MANILA, Philippines?A group led by Philippine Long Distance Telephone Co. (PLDT) chair Manuel V. Pangilinan is in talks to acquire a controlling 87.5-percent stake in the country?s second most read newspaper, Philippine Star.

MediaQuest Holdings Inc., a subsidiary of the PLDT Beneficial Trust Fund, is conducting a due diligence audit on the Philippine Star group, including its affiliate media outfits and printing plants, industry sources said.

Industry sources estimated that the Pangilinan group was willing to invest as much as P4.8 billion in the new media venture, including fresh capital outlays and billions of pesos to buy out the controlling stockholders.

?In response to various queries we have received, MediaQuest confirms that it is in discussions with the Philippine Star Group for a possible investment,? Jose Benjamin Fernandez, MediaQuest Holdings chief technology officer, wrote in a one-line press statement.

The bid is widely believed to be in line with the business group?s attempt to dominate media content. It did not disclose the size of the stake involved or the price consideration.

Sources privy to the audit said MediaQuest was looking to buy 87.5 percent of Philippine Star.

Soliven estate

Majority of the publication is owned by the Belmonte family while the estate of the late journalist Max Soliven accounts for over 20 percent, industry sources estimated. Other sources said the Soliven family had yet to commit to the block sale.

Pangilinan, in his private capacity, has long been a minority stockholder in Philippine Star, holding about 10 percent.

MediaQuest is the PLDT group?s vehicle for media-related investment opportunities. It is a wholly owned subsidiary of PLDT?s Beneficial Trust Fund. The company owns 100 percent of Mediascape Inc. which has a congressional franchise that allows it to provide broadcast services.

MediaQuest also holds a controlling interest in Nation Broadcasting Corp., which operates a network of radio stations; a minority interest in Central CATV, a cable TV company trading under the name of Sky Cable; and a 30-percent stake in the newspaper BusinessWorld.

PLDT not involved

PLDT told the Philippine Stock Exchange on Thursday that it was not involved in the acquisition of Philippine Star.

PLDT, which has some foreign stockholders including the First Pacific group and the NTT Group of Japan, cannot be directly involved in this transaction because the Philippine Constitution requires that media outfits be 100-percent Filipino-owned, legal experts said.

Analysts said the proposed acquisition was in line with the PLDT group?s ?convergence? strategy.

?The group has always looked at print and broadcast media as a source of content,? stockbroker Philippine Equity Partners Inc. president Jojo Gonzales said.

Jose Mari Lacson, head of research at stockbrokerage Campos, Lanuza & Co., said that the deal would have no direct benefit on PLDT?s earnings since MediaQuest was a subsidiary of the Beneficial Trust Fund and not the PLDT itself.

Content provider

?Indirectly, though, there are benefits of the planned acquisition in terms of the execution of their distribution/convergence strategy wherein PLDT provides the communications and Philstar partially provides the content,? Lacson said.

?The implications of the planned acquisition is more critical to the multimedia industry rather than the telecom industry. It is too early to tell though whether the acquisition will reap the benefits that the PLDT Group hopes to make. MediaQuest would have to communicate what it wants to do with Philstar after the acquisition because at this point, outsiders can only speculate,? he said.

Owned and published by Philstar Daily Inc., the Philippine Star group was founded in 1986 by veteran journalists, including Soliven, Betty Go-Belmonte and Art Borjal.