Analysis: PLDT media unit eyes stake in PhilStar


Posted at Jan 29 2009 06:16 PM | Updated as of Jan 30 2009 02:48 AM

The media unit affiliated with listed telecommunications giant Philippine Long Distance Telephone (PLDT) Co. is eyeing to buy a stake in the local Philippine Star newspaper group, a member of the Belmonte family confirmed with Thursday afternoon.  

Miguel Belmonte, president and chief executive officer of Philstar Daily, Inc, said in a phone interview, "There are ongoing talks but there is nothing definite yet. Nothing has been signed. No money has been exchanged."  

In a disclosure to the stock exchange on Thursday morning, PLDT denied acquiring a stake in the Star group.

Belmonte, however, confirmed that it is Mediaquest Holdings Inc, a unit of the PLDT's wholly-owned Philippine Long Distance Telephone Co. Beneficial Trust Fund, which has been in talks with the controlling family.

In a statement, Jose Benjamin Fernandez, chief technology officer of Mediaquest Holdings, said the company "is in discussions with the Philippine Star Group for a possible investment."

Mediaquest has been the corporate vehicle for the PLDT group's various media-related ventures, including a 30 percent stake in another paper, BusinessWorld. 

For months, talk in the business community has been rife about the buy-in of PLDT into the Star group, one of the country's widest-circulated broadsheets.
We learned from a source privy to the talks between Mediaquest and the Belmontes that the PLDT board approved the purchase of 87.5 percent of the Star early this week after conducting about three months of due-diligence work.  
The deal, our sources say, will cost PLDT more than P4 billion. 

Based on Securities and Exchange Commission (SEC) filings, Philstar Daily, Inc. had total assets of P1.3 billion as of December 2007 and total networth of P421 million.

The Belmontes
The Belmontes own majority of The Philippine Star newspaper and the Freeman, which circulates in Cebu, plus several tabloids. The Belmontes set up the paper in the wake of the downfall of former president Ferdinand Marcos in 1986.
Various members of the family directly own an aggregate 51 percent of Philstar Daily, Inc., data from the company's September 2008 submission to the SEC showed.
Other shareholders include Majent Mgt. & Dev't Corp, which lists among the directors, Menardo R. Jimenez, the father of Menardo "Butch" G. Jimenez, Jr., who heads the retail business group of PLDT and the wireless group of PLDT mobile arm, Smart Communications. Majent has 5 percent stake in Philstar Daily, Inc.

Another shareholder, Hastings Holdings, Inc., owns 8 percent of the paper. Hastings lists PLDT's main office in Makati City as its corporate address.

When asked if Majent and Hastings represent existing links of PLDT prior to the current talks, Star president Belmonte said, "I cannot speak for the other shareholders of the paper."

Nonetheless, he clarified that Jimenez, through Majent, has been with the paper for over 20 years.

Content play 
If a deal pushes through between Mediaquest and the Star group, Belmonte said the family would keep a stake in and continue their management of the paper. "We are still ironing out these details," he said.   

Belmonte, the youngest son of the late Betty Go-Belmonte, a pillar of the Star, said the family is considering the deal since "there are synergies in these things."

Ramon Isberto, PLDT's spokesperson, agreed. "In broad strokes, you can consider this a content play."

With technology constantly progressing, the PLDT group is evolving from being a mere engineering company, which just lays copper wire cables, to one that has to mind what passes through their infrastructure superhighway, Isberto explained.  

"It's important to have a strategy in this field," Isberto said.

Besides BusinessWorld, and potentially the Star group, Mediaquest's portfolio includes controlling interest in National Broadcasting Corporation (NBC), which operates a network of radio and TV stations, and a minority interest in cable TV company Sky Cable.  

MediaQuest also controls 360media, which has a Direct-to-User license that permits it to broadcast via satellite and terrestrial wireless transmission Mobile TV and direct-to-home services.