Economists warn of impact of ABS-CBN franchise denial on economy, investors

MANILA - Several economists warned on Monday that lawmakers’ decision to deny ABS-CBN a new broadcast franchise will have a negative impact on the economy and on investor confidence. 

Toby Monsod, an economics professor at the University of the Philippines said ABS-CBN was part of a supply chain in the creative industry, and the media giant also indirectly supported other businesses. 

“You have ancillary, related businesses that support operations of ABS-CBN and its employees. Sa QC nga, it’s full of eateries, restaurants around that area. Yung sinasabi nila 11,000 permanent or part-time project-based, that is just the tip of the iceberg,” Monsod said. 

“Just as any new business has positive multiplier effects, when you cut business, you can have negative multiplier effects,” she added. 

Calixto Chikiamco, founder of the Foundation for Economic Freedom, said the lack of competition will also hurt the quality of content created in the Philippines. 

"ABS-CBN has earned the privilege to be #1 broadcaster because of its content,” Chikiamco said. 

"ABS-CBN's franchise denial makes a mockery of government’s efforts to develop our creative industries,” Chikiamco added. He said this was unfortunate because the Philippines was aiming to follow what South Korea successfully did with its exports of films, music and TV shows.

Chikiamco said the shutdown will also spook new investors. 

Vic Abola, a professor at the University of the Asia and the Pacific, said investor sentiment will be affected after ABS-CBN’s franchise application was rejected despite regulators clearing the company of any wrongdoing. 

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"It is unfortunate that our leaders would disenfranchise ABS-CBN. This would contribute to negative sentiment of local and foreign investors,” Abola said. 

Businessmen will also be warier of political intrusion into businesses after congressmen disregarded the testimonies of regulators, Monsod said. 

“When you have regulation affected by factors na walang basis, anybody in the economy will be worried. They should be scared. How should we proceed in the economy, if the powers that be can stop companies and livelihoods in this manner?” Monsod said. 

• ABS-CBN shutdown 'highly politicized,' to weigh on foreign investments: Fitch Solutions

Last week, Fitch Solution said the “forceful termination” ABS-CBN’s franchise will weigh on the country’s ability to lure foreign investors, noting the decision was “highly politicized.” 

Finance Secretary Carlos Dominguez III however said the government has yet to see any direct result of a slowdown in investments because of the ABS-CBN issue. 

news.abs-cbn.com is the official news website of ABS-CBN Corp.

- Report from Warren De Guzman