ABS-CBN buys 35% stake in TV5; NTC keeps watch
ABS-CBN Corp. and TV5 Network Inc. of businessman Manuel V. Pangilinan on Thursday announced an investment agreement that is seen to enhance TV5’s presence in the broadcast industry and give the Lopez family-controlled operator of the defunct Channel 2 a way around its lack of congressional franchise and have a permanent venue to air its programs in the free TV space.
ABS-CBN, in a disclosure to the local bourse, said it would acquire 6.46 million new common shares in TV5 for P2.16 billion. This represents 34.99 percent of the total outstanding capital stock of TV5.
The agreement, which is targeted to be closed within the month, also includes P1.84 billion worth of convertible notes to be issued by TV5 to ABS-CBN. Subject to regulatory approvals, this will allow ABS-CBN to buy additional shares to bring its stake in TV5 up to 49.92 percent after eight years from its issuance.
“This transaction is clearly transformational for both companies and is envisaged to significantly enhance TV5’s capability to deliver content and coverage to the Filipino public in the areas of entertainment, news, sports and public services,” ABS-CBN said in a statement.
The partnership had been highly anticipated after reports about the potential joint venture first broke in June.
The Lopez-led network has been operating without a free TV franchise for two years after its renewal application was rejected during the previous administration by a House of Representatives dominated by allies of then President Rodrigo Duterte.
In January last year, ABS-CBN entered into a blocktime leasing deal with TV5 to allow the former’s popular shows to be aired via the Pangilinan-led network. It has also turned to digital platforms to stay afloat.
“We welcome the entry and investment of ABS-CBN in TV5, as ABS-CBN has always been the leading developer and provider of Filipino-related entertainment content not only in the Philippines but overseas as well,” Pangilinan said.
“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,” ABS-CBN chair Mark Lopez said.
ABS-CBN president and CEO Carlo Katigbak, meanwhile, said the “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.”
Infrawatch PH convener Terry Ridon said that the “new partnership is a testament to the enduring quality of content being produced by ABS-CBN, which has remained cutting edge and relevant despite the previous government’s shutdown in 2020.”
However, he warned that “adversaries of ABS-CBN at all levels of government will try to sabotage this partnership.”
In fact, the National Telecommunications Commission (NTC) said on Thursday it was “monitoring developments” of the partnership.
NTC Commissioner Gamaliel Cordoba raised the need to look at the alleged violations of ABS-CBN that were flagged during its franchise renewal hearing in 2020, including tax payments and foreign ownership that ABS-CBN had refuted before.
“The NTC has issued a memorandum order that a franchise grantee shall not enter into commercial agreements in which the NTC has jurisdiction, with those that have outstanding obligations to the national and local governments,” Cordoba explained.
He said that the “franchise grantee shall ensure that all the parties it transacts, or enters into agreements, will obtain clearances” from the Bureau of Internal Revenue, Bureau of Customs, Securities and Exchange Commission, and the NTC.
“The commercial agreements together with these clearances should be submitted by the franchise grantee to the NTC prior to consummation,” Cordoba said.
Cordoba said that other government agencies, including the Department of Justice and Philippine Competition Commission, were set to investigate the alleged violations.
Cable TV deal
Aside from the equity deal, TV5’s Cignal Cable Corp. also signed an agreement to invest in the Lopez Group’s Sky Cable Corp., which is expected to expand the latter’s coverage.
On the cable TV deal, Cignal entered into an agreement with Sky Vision Corp., ABS-CBN Corp. and Lopez Inc. to acquire a 38.88-percent stake in Sky Cable for P2.86 billion.
The investment is seen benefiting Sky Cable’s more than 300,000 cable subscribers and nearly 350,000 broadband subscribers as this would “expand significantly its coverage, offerings and services.”
“It will also enable Sky Cable to expand its broadband reach and capacity in support of the government’s plan to prioritize the development of the country’s digital infrastructure, reaching a larger portion of the Filipino population and providing them with greater choices for their content and internet requirements,” Cignal said.
Cignal also aims to expand Sky Cable’s public service programs. The Lopez-led cable television company is currently running Knowledge Channel, which provides educational programs for children.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.