House committee sets briefing on ABS-CBN, TV5 deal

RG Cruz, ABS-CBN News

Posted at Aug 16 2022 07:39 PM

MANILA - The House Committee on Legislative Franchises has set a briefing this Thursday on the investment of ABS-CBN Corporation in TV5.

The lower House website posted the schedule of the panel's hearing this Thursday at 2 p.m. The stated agenda was the organizational meeting of the committee and approval of its internal rules as well as a briefing by concerned offices on the purchase agreement between ABS-CBN and TV5.

No further details were available.

The panel is now led by Paranaque 2nd District Rep. Gustavo Tambunting. Tambunting's wife, the previous district representative Joy Myra Tambunting, was an author of one of the ABS-CBN franchise bills which was rejected by the 18th Congress.

The schedule was announced same week as SAGIP Party List Rep. Rodante Marcoleta renewed his position against ABS-CBN.

In a privileged speech on Monday, Marcoleta hinted he may go after the PLDT group, which owns TV5, for allegedly "merging" with ABS-CBN, whose franchise renewal was rejected by the 18th Congress. Marcoleta had played a leading and vocal role in that rejection.

When ABS-CBN and Mediaquest, parent company of TV5 signed the investment agreement last week, their executives maintained it was not a merger.

ABS-CBN merely invested in 35 percent of TV5 stocks, with Mediaquest, which is controlled by PLDT, retaining control over 65 percent of the broadcaster. The 2 companies remain distinct.

In a joint statement on the accord, both parties said the investment agreement 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. 

MediaQuest, which currently owns 99.67 percent of TV5, will see its stake reduced to 64.79 percent after the deal is finished. 

Pangilinan’s PLDT Beneficial Trust Fund owns and controls MediaQuest. ABS-CBN can also acquire additional shares in TV5, which may increase the Kapamilya network’s stake in the Kapatid network to 49.92 percent after 8 years. 

The acquisition of additional shares, which will be done via a convertible note agreement, will be subject to regulatory approvals.

At the same time, the cable and satellite TV subsidiaries of ABS-CBN and PLDT also entered into a similar deal. Cignal Cable Corp said it was acquiring 38.88 percent of Sky Cable Corp for P2.862 billion. 

Similar to the ABS-CBN and TV5 deal, Cignal is also buying an Exchangeable Debt Instrument from Sky worth P4.388 billion, which gives Cignal the option to acquire an additional 61.12 percent of Sky Cable shares. Cignal Cable will also acquire a Convertible Note issued by Sky Cable worth P250 million and convertible into primary shares of Sky Cable representing about 1.84 percent of outstanding capital stock.

Last week, ABS-CBN Chairman Mark L. Lopez said the partnership was an opportunity to help TV5 grow, strengthen its free to air network, and take it “to the next level.”

"For ABS, it presents a fantastic platform for us to achieve synergies in production content and talent management as well as maximizing our content delivery. We look forward to be of greater service to the public as we come together in taking TV5 to the next level," Lopez added.

Manny V. Pangilinan, chairman of Mediaquest Holdings, earlier said they welcome the entry and investment of ABS-CBN in TV5. 

“...ABS-CBN has always been the leading developer and provider of Filipino-related entertainment content not only in the Philippines but overseas as well. Our companies have always had these cherished values of providing top and quality programs in the service of the Filipino people and together we believe we can achieve this in greater measure and success," Pangilinan said.

Carlo Katigbak, president and CEO of ABS-CBN, also said the deal is aligned with the Lopez-led company’s vision.

“This partnership is consistent with the strategic intention of ABS-CBN to evolve into a storytelling company whose goal is to reach as wide an audience as possible,” Katigbak said.

"In partnership with TV5, we look forward to reaching viewers both on owned platforms and through other broadcast partners, thereby enriching the Philippine creative industry. We hope the industry evolves from being highly competitive to increasingly collaborative, which benefits all stakeholders in the long run," he added.

Marcoleta cited alleged violations of the expired franchise of ABS-CBN as well as tax laws and labor laws as reasons for the rejection of the franchise as well as reasons for why TV5, as a grantee of a franchise, should not "merge" with ABS-CBN.

To date, no government agency has sued ABS-CBN in court. Neither has it been convicted for alleged violations of franchise and tax laws.

But Marcoleta insisted on the supposed violations, and even chastised the concerned government agencies.

Marcoleta had refiled a resolution claiming ABS-CBN owes NTC about P1.6 trillion in fines for alleged franchise violations. But the 18th Congress had no action on that resolution. The 19th Congress still has no action.