MANILA (UPDATED) — Albay Rep. Edcel Lagman wrote a letter to House Speaker Martin Romualdez last Aug. 22 expressing concern that the "House investigation" into the investment agreement between TV5 Network Inc. and ABS-CBN Corporation may result in the "derogation of press freedom and free speech."

The deal allows ABS-CBN Corp. to acquire 6,459,393 primary (new) common shares in TV5 representing 34.99 percent of the total voting and outstanding capital stock of TV5 for P2.16 billion.

On Wednesday, ABS-CBN and TV5 said they have agreed to a "pause" in their closing preparations amid the inquiry.

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Lagman clarified that the deal is not a merger, where one entity absorbs another or two entities fuse to form a new one.

"TV5 and ABS-CBN remain separate and independent juridical entities… ABS-CBN does not acquire control of TV5," Lagman said.

The lawmaker also asserted that TV5 did not violate its franchise, because there is no sale, lease, transfer, or grant of the usufruct or assignment of TV5’s franchise to ABS-CBN.

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He added that there is no merger or transfer of controlling interest in TV5, and that the transaction between the two companies is "exempt from the compulsory notification and approval of the Philippine Competition Commission."

"The transaction of P4.45 billion is less than the transaction value threshold of P50 billion under the 'Bayanihan to Recover as One Act' or RA No.11494."

Lagman said the transaction between TV5 and ABS-CBN enhances fair competition in the television and broadcast industry. "Without a franchise, ABS-CBN ceased to be a major player in the industry. TV5 has not achieved major player status. One television network presently dominates the industry. With the recent infusion of ABS-CBN investment in TV5, the playing field approximates leveling."

Lagman to NTC: Review the extent of your authority

At the House inquiry into the two corporations' deal on Wednesday, National Telecommunications Commission (NTC) Commissioner Gamaliel Cordoba told lawmakers that the agency can add obligations to a franchise holder.

"It can add obligations especially since that is a privilege granted by the State and in this case the parties are franchise holders, they get permit from the national governement for the use of frequencies which is owned by the national government," he said.

The NTC has earlier issued a memo preventing broadcast franchise holders from dealing with those who have "outstanding obligations to the national government and local government units." This is a separate memo from the one that restricts blocktime agreements.

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But Lagman disagreed. He said that he does not think that the NTC has the power to amend or impose new restrictions to a legislative franchise.

"This is a derogation of the legislative power, and we cannot allow NTC to make a mockery of the franchises issued by Congress," the lawmaker told Cordoba. "I suppose Mr. Commissioner you should be able to review the extent of your authority."

In his letter, Lagman said that the new NTC memo is "constitutionally infirm, arbitrary, and vague."

"There is no rhyme nor reason to disqualify an entity from contracting simply because it has 'outstanding obligations' to the government," Lagman said.

"The NTC Memorandum is a usurpation of legislative power. It adds and imposes a restriction on a franchisee like TV5, which is not in its legislative franchise," he added.

"The NTC Memorandum is arbitrary because it discriminates against entities, which have 'outstanding obligations to the national and local governments.' It is also akin to class legislation, which infringes on the constitution."

He noted that the NTC memorandum lacks the requisite standard for determining what is the nature, extent, and status of the so-called outstanding obligations.

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

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