law requires PCC to review mergers or acquisitions with a transaction value of more than P50 billion, meaning either of the parties must have assets or revenues of more than P50 billion.
The value of voting shares being acquired from the company should also be at least 35%, he added.
While the assets and revenues of the Lopez group of companies, of which the ABS-CBN is under, is at P465 billion, which exceeds the threshold, TV 5’s value of assets is only at P7 billion, Bernabe pointed out.
Also, ABS-CBN will only acquire 34.9% of the total voting and outstanding capital stock of TV-5, which does not also exceed the PCC’s threshold for mergers and acquisitions.
“It appears that the transaction is not notifiable,” Bernabe reiterated.
Under PCC’s rules, entities that enter into a merger or acquisition meeting the thresholds are required to notify the PCC within 30 days of signing the agreement.
The PCC will then review the transaction and decide whether the deal should proceed. However, it can stop the agreement if it finds that the contract “will substantially prevent, restrict or lessen competition.”
The PCC can issue orders to remedy the situation and impose financial penalties.
However, while the two media firms are not required to notify the PCC of their investment deal, Bernabe said they can still volunteer to do so.
The PCC can also initiate a motu proprio review, but it must have a reasonable basis to do so, according to the official.
Bernabe said the PCC has already directed its Mergers and Acquisitions Office to make an initial assessment of whether the transaction between ABS-CBN and TV5 will substantially prevent, restrict or lessen competition.
ABS-CBN and TV5 earlier announced an investment agreement where the Lopez-led firm will acquire 6,459,393 primary (new) common shares in TV5, equivalent to 34.99 percent of the total voting and outstanding capital stock for an aggregate subscription price of P2.16 billion.
This deal will allow ABS-CBN to own a minority interest in TV-5.
TV5 will hold 64.79 percent of the total voting and outstanding capital stock, and the MediaQuest group remains the controlling shareholder of TV5.
Due to the issues raised by certain legislators and the National Telecommunications Commission, the two media entities have decided to put their agreement on hold.