ABS-CBN and TV5 joint venture
MANILA, Philippines — ABS-CBN Corp. and TV5 Network Inc. on Thursday announced that they have “mutually” agreed to scuttle a proposed investment agreement that would have allowed the Lopez family-owned broadcast firm to return to free-to-air TV, a move critics viewed as leaving a chilling effect on the media industry and potentially causing an adverse impact on the country’s investment climate.
Trading in ABS-CBN shares was halted for an hour following the announcement of the deal’s termination. When the freeze was lifted, ABS-CBN shares fell to a low of P9.04 before closing at P9.14 each, or down by 14.74 percent for the day.
The decision to abandon the agreement came about a week after the two media companies said they were taking a “pause” to evaluate and respond to issues raised by the National Telecommunications Commission (NTC) and legislators. The transaction, wherein ABS-CBN was supposed to buy 35 percent of TV5 for P2.16 billion, with an option to increase the stake to half of the Manuel V. Pangilinan-led network, was initially targeted to be completed last August.
While publicly listed ABS-CBN did not cite the reason for the termination of the agreement in the disclosure it filed at the Philippine Stock Exchange, the initial announcement of the investment pact early last month was met with a statement from NTC Commissioner Gamaliel Cordoba saying they would look into alleged violations of the Lopez firm that were flagged during its franchise renewal hearing in 2020, including tax payments and foreign ownership that the media giant had refuted before.
In Congress, Sagip party list lawmaker Rodante Marcoleta also claimed that TV5 violated an NTC memorandum prohibiting a franchise grantee from entering into partnership with companies that have outstanding obligations to the government. Three members of the House of Representatives later filed separate resolutions seeking to probe the alleged foreign ownership of TV5.
Infrawatch PH convener Terry Ridon sees this development as underlining the state of press freedom in the country.
Warning to business
“Only now have contracts been terminated due to objections of those in power. This also creates a clear chilling effect on the media and its owners, as two of the country’s most respected media institutions have terminated a well-intentioned transaction that would have pushed the envelope of reportage and public service,” he said.
“If it can happen to the biggest media entities, it can happen to the smallest ones,” Ridon lamented.
Ridon also sounded the alarm on the potential drawback on the country’s attractiveness as an investment destination.
“This also serves as a warning to business: that free enterprise will only be free if businesses align with the politics of those in power,” he stressed.
“With this development, investors looking at the Philippines as a prospective investment destination might as well bring their funds to other emerging economies with a better governance outlook,” he added.
A media scholar warned that the termination of the deal was a “portent of things to come” under the new administration.
“Reading between the lines of the two media organization’s statements, they apparently gave in to political pressures,” lamented University of the Philippines journalism professor Danilo Arao.
“Much as we respect the decision of the management of ABS-CBN and TV5, we hope that their journalists and media workers will continue the fight for press freedom and media freedom,” he added.
Anticonsumer
He said the scuttled deal was part of a pattern of continued repression of press freedom in the country, with the NTC as executioner. He cited the agency’s role in reviewing blocktime agreements as well as moves to disable alternative media outlets.
“It is a matter of time before they would find excuses to further discredit or directly shut down the other platforms that ABS-CBN currently uses,” he warned.
“Don’t be surprised if A2Z would be next,” he added, referring to the existing blocktime arrangement between ZoeTV and ABS-CBN.
Consumers Union of the Philippines president Rodel Taton said the deal’s termination was “clearly not proconsumer.”
“While it appears to be a private matter for the two media companies, what is at stake here is the information that may be consumed by the general public. Not only is this a matter of news and entertainment but choices of people as we continue to inform them of the events and the market trends,” Taton said in a message sent to the Inquirer.
“The right to information and the freedom of choice are avowed rights of an ordinary consumer,” he added.
Taton said the end result was tantamount to the suppression of speech, expression and media freedom.
“By and large, this is a sad day for our consumers, a sad day for Filipinos whose hunger for information and truth is so telling at these times,” he noted.
Losses
This is the second setback for ABS-CBN after losing its TV franchise during the previous administration when it incurred the ire of former President Rodrigo Duterte.
On May 5, 2020, it was forced off the air after the NTC issued a cease-and-desist order when the media network’s legislative franchise expired.
House members allied with Duterte eventually denied ABS-CBN’s bid for a new franchise, forcing the company to retrench thousands of employees and significantly scale back business operations.
The company has since turned to digital platforms to stay afloat, launching the online streaming channel “Kapamilya Online Live” in August 2020.
In October 2020, it secured a partnership with Zoe Broadcasting Network Inc. to blocktime programs via Channel 11 A2Z, allowing it to return to free TV.
In January last year, through a blocktime leasing deal with TV5, ABS-CBN was able to air its popular shows on free TV across the country.
In the first half of 2022, ABS-CBN trimmed its net losses to P1.42 billion from P3.37 billion in the same period last year, supported by advertising revenues that grew by 47 percent to P3.29 billion. —WITH A REPORT FROM INQUIRER RESEARCH