BIZ BUZZ: Moment of truth | Inquirer Business

BIZ BUZZ: Moment of truth

/ 02:04 AM October 03, 2022

The rivalry between the Aboitiz conglomerate and San Miguel Corp. that’s been heating up in recent weeks will all come to a head tomorrow when the Energy Regulatory Commission (ERC), which is headed by the former chief legal counsel of Aboitiz Power Corp., convenes to decide on the joint rate hike petition filed by San Miguel and Meralco.

At stake in this long-running rivalry, of course, is dominance over the local power generation industry.

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In terms of output, both conglomerates are more or less evenly matched since each produces about 20 percent of the Philippines’ total electricity supply (give or take a few hundred megawatts).

But in terms of proximity to the current dispensation, Aboitiz has the clear advantage with three top energy sector officials—the Energy Secretary, the ERC chair and the head of the Power Sector Assets and Liabilities Management Corp.—all having past ties with the Aboitiz group.

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In any case, San Miguel made the wrong call in setting a low fixed price in 2019 (with the pandemic and the Russia-Ukraine war nowhere in sight) for the power it would sell to Meralco. The resulting skyrocketing energy prices since then meant that San Miguel has since lost P15 billion and this number is still rising.

The conglomerate is now pleading for regulatory relief from the ERC, not to allow it to make money, but simply so that it loses less. If not, the current contract allows San Miguel to unilaterally terminate the supply contract after giving everyone the requisite heads up.

If this happens, Meralco will have no choice but to go to the spot market and buy supply at current prices, resulting in much higher electricity bills for consumers than if ERC approves the joint San Miguel-Meralco hike petition.

Of course in recent days, San Miguel and Meralco have been bombarded by organized protest actions by advocacy groups, just as Biz Buzz had predicted some weeks back.

So the question is … will energy regulators and the Aboitiz group give San Miguel some breathing room? Or will it press its advantage, seeing that its industry rival is on the ropes? Abangan!

—Daxim L. Lucas

BTS-inspired IPO

Last year, South Korean entertainment label Big Hit raised $840 million from a much-hyped stock market debut, riding on the global fandom of K-pop boy band BTS.

Big Hit, now rebranded as Hybe Corp., has since then seen a roller-coaster ride in the stock market. When BTS announced a hiatus (not a breakup, they assert), that of course caused a price free fall.

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Nonetheless, the concept of a talent- and content-driven equity play has appealed to Philippine showbiz bigwig Vic del Rosario, who is now hatching a similar capital-building exercise for Viva. We hear that he has mandated BDO Capital & Investment Corp. to work on an initial public offering (IPO) of about P4 billion for Viva possibly by next year.

Unlike Big Hit, which relied on BTS for the bulk of its revenues, Viva is likely to pitch a more diversified portfolio.

In the last four decades, Viva has built an extensive library of films, music, original TV shows, videos, concerts and books, alongside top talents (including Sarah Geronimo, Anne Curtis, Bela Padilla) and an experienced production team.

For the Philippine market, Viva operates Pinoy Box Office (PBO), Tagalized Movie Channel (TMC), Celestial Movies Pinoy (CMP), Sari-Sari and Viva TV. It also distributes international pay TV channels like History, Lifetime, FYI, CI, H2, Blue Ant Entertainment, BlueAnt Extreme and Comedy Central, as well as top Hollywood, Asian and international films, based on its website.

The group also owns production sites, provincial radio stations and event venues in line with its positioning as a one-stop shop for entertainment in the country. During the pandemic lockdowns, its video streaming services picked up even as production activities turned more challenging.

Note that apart from media assets, Viva is also in the food business, handling brands such as Botejyu, Greyhound Cafe, Papermoon, Pepi Cubano, Wing Zone and Yogorino.

For this prospective IPO, however, we hear that Del Rosario may focus on a smaller entity handling the most lucrative segments, particularly talent management and digital streaming services.

It’s still a work in progress, and “Boss Vic” isn’t in a rush, especially now that the stock market is held captive by the bears.

—Doris Dumlao-Abadilla

Cebu Pacific’s turn to check Borongan

It may be just a matter of time before regular commercial flights between Manila and Borongan City, the capital of Eastern Samar, finally resume after years in suspension.

This, after Cebu Pacific determined during a recent site inspection of the Borongan City Airport led by Capt. Carlo Aclan to evaluate the operational capacity and viability of opening a flight route that the airport had no “showstoppers” or obstacles in terms of technical operations for flying.

Borongan City information OIC Rupert Ambil visited the Cebu Pacific headquarters in June to formally signify the intent of the city to partner with the airline for direct flights, after the Civil Aviation Authority of the Philippines declared that the airport was ready to accept flights managed by major airlines.

Borongan City is eager to resume the flights to shore up tourism and commercial activity in the province, but further improvements and purchase of needed equipment must be done first.

Cebu Pacific said that based on the technical safety and security evaluation, the fencing and terminal area needed to be upgraded. More detailed discussions on sales and marketing, including viability, can then begin in earnest.

WIth the local and provincial governments determined to make the flights happen, it is likely that “Estehanons” will get on board those direct flights sooner rather than later.

—Tina Arceo-Dumlao

Sword of Damocles

The Asian Development Bank (ADB) successfully held its annual meeting in Manila last week after economically crippled Sri Lanka backed out of this year’s hosting duties due to difficult circumstances facing the country.

And to celebrate the successful “impromptu” hosting of the annual event, the ADB leadership will host an appreciation dinner on Monday night, Oct. 3, at its Mandaluyong City headquarter for all its staffers and personnel who were involved in the event.

But Biz Buzz hears there’s a proverbial “sword of Damocles” hanging over the heads of the leaders of the multilateral lending agency. That’s because, just a few weeks ago, the Supreme Court ruled that ADB officials could be sued before Philippine courts for certain corporate actions despite the supposed diplomatic immunity that the institutions and its officials enjoy.

We’re talking, of course, about the case of former ADB official Matthew Westfall whose complaint for being unjustly dismissed is now before the Makati courts after the Supreme Court decision.

We hear the case is putting somewhat of a dampener on the ADB’s festivities these days. Watch this space, folks.

—Daxim L. Lucas INQ

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