The honeymoon ended before it began.
Broadcasting giants ABS-CBN and TV5 have agreed “to pause” their planned merger “to address the issues raised by certain legislators and the National Telecommunications Commission” a day after a legislator from southern Philippines filed a bill seeking a franchise renewal for ABS-CBN.
“To address the issues which have been raised by certain legislators and the National Telecommunications Commission on the proposed investment by ABS-CBN for a minority interest in TV5, ABS-CBN and TV5 have agreed to a pause in their closing preparations,” the media giants said in a joint statement.
According to the media giants, the pause would “give the space for both media organizations to respond to the issues, and accommodate any relevant changes to the terms.”
Both companies maintained that their partnership would favor the local media industry and free-to-air television, “which remains the most affordable and extensive source of entertainment and public service to Filipinos.”
Early this month, ABS-CBN Corp. disclosed it had acquired 34.99 percent of TV5 in a deal that could reach P4 billion. The company told regulators it would acquire 6.46 million primary common shares from TV5 for P2.16 billion. MediaQuest Holdings Inc., which operates TV5, will remain the controlling shareholder with a 64.79 percent stake after the transaction.
“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,” MediaQuest chairman Manuel V. Pangilinan commented on the deal.
“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,” he added.
Under the agreement, the parties would also allow TV5 to issue a P1.84-billion convertible note, which will enable ABS-CBN, subject to obtaining applicable regulatory approvals, to acquire additional primary common shares from it after eight years from the issuance. ABS-CBN can increase its equity in TV5 but should not exceed 49.92 percent of the outstanding capital stock.
But critics of the partnership quickly denounced the deal and described the move as a circumvention of the Constitution and existing laws on franchising.
Several lawmakers said the planned de facto merger of TV5 and ABS-CBN will violate TV5’s legislative franchise, which prohibits TV5 from sharing its franchise with another broadcast entity without the prior approval of Congress.
The Philippine Competition Commission said it would review the deal motu proprio.
“While the PCC determines whether the thresholds under Bayanihan 2 have been met, it may also direct its Mergers and Acquisitions Office to conduct an initial assessment if the effects of the transactions involving TV5 and ABS-CBN, and Cignal and SkyCable, warrant a motu proprio review,” PCC said in a statement minutes after the partnership announcement.
It added that a merger review would determine if the transaction might “result in a substantial lessening of competition in the relevant markets.”
On Tuesday, Surigao del Sur 2nd District Rep. Johnny Pimentel filed House Bill No. 431 seeking to renew ABS-CBN’s franchise.
Pimentel said in his proposed bill, “The news and public affairs program of ABS-CBN serves as the only avenue for crucial and relevant information for a great number of our countrymen.”
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