What has not even begun is now gone.

TV5 Network Inc. and ABS-CBN Corp. mutually terminated their landmark P4-billion investment deal that was supposed to boost their content creation and pave the way for the return of the Lopez-led ABS-CBN to free-to-air television.

In separate regulatory disclosures on Thursday, the two broadcasting networks said the termination was formalized through a memorandum of agreement.

Both parties also reiterated they have not implemented any of the transactions covered by the sale and purchase, debt instruments, investments and convertible note agreements.

Last 11 August, ABS-CBN disclosed it planned to acquire 6.46 million primary common shares from TV5 for P2.16 billion — representing 34.99 percent of the total voting and outstanding capital stock of the Manny V. Pangilinan-led network.

MediaQuest Holdings Inc., which operates TV5, would have remained the controlling shareholder with a 64.79 percent stake, had the transaction pushed through.

Under the agreement, TV5 would issue a P1.84-billion convertible note, allowing ABS-CBN to acquire additional primary common shares from it, eight years from the issuance. It meant ABS-CBN could increase its equity in TV5, but it could not exceed 49.92 percent of the outstanding capital stock.

Content enhancement

The proceeds of the primary common shares and convertible note subscriptions, amounting to P4 billion, were intended to fund the capital expenditures and operating expenses of TV5 in pursuing the enhancements of its content and programming, and public service offerings.

The transaction was initially expected to be completed within August, and closing was subject to the fulfillment of certain conditions. However, the announcement — although purely business in nature — was met with strong opposition from authorities and lawmakers.

Rep. Rodante Marcoleta said he feared the partnership would eventually lead to monopoly or consolidation of market powers that would be detrimental to consumers.

Marcoleta had earlier said the deal would violate various laws and no less than the 1987 Constitution. He said it would allow ABS-CBN to broadcast even after its franchise had lapsed without being renewed or replaced by Congress in 2020.

The same issue had been raised against ABS-CBN over its block-time agreement with Zoe Television, a broadcast facility operated by the family of Sen. Joel Villanueva.

Application denied

The “blocktimer” deal between Zoe and ABS-CBN was criticized as illegal since the legislative franchise of Zoe prohibits it from sharing its franchise with another broadcast entity without the prior permission of Congress.

In 2020, the House of Representatives denied the application of ABS-CBN for a new 25-year franchise over issues like the dual citizenship of its chair emeritus Gabby Lopez, and alleged tax, labor and legislative franchise violations.

The House technical working group said in its report that the “applicant (ABS-CBN) was seen as undeserving of the grant of a legislative franchise.”

It added the issuance of Philippine depositary receipts by ABS-CBN to foreigners has allowed the latter to own part of the network. The issuance of foreign ownership through the issuance of PDRs had also been raised against the online news website Rappler.