GMA Network sues ABC-5, Malaysian media company

ABS-CBN News

Posted at Dec 03 2008 05:37 PM | Updated as of Dec 04 2008 01:45 AM

GMA Network, Citynet, and ZOE Broadcasting have filed a lawsuit against rival channel ABC-5, Malaysian company Media Prima Berhad (MPB), and MPB Primedia for allegedly entering into an unlawful blocktime agreement.
 
GMA Network is asking the Quezon City Regional Trial Court to nullify the blocktime agreement between MPB Primedia and ABC-5 as the agreement violated the 1987 Philippine Constitution restricting ownership and management of mass media to Filipino citizens or corporations.
 
The said blocktime agreement allowed MPB Primedia to control and manage ABC-5's programming content and airtime sales.
 
GMA Network said that while MPB Primedia's Articles of Incorporation indicates that it is Filipino-owned, it is in truth a subsidiary of Malaysian company Media Prima Berhad. The Verification or Reservation Request of Primedia on file with the Securities and Exchange Commission (SEC) indicates that the acronym “MPB” in its corporate name stands for “Media Prima Berhad” which is the same name of the Malaysian company.
 
This was later confirmed when MPB stated in its own Web site that it “has set up a subsidiary, MPB Primedia, Inc. that will soon enter into a blocktime agreement with the ABC5 network, one of the television networks in the Philippines.”
 
GMA also said that according to the report of Merrill Lynch of Singapore on March 25, 2008, the acquisition of ABC-5's airtime forms part of the investment strategy of the Malaysian corporation, Media Prima Berhad, to establish a company in the Philippines which will be owned by MPB at seventy percent. This Philippine company was identified in the report as Primedia.
 
MPB Primedia has an authorized capital stock of P5,600,000.00. Twenty five percent (25%) of Primedia’s authorized capital stock was subscribed by its incorporators and directors. Out of the 25 percent subscribed capital, only P350,150.00 has been paid.

According to GMA's complaint, the transfer of control and management of ABC-5's programming content and airtime sales to MPB Primedia constitutes intervention by a foreign company and/or its dummy in the management and/or operation of a 100% nationalized business activity which violates the Constitution and the Anti-Dummy law.
 
As mandated by the Constitution, mass media, which includes television and radio broadcast, is a completely nationalized business activity. The Anti-Dummy Law (Commonwealth Act No. 108, as amended) punishes the evasion of nationalization laws and prohibits non-Filipino citizens from intervening in the management, operation, administration, or control of any nationalized activity.
 
It being contrary to the Constitution and the Anti-Dummy law, GMA Network said that the blocktime agreement entered into between ABC-5 and MPB Primedia is void.
 
GMA Network likewise said that the blocktime agreement between ABC-5 and MPB Primedia results in unfair competition against local broadcasting networks. GMA said that while it continues its operations within the bounds of law, ABC-5, MPB and Primedia employed illegal methods to evade restrictions on mass media ownership, which have deprived GMA and other local networks of the fair chance to engage in the broadcast business.
 
Since its relaunch in 2008, TV-5 has ascended to the number three post in TV ratings.
 
Apart from asking the court to declare the blocktime agreement between ABC-5 and MPB Primedia null and void, GMA Network is also claiming a total of P11 million for damages, including attorney’s fees and litigation expenses, from ABC-5, MPB, and MPB Primedia to compensate for the loss of revenues due to unfair competition.